Edtech unicorn Unacademy has decided to stop putting non-performing employees on performance improvement plans (PIPs) and will instead provide a direct exit to such employees, sources told Inc42.

In a message sent on an internal communication channel, Unacademy CEO and cofounder Gaurav Munjal said, “We are putting a ban on PIP. We will not have PIP in the organisation moving forth.”

“If someone is not doing their job well then give feedback. If it happens repeatedly then it’s better to part ways,” Munjal added. 

Inc42 has seen the message sent by Munjal.

The CEO said that PIPs don’t lead to anything and just delay the decision. “Moving forth, we will have a Direct Exit with notice period for Non-Performers. We will not waste the Non-Performer’s time and the company’s time with the PIP process,” he said.

Meanwhile, a representative of Unacademy, in a statement sent to Inc42, said, “We’ve decided to do away with the PIP process that was part of the notice period in case of (a) negative outcome of the PIP. From now on, if an employee is not performing well, they can serve their notice period and leave the company. This change allows us to address performance concerns more directly and make decisions more efficiently, without unnecessary delays.”

The statement said that rather than PIPs, the non-performing employees will have the opportunity to address their performance issues directly through feedback channels. However, if performance issues persist, it is in the best interest of both the individual and the organisation to facilitate a smooth and respectful transition. 

Typically, a PIP is the last warning issued by an employer to the employees considered inefficient. It generally involves a 30 or a 60 days timeline, during which the employer sets a target for the employees to achieve. Failing to meet the target, the company parts ways with the employee. PIPs are widely used by tech companies across the world. 

The latest development has come almost a month after Unacademy appointed Sandhydeep Purri as its new chief people officer (CPO). While announcing her appointment, Unacademy said that Purri will cultivate talent and drive a culture of innovation and progress at the startup. 

Purri’s appointment also came after Unacademy saw several senior-level exits in 2023. The following were the key exits during the year:

• Arnab Dutta – Senior Vice President Strategy
• Vivek Sinha – Chief Operating Officer
• Abhyudaya Singh Rana – Chief of Staff, Chief of Compliance Officer
• Subramanian Ramachandran – Chief Financial Officer
• Siddharth Manchanda – General Counsel
• Tina Balachandran – Senior Vice President, Talent and Culture
• Sachin Aggarwal – Head Franchisee Business (Offline Centres)
• Karan Shroff – Partner & Chief Operating Officer
• Ashish Arora – Senior Vice President & National Head Academics

Meanwhile, after several rounds of layoffs and cost-cutting exercise, Munjal recently claimed that Unacademy reduced its cash burn by 60% in 2023.

Unacademy’s loss jumped by 85% to INR 1,537 Cr in FY22, while its operating revenue increased to more than 80% to INR 719 Cr.

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At its annual general meeting (AGM) on Wednesday (December 20), troubled edtech major BYJU’S‘ stakeholders approved its financial statements for the fiscal year 2021-22 (FY22). 

With close to 60 shareholders in attendance, BDO was reappointed as the statutory auditor of the company during the three-hour long AGM, BYJU’S said in a statement, adding that all the resolutions proposed by the company were passed. 

“Think and Learn, the parent company of BYJU’S, held its Annual General Meeting (AGM) today with close to 60 shareholders in attendance. All the resolutions were passed, including the accounts for FY22. BDO was reappointed as the statutory auditors of the company,” the statement said. 

As per the edtech major, cofounder and chief executive officer (CEO) Byju Raveendran kicked off the AGM with an ‘account of the state of business and its challenges’. This was followed by chief financial officer Nitin Golani briefing the stakeholders about the audit while India CEO Arjun Mohan spoke about business updates and plans. 

The AGM also saw auditor BDO answering questions from shareholders about the newly furnished financial statements. 

The audited financial results were finally approved by the stakeholders after multiple delays from the company in furnishing them. This resulted in the resignation of previous auditor Deloitte and exit of three key board members, including GV Ravishankar of Peak XV Partners, Prosus’ Russell Dreisenstock and Vivian Wu of Chan Zuckerberg Initiative.

In November this year, the troubled startup released select financial numbers for its core operations. Think and Learn Private’s standalone EBITDA loss stood at INR 2,253 Cr in FY22 compared to an EBITDA loss of INR 2,406 Cr in the previous fiscal. Total income stood at INR 3,569 Cr in the year ended March 2022 as against INR 1,552 Cr in FY21. 

While there was no mention of the net loss figure in FY22, the edtech major’s consolidated net loss stood at INR 4,588 Cr in FY21, up 1,880% year-on-year.

The edtech decacorn has been grappling with a slew of issues, including paucity of funds, mass layoffs, mounting losses, top-level leadership exits and full-blown confrontation with its lenders over the repayment of its $1.2 Bn Term Loan B. 

To tide over the crisis, the company has been scouting investors to raise funds and has also been in the market to reportedly sell subsidiaries Epic and Great Learning to repay the loan.

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BYJU’S-owned Gradeup turned profitable in the financial year ended March 31, 2023. The exam preparation startup reported a net profit of INR 15.2 Cr in the financial year 2022-23 (FY23) as against a net loss of INR 133 Cr in the previous fiscal year. 

The edtech startup’s operating revenue surged 214% to INR 154.1 Cr in FY23 from INR 49.1 Cr in the previous fiscal year.

GradeUp’s overall expenses fell 24% to INR 139 Cr during the year from INR 182.5 Cr in FY22. 

Is Gradeup Even Profitable?

However, there’s a caveat in the rise in its operating revenue. For one, the company generated revenue of INR 34.7 Cr from education and related activities, which was 29% lower than INR 49.1 Cr it generated in the previous fiscal year.

