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Byju's Under Scrutiny, Government Orders Inspection Amid Auditor Resignations and Financial Woes

Troubles Mount for Ed-Tech Giant Byju's: Government Probe and Resignations Cast Shadow

11 July 2023

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Kunal Tyagi

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  • The Indian government has ordered an inspection into Byju's account books following the resignation of its auditor and three board members, raising concerns about potential financial irregularities.

  • Byju's, valued at $22 billion, is already facing financial difficulties and seeking debt restructuring after breaching certain terms of its $1.2 billion term loan.

  • The recent resignations within Byju's, including the auditor and influential board members, highlight the erosion of trust within the company and raise questions about its internal governance and transparency.

India's prominent ed-tech giant, Byju's, finds itself in a challenging position as the Modi government has ordered an inspection into the company's account books. This move comes following the resignation of the company's auditor and three board members, sparking concerns about potential financial irregularities. The inspection, conducted by the Ministry of Corporate Affairs, aims to assess the situation and determine whether further investigation by the Serious Fraud Investigation Office is necessary. With Byju's already facing financial difficulties and seeking debt restructuring, this government probe adds to the company's woes.


A Troubling Turn of Events:


Byju's, valued at $22 billion in its last funding round, now faces multiple obstacles. The ongoing negotiations to restructure a $1.2 billion term loan have been complicated by the breach of certain debt agreement terms. Additionally, the company has been forced to cut thousands of jobs, highlighting the extent of its financial challenges. These difficulties have prompted Byju's to seek more than a billion dollars in funding to overcome its current financial crisis.


Resignations Amplify Concerns:


The recent resignations within Byju's have further shaken confidence in the company. Deloitte Haskins and Sells, the company's auditor, stepped down citing delays in submitting financial statements. Simultaneously, influential board members from Peak XV, Prosus NV, and the Chan-Zuckerberg Initiative also resigned. These departures underscore the erosion of trust within the company's ranks, raising questions about its internal governance and transparency.


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Government Intervention:


In response to these developments, the Indian government has taken action. The Ministry of Corporate Affairs has initiated an inspection into Byju's financial records, seeking a comprehensive report within six weeks. This step aims to shed light on the company's financial position and determine if any fraudulent activities have taken place. Depending on the findings, the government will decide whether to escalate the matter to the Serious Fraud Investigation Office.


Byju's Silent Response:


Despite the gravity of the situation, Byju's has chosen not to comment on the government's inspection or the recent resignations. The company's spokesperson remained unresponsive to Bloomberg's attempts to seek clarification. The silence from Byju's raises further questions about its commitment to transparency and willingness to address the concerns raised by its stakeholders.


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