Edtech platforms have made news for all the wrong reasons, from leading layoffs in the Indian startup ecosystem to closing down multiple verticals. At the top of the list is BYJU’S, whether it be firing staff members in the most inappropriate format with mailed apologies from the head, having an allegedly harsh and “abusive” work environment, or now having a working capital crisis with lenders demanding back the loans extended to the unicorn. (Arora) Founded by Byju’s Raveendran in 2011, the company has rapidly grown to become one of the world’s most valuable ed-tech startups. Byju’s Learning App offers comprehensive educational content for students from kindergarten to higher secondary levels. It covers various subjects, including math, science, and social studies. The app employs interactive video lessons, quizzes, and adaptive learning techniques to provide personalized learning experiences. Byju’s utilizes data analytics to track student’s progress and tailor the content and pace of their learning journey accordingly.
In April 2021, Byju’s announced the acquisition of Aakash Educational Services, aimed at expanding Byju’s presence in the test preparation segment. While this was seen as a strategic move, some concerns about the potential impact on competition within the ed-tech space were raised. Byju’s faced increasing competition in the Indian ed-tech market. Several other ed-tech startups emerged, offering similar online learning platforms and services.
Competitors like Unacademy, Vedantu, and Toppr gained prominence and vied for a share of the ed-tech market. This competitive landscape pressured Byju’s to innovate and maintain its market position. Given the digital nature of Byju’s platform, concerns have been raised regarding data privacy and security. Critics question student data collection, storage, and usage, emphasizing the need for robust data protection measures to safeguard sensitive information. Also, Byju’s premium offerings have been criticized for their relatively high cost, making them less accessible to students from lower-income backgrounds.
Current Considerations
Byju’s violates the terms and conditions of the $1.2 billion loan it obtained in November 2022. It allegedly failed to submit its financial statements to the lenders within the specified timeframe, a requirement outlined in the loan agreement. Consequently, a group of lenders who participated in the loan have expressed the need for faster repayment of a portion of the loan. In addition, some creditors who acquired the loan through primary holders in September have engaged the services of investment bank Houlihan Lokey to advocate for an accelerated pre-payment of a section of the loan. Byju’s, the prominent Edtech company, has been exploring options to restructure the loan due to increasing losses and significant cash burn. (SH)
The recent emphasis on expediting the repayment of loans coincides with a period where Byju’s has been making headlines due to various rounds of workforce reductions and allegations of questionable accounting practices. These practices have come under scrutiny not only from external parties but also from Byju’s financial auditor. Furthermore, Byju’s has faced scrutiny from government authorities, particularly the Ministry of Corporate Affairs, following a significant delay of approximately 18 months in releasing its financial statements for the fiscal year 2021, well beyond the prescribed timeline.These developments have raised concerns about Byju’s financial management, transparency, and compliance with regulatory requirements. The company’s reported layoffs, coupled with the allegations of questionable accounting practices and the delayed release of financial statements, have likely contributed to a sense of uncertainty and scrutiny surrounding Byju’s operations.
The government and regulatory bodies have a vested interest in ensuring that companies adhere to prescribed timelines for financial reporting and maintain transparency in their practices. Byju’s delay in releasing its financials beyond the mandated timeline could be seen as violating regulatory standards, prompting additional scrutiny and potential consequences.
Byju’s employees have come forward to shed light on a work environment that they describe as abusive and exploitative, attributing the company’s success to such practices. Allegations include using unscrupulous sales tactics targeting and pressuring potential customers from economically disadvantaged backgrounds to purchase Byju’s courses. (Reuters)Evidence, including WhatsApp messages, internal emails, company contracts, and audio recordings of calls and meetings, has emerged, revealing the extent to which some higher-ups at Byju’s employ tactics of coercion and intimidation.
Reports indicate that certain managers at Byju’s exert pressure and issue threats to employees, compelling them to work more than 72 hours per week without adequate breaks or time off. Employees allegedly face strict targets and are forbidden from leaving the office until these targets are met. The revelations paint a concerning picture of an environment prioritizing meeting sales objectives over employee well-being and labour rights. These allegations raise serious concerns about the welfare and rights of Byju’s employees. If substantiated, they would highlight a need for the company to address issues of workplace abuse, exploitative practices, and the disregard for work-life balance.
As per the guidelines of the Employees’ Provident Fund Organisation (EPFO), organizations are required to credit provident fund payments for each month by the 15th of the following month. If there is a delay in the worker’s contribution, the employer is liable for covering the damages. Furthermore, such delays can attract penalties ranging from 5% to 100% of the outstanding amount. However, it has been reported that the company in question has been consistently delaying the PF contributions by three to four months. This delay in fulfilling the PF obligations has adversely affected the employees. For instance, in April, only 3,164 staff members had their PF contributions credited, and even that occurred with a delay of 36 days. In contrast, only 31 individuals received their due Provident Fund payments for May. (Hindustan Times)
The Enforcement Directorate (ED) conducted searches at three Bengaluru-based locations linked to Byju’s, an EdTech company, as part of an investigation into alleged violations of foreign exchange regulations. During these searches, the ED discovered several pieces of evidence, including incriminating documents and digital data. Since 2020–2021, the company has not prepared its financial statements nor had the accounts audited, which is required. As a result, the banks cross-examined the accuracy of the statistics provided by the company. Based on allegations from various people, the inquiry into the platform was started. The investigation under the Foreign Exchange Management Act, 1999 revealed that Byju’s had received approximately Rs 28,000 crore in foreign direct investment from 2011 to 2023. Additionally, the company had remitted around Rs 9,754 crore to various foreign jurisdictions during the same period under the guise of overseas direct investment.
Conclusion
It is worth noting that these allegations and delays in financial reporting may have repercussions for Byju’s reputation and investor confidence. Stakeholders, including lenders and investors, often rely on accurate and timely financial information to make informed decisions. The series of events surrounding Byju’s raises questions about the company’s governance, internal controls, and overall financial stability. The issues surrounding Byju’s, the Indian ed-tech company, include allegations of questionable sales practices, an abusive work environment, delays in financial reporting, and potential violations of foreign exchange regulations. Byju’s needs to respond to these allegations transparently and take appropriate action to address any systemic issues within the company. This includes conducting thorough investigations, implementing safeguards to prevent abusive practices, and actively engaging with employees to foster a collaborative and respectful work environment.
Written by- Aathira Pillai
Edited by – Vanshika Haldiya