India's prominent ed-tech company, Byju's, once hailed for its skyrocketing success in the online education space, finds itself mired in an protracted financial crisis.
Byju's, an ed-tech company valued at approximately $22 billion, is currently facing financial troubles and defaulting on payments to lenders.
Their troubles mainly boil down to 4 reasons:
During the pandemic, Byju's experienced a rise in online education demand due to increased internet usage. But as the pandemic subsided, demand went down, impacting their revenue.
Byju's employee costs significantly increased from Rs 420 crore in FY20 to 1,943 crore in FY21, contributing to the company's losses.
Byju's decision to recognize a significant portion of its subscription revenue upfront may have artificially inflated its financial numbers.
Byju’s took $1.2 billion loan from the overseas market to fund general corporate purposes offshore, digging them further into a hole of debt.
Byju's financial statement for FY21 showed a loss of Rs 4,589 crore and a 30% decline in revenue to Rs 2,428 crore.
Creditors, upon reviewing Byju's audit results, requested immediate repayment of a portion of the loan while simultaneously renegotiating the terms of the debt.
Byju's is now refusing to make further payments on the loan and has filed a lawsuit against the lenders due to their demands.