Amid board trouble, Byju’s promises investors September deadline for FY22 audited results

Byju’s has told its investors that it will file the much-delayed audited financial results for fiscal year 2022 by this September while the results for the year ending March 2023 will be submitted by December, according to people aware of the developments at the embattled edtech company.

Following the confirmation, last week, of resignations by three investors – representatives of Peak XV Partners, Prosus and Chan Zuckerberg Initiative–from the board of the company, founder Byju Raveendran and newly appointed chief financial officer Ajay Goel met investors over the weekend in an attempt to assuage concerns over the controversial delay in furnishing the company’s financials, sources said.

“For now, Byju’s leadership has briefed the investor group giving timelines on submitting the audited results for FY22,” said one of the people cited above.

Separately, another shareholder who was speaking on the condition of anonymity, said Byju's has told investors that “the exit of Deloitte ( Byju’s former audit firm) and the three board members was not coordinated.”

“The call was intended to pacify the shareholders after the resignations. They are working with their new auditor to finalise the financial statements,” the person added. Prior to this, the company had provided no clear timeline of when it would share audited FY22 financial with investors as well as with creditors of its $1.2 billion term loan B, according to people directly aware of the developments.

On June 22 , Deloitte–the erstwhile auditor for the edtech firm – resigned from its post citing delay in receiving financial statements for fiscal year 2022 from the Bengaluru-based firm. It told Byju’s board in a letter that due to the delay, “there will be a significant impact on their ability to plan, design, perform and complete the audit in accordance with the applicable auditing standards.” Citing these reasons, Deloitte resigned from its post of the auditor with immediate effect.

Subsequently, Byju’s announced the appointment of BDO (MSKA & Associates) as its statutory auditors commencing from FY22 for the next five years.

Byju’s ongoing troubles began in late 2022 after it had filed its financial results for fiscal 2021 after a delay of 18 months revealing a significant drop in revenue, than estimated earlier, while its losses swelled. The company reported operating revenue of Rs 2,280 crore in FY21 along with a loss of Rs 4,588 crore, up from just Rs 262 crore in the previous fiscal year.

An email sent to Byju’s on Sunday did not elicit any response until press time.

It remains to be seen if Byju’s will be able to meet the new deadlines that it has now set given that Deloitte–one of the so-called ‘Big 4’ consultants– has resigned citing that it will take a certain amount of time to close the audit process, people in the know said.

“There is a reason why company shareholders and agreements mandate a Big 4 to do the audits. It has a process and takes time and can’t be done upon one’s wishes. Our shareholder agreements clearly say that accounts have to be audited by Big 4 auditors,” a founder of another top edtech unicorn said.

Last September, Raveendran had told the media that its unaudited revenue for fiscal year 2022 is Rs 10,000 crore but it remains to be seen what the audited numbers will finally reveal.

One of the key changes that Byju’s had to make in its FY21 results included the readjustment of its annual revenue. It was required to file revenue for only the period of consideration –fiscal 2021—and to not include multi-year payments. For example, if a student or executive is paying for courses from FY 23-26, only the fees paid for FY23 can be accounted for in that fiscal’s income, auditors said.

Troubles galore

Backed by the likes of General Atlantic and Qatar Investment Authority (QIA), the latest board resignations underscore the issues the edtech firm is trying to solve while maintaining the confidence of investors. Byju’s continues to be in talks with lenders of its term loan B to finalise new terms amid ongoing legal battles between the two parties.

Glas Trust Company is pursuing a legal action suit against the edtech firm in Delaware, US. While Byju’s has filed a suit against hedge fund Redwood and its entities in New York, against their demand for “accelerated repayment.”

A key reason for Byju’s creditors seeking ‘accelerated payment’ of the full amount of the $1.2 billion loan is the delay in furnishing FY22 financials, ET reported on March 20. Byju’s has been offering higher interest rates on the loan as well as negotiating on a partial prepayment to the lenders.

Last month, Byju’s signed a Rs 2,000 crore credit facility with Davidson Kempner Capital in a structured credit transaction against the cash flows of its test prep subsidiary Aakash Educational Services.

Amid the upheaval in its corporate governance, Byju’s is firing employees with up to 1,000 people impacted.

After its last fundraise in 2022, the edtech firm was valued at $22 billion and it has been trying to stitch up new funding through a mix of equity and convertible notes, but that is yet to be formalised or announced. In what was the second such exercise by its investor BlackRock, the fund wrote down the edtech’s valuation to $8.29 billion in May for the period of March 2023.