Ed-tech firm Byju’s, despite being a major beneficiary of the pandemic-induced surge in online learning, unexpectedly witnessed a decline in revenue for FY21. This is a stark contrast to the tremendous growth experienced by ed-tech companies in India and worldwide during this period, driven by the stay-at-home restrictions imposed due to Covid-19.
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In a stunning turn of events, Deloitte, a renowned global audit firm, has shockingly resigned as the statutory auditor of Byju’s, intensifying the mounting troubles for India’s most valued startup. The resignation comes amidst a string of challenges faced by the company, raising concerns about its financial stability. Deloitte expressed deep dismay over the prolonged delay in receiving the financial statements for the year ended March 31, 2022. Furthermore, they highlighted the absence of communication regarding the resolution of audit report modifications for the preceding year and the status of audit readiness for the current year. These unresolved issues have severely hampered Deloitte’s ability to effectively conduct the audit according to established standards, ultimately leading to their immediate resignation.
Byju’s, in response to this setback, swiftly appointed BDO (MSKA & Associates) as Deloitte’s successor and the company’s statutory auditors for the fiscal year commencing from FY22, spanning the next five years. BDO will also assume the role of statutory auditor for the consolidated group, in addition to conducting audits for the IPO-bound Aakash Educational Services.
This unexpected turn of events involving Deloitte’s resignation arrives at a time when key board members of Byju’s have also tendered their resignations due to significant disagreements with founder Byju Raveendran on crucial operational matters. The departure of Deloitte has left Byju’s in a state of uncertainty, especially considering the revelation of irregularities in revenue recognition practices within the company’s FY21 (2020-21) results. As advised by Deloitte, Byju’s was compelled to defer approximately 40 percent of its FY21 revenue to subsequent years.
Byju’s, despite being a major beneficiary of the pandemic-induced surge in online learning, unexpectedly witnessed a decline in revenue for FY21. This is a stark contrast to the tremendous growth experienced by ed-tech companies in India and worldwide during this period, driven by the stay-at-home restrictions imposed due to Covid-19. Moreover, Byju’s incurred substantial losses exceeding Rs 4,500 crore in FY21, further exacerbating the challenges faced by the company.
The convergence of Deloitte’s resignation, board member departures, and the revelation of revenue irregularities has placed Byju’s in a precarious position. The company now faces a critical juncture as it navigates through these significant setbacks, striving to restore confidence among stakeholders and chart a course towards sustainable growth and financial transparency.
