There was a time when Byju’s name shined brightest in the Indian startup ecosystem. From the jerseys of the Indian cricket team to TV advertisements, this edtech company was everywhere. Its value in the year 2022 was estimated at $22 billion. But now the foundation of this empire has completely collapsed. A Singapore court has convicted the founder of Byju’s Byju Raveendran Has been sentenced to six months in jail for ignoring court orders. This case has become one of the biggest failures in India’s corporate history. Today the company is facing stalled audits, huge debts, angry investors, bankruptcy proceedings, allegations of misappropriation of funds as well as legal battles over missing money across the world.
Pandemic profits become a debt trap
Started in the year 2011 with the name of ‘Think and Learn Private Limited’, this company made the Indian education system and preparation for competitive examinations its market. The increasing penetration of smartphones proved beneficial for the company. Then the Covid-19 pandemic added fuel to the fire. When schools were closed and education went online, the demand for Byju’s started skyrocketing. Foreign investors invested a lot of money. During this period, Byju’s rapidly expanded into other markets including America. The company spent about $3 billion and bought companies like Aakash Educational Services, Great Learning, Epic.
But behind this fast pace a big crisis was brewing. In November 2021, the company took a huge loan of $ 1.2 billion from foreign lenders. At that time it was considered the global success of Indian startups, but this loan became the biggest reason for Byju’s downfall. When Byju’s delayed submitting its audited financial results, questions began to arise. When the results of financial year 2021 came out, investors were shocked to see a huge loss of Rs 4,588 crore. Due to lack of transparency, renowned audit companies like Deloitte and BDO Global left Byju’s. This was the biggest alarm bell for investors.
Company accused of hiding assets
By the end of 2022, the relationship between the company and the lenders had completely deteriorated. The lenders alleged that about $533 million related to the loan had been diverted without providing correct information. After this, a legal battle broke out from Delaware to New York in America. Lenders accused the company of hiding assets.
It was also claimed in the court documents that more than $500 million was diverted from several institutions to a Singapore company through ‘OCI Limited’, a British logistics company. The legal battle intensified in Singapore also. A subsidiary company of Qatar Investment Authority filed a case against Byju’s in the matter related to the acquisition of Akash. The Singapore court had given orders to Byju Raveendran regarding disclosure of assets, which he did not follow. In this case the court has sentenced him to six months’ imprisonment. Besides, an order has also been given to present documents proving the legal ownership of BR Investco Pte.
Bankruptcy started from cricket sponsorship
Amidst these ongoing battles at the global level, the company’s troubles increased in India too. In July 2024, the Bengaluru bench of the National Company Law Tribunal (NCLT) initiated bankruptcy proceedings against Byju’s. The surprising thing is that the bankruptcy case against this company with billions of dollars of debt started with dues of only Rs 158 crore. This dues belonged to the Board of Control for Cricket in India (BCCI). The cricket sponsorship that once made Byju’s a brand became the reason for its bankruptcy.
Meanwhile, the issue of Akash Educational Services also heated up. Byju had bought it for about 1 billion dollars. Now during the bankruptcy process, Akash has proposed a rights issue to raise new capital. Byju has strongly opposed this because it could bring its stake down from 25.75 percent to less than 5 percent. But the tribunal has refused to stop the process.
Investors lost their confidence and employees fell in trouble.
The functioning of the company has been badly affected amid legal disputes. Ordinary employees did not receive salaries for months, mass layoffs took place and many board members resigned. The valuation of the company which was once worth $22 billion has fallen to $1 billion or less. Forbes has reduced the net worth of Byju Raveendran to zero.
However, Raveendran has denied these allegations and accused the lenders of ‘criminal collusion’. But the truth is that Byju’s fall is not just the fall of a startup. This is a big lesson for India’s startup ecosystem. It has proved that without strong governance, indiscriminate expansion on the basis of debt and aggressive marketing alone, it is not possible to survive in the long run. The company which once claimed to change the face of education across the world, is today fighting in the courts of different countries to save its existence.
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