While the story of Rags to Riches often inspires people around the world, Byju Raveendran's story recently turned out to be a perfect example of what people should avoid doing. Forbes recently published its Richest People of the World 2024 report and Byju Raveendran was nowhere to be seen. Byju Raveendran is the founder of India's leading education technology company Byju's. A few years back, Raveendran featured in multiple global rich lists with a net worth of Rs 17,545 crore ($2.1 billion). However, the Forbes 2024 report has showcased his net worth as zero. As a result, Byju Raveendra's net worth is raising eyebrows all around the world and the Forbes report highlights how the multiple problems that the company faced resulted in the downfall of Raveendran. Forbed in its report observed, "BlackRock slashed its valuation of Byju's to about $1 billion, down from the firm's $22 billion valuation in 2022, amid the company's struggle to secure capital and allegations of accounting irregularities. Byju's shareholders voted to oust Raveendran as CEO in February." Now, the question arises what went wrong with Byju Raveendran or Byju's? Below are the problems Byju's faced over the years-
During the COVID, Byju's saw its highest jump in valuation. When entire India was in their home and schools were closed, Byju's became the most trustworthy firm for parents. Parents bought its subscription despite being expensive for their children so that they continue to learn at home. Byju's success during the COVID can be calculated by the fact that it reached a peak valuation of $22 billion in 2022.
However, warning bells started to ring when Byju's posted its long-delayed results for the fiscal year ending March 2022, revealing a staggering net loss exceeding $1 billion. This dismal financial performance led to BlackRock, a major investor, slashing its valuation of Byju's to a mere $1 billion, marking a precipitous decline from its peak valuation.
Byju's faced the action of the Enforcement Directorate (ED). ED issued a showcase notice to Byjus that depleted its credibility as a company. Byjus came under ED radar for alleged violations under the Foreign Exchange Management Act (FEMA) violations amounting to Rs 9362.35 crores. Not only this, on April 27 and 28 last year, ED raided three premises linked to Byju's over alleged FEMA violations. In a statement issued after the raids, ED had then alleged that the searches revealed that the company received foreign direct investment of around Rs 28,000 crore from 2011 to 2023.
Byju's in its statement had clarified that the queries received in the notice are solely technical in nature such as delay in filing Annual Performance Reports (APRs) with respect to duly compliant ODI investments of close to Rs 8000 crores that arose from the delayed statutory audit (FY22).
In the name of cost-cutting, Byju's has sacked at least over 10,000 employees in the past two years. The company grapples with dwindling funds and legal showdowns with investors and stakeholders. Currently, nearly 14,000 employees are on the payroll of Byju's India entity. The fund crunch in Byju's reached such an extent that it reportedly delayed March salaries to its employees for the second month in a row amid an ongoing dispute with shareholders over the firm's rights issue. Byju's has assured its staff that it is working on a parallel line of credit to ensure salaries are paid by April 8.
In India, Byju's was firing its employees in bulk, on the other hand, it was paying millions of dollars to Argentinian footballer Lionel Messi. Less than a month after announcing 2,500 layoffs, Byju's signed a three-year deal with Lionel Messi in 2022 to get him on board as its global brand ambassador for an 'education for all' campaign. As per reports, Messi had been roped in for an estimated $5-7 million per year.
Byju's continued to take over multiple firms and merge them with its umbrella to grow its business. For instance, in April 2021, BYJU’S acquired Aakash Educational Services Ltd. (AESL). With over 33 years of experience and more than 215 centres across India, it is a leader in the test preparation segment for students preparing for medical and engineering entrance exams, school/board exams, KVPY, NTSE, Olympiads, and other Foundation level exams.
In July 2020, BYJU’S acquired WhiteHat Jr. for $300 million which teaches online coding to students through live lessons and interactive classes.
There were a total of 6 big companies that Byju's acquired.
As per reports, Byju's investors voted to remove Raveendran as the CEO of the company. A reports quoted a source which informed, "Byju's shareholders, including Prosus NV and Peak XV Partners, last month voted to oust Mr Raveendran as CEO, escalating a battle over the fate of the once high-flying online tutoring startup that is fighting to remain in business."
Byju's also faced accusations of not returning their money despite the promises made by its sales team by multiple parents. A Scroll report quoted Twenty-two Byju’s customers from several low-income homes who informed that they had been aggressively targeted by salespeople, with some coerced into paying for courses, tricked into taking out loans, and ultimately left out of pocket.