Troubled Byju’s braces for fresh storm as auditor BDO's exit adds to ongoing problems

The haze that has enveloped edtech major Byju’s looks unlikely to clear up any time soon. The latest in a long string of setbacks is the sudden resignation of the embattled firm’s auditor, BDO (MSKA & Associates).

The BDO exit, significant in itself, comes just a year after the similarly abrupt exit of Deloitte as the firm’s auditor. BDO’s tenure was supposed to last five years.

Add that to the recent developments and you get an idea of the enormity of the challenges confronting Byju’s. Insolvency proceedings that the company had challenged have been reinstated. And just last month, the Supreme Court ordered the formation of a Committee of Creditors under Pankaj Srivastava, the Insolvency Resolution Professional.

Siddharth Chandrashekhar, Senior Standing Counsel for the Department of Revenue Intelligence (DRI), highlights the significance of BDO’s resignation. “With back-to-back exits by Deloitte and now BDO, the spotlight is once again on Byju’s. Governance lapses seem to have deepened the crisis,” he notes.

The Byju Raveendran (pictured)-led edtech firm’s financial troubles are considerable. The company owes Rs 1,404 crore to Aakash Educational Services, an unsecured financial creditor, in addition to debts owed to InCred Financial Services (`20.3 crore), Aditya Birla Finance (`47 crore), and Glas Trust Company (over Rs 11,000 crore), which represents Byju’s US-based term loan lenders. That’s not to mention the tax claims of the Indian and Karnataka governments of more than `840 crore.

It is now a question of Byju’s true value. Vivek Parti, an insolvency professional, says, “A buyer may emerge, but the question remains—what relevance does Byju’s hold today? They have a strong brand, but beyond that, little of value is tangible.”

As Byju’s struggles play out, the fallout extends beyond the company. Investor confidence in the edtech sector has taken a hit, with one industry insider remarking, “When a company’s reputation is compromised, it casts a shadow over the entire sector.”

@PalakAgarwal64