At INR 119.3 Cr, a majority of the edtech startup’s revenue came from “business support services” provided to Think & Learn Pvt Ltd, the parent of BYJU’S. Revenue under this bucket was nil in FY22.

Gradeup explained business support services as, “Recovered from Holding Company against cost incurred by the company (with a markup of 10%) towards business support services in the field of education and related activities.” 

Without “business support services”, Gradeup incurred a loss of INR 104 Cr in the year.

Besides, GradeUp also borrowed an additional INR 3 Cr from Think & Learn during the year under review. As of March 31, 2023, the startup owed INR 99 Cr to BYJU’S, over 6X of its net profit during the year.

Where Did GradeUp Spent? 

Of all the costs disclosed by the startup, employee benefit expenses accounted for the biggest chunk. 

Employee Benefit Expenses: The startup’s employee benefit increased 19% to INR 89.4 Cr as compared to INR 75.4 Cr in FY22.

Advertising Expenses: The other big cost for the startup was advertising expenses, however, it declined 64% to INR 19 Cr from INR 53.2 Cr in FY22. 

Meanwhile, the startup’s auditor flagged concern about its ability to continue as a going concern  basis.

“The company has significant accumulated losses which has resulted in erosion of its entire net worth as at March 31, 2023. Further, current liabilities exceeds current assets by Rs 11,117.74 Lakhs… These conditions indicates that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern basis,” auditor Lodha & Co said.

“Company’s ability to continue as a going concern depends on generation of the expected cash flows to be able to meet its obligations as and when arises. In view of continued financial support of Think and Learn Private Limited and merger application with Think and Learn Private Limited filed with NCLT Bengaluru, management considers it appropriate to prepare these financial statements on a going concern basis,” it added.

It is pertinent to note that Gradeup was BYJU’S eighth acquisition in 2021, when the edtech decacorn was on an acquisition spree and splurged over $2 Bn. As per reports, BYJU’S had spent $40 Mn to $50 Mn for the acquisition of GradeUp from Times Internet. 

Post the acquisition of Gradeup, BYJU’S rebranded it to BYJU’S Exam Prep. 

The financial numbers come at a time when BYJU’S is fighting multiple fires, including delay in filing financial statements, debt repayment issues, an ongoing ED investigation, and other legal cases. 

Great Learning, another company of BYJU’S group, reported a net loss of INR 357.3 Cr in FY23. 

Meanwhile, BYJU’S last month disclosed select FY22 numbers for its standalone operations. After multiple delays, the startup has convened an annual general meeting (AGM) on December 20 to seek approval for its financial statements for FY22. 

The post BYJU’S-Owned Gradeup Mints Profits, But There’s A Catch & Auditors Have Concerns appeared first on Inc42 Media.

The University Grants Commission (UGC) has yet again warned edtech platforms of stern action for offering online degree courses in association with foreign institutions. 

The Commission noted that franchisee arrangements between edtech startups and foreign universities are barred. Flagging ads published by edtech companies, it added that degrees issued as part of such courses would not be valid. 

“It has also come to the notice of UGC that some edtech companies are… offering degree and diploma programmes in online modes in association with some foreign… institutions… Action will also be taken against all the defaulting edtech companies as well as the HEIs (higher educational institutions) under applicable laws/rules/regulations,” said UGC in a public notice issued on December 12.

The Commission also advised the general public to exercise ‘due caution’ while enrolling for such courses, adding that those opting for such degrees would be doing the same at their own risk and consequences.

It is pertinent to note that the amended UGC Act, 1956 bars HEIs from offering courses via franchising agreements with foreign universities. Current rules stipulate that such courses are not recognisable by the Commission. 

The move is expected to rein in edtech startups that offer such courses and ensure that students and parents do not spend resources and time on earning degrees that have no recognition. 

However, this is not the first time that authorities have cracked the whip on edtech companies.for offering non-recognised educational programs. In early 2021, the Commission had directed HEIs to withdraw any degree or diploma programmes being offered in partnership with edtech companies.

Afterwards in October 2022, the UGC again issued a fresh order that noted that online Ph.D programmes offered by edtech players in partnership with foreign institutes were not recognised.

The development comes at a time when the Indian edtech sector has been mired in a slew of troubles. 

The funding winter, increased regulatory compliance, layoffs, and a merger and acquisition wave headlined the Indian edtech startup ecosystem in 2023. From BYJU’s to Unacademy, the sector has seen companies slashing headcount by thousands. As per Inc42, 24 Indian edtech startups have fired more than 14,616 employees since 2022.

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Mumbai-based edtech unicorn upGrad’s net loss surged 76% to INR 1,141.5 Cr in the financial year 2022-23 (FY23) from INR 648.2 Cr in the previous fiscal year.

The startup’s bottom line took a hit due to goodwill writedown of INR 410 Cr (more on this later) despite its operating revenue crossing the INR 1,000 Cr mark for the first time since inception.

The edtech startup reported an operating revenue of INR 1,169.6 Cr in FY23, an increase of 97% from INR 595 Cr in the previous fiscal year.

Founded in 2015 by Ronnie Screwvala, Mayank Kumar, and Phalgun Kompalli, upGrad offers higher education courses and skilling programmes in collaboration with colleges and universities.

It primarily earns revenue from programme fees and the commission that it earns from universities. 

Including other income, total income rose to INR 1,194.4 Cr by 96% from INR 608.3 Cr

Acquisitions Take Toll

upGrad’s acquisition spree in 2022 cost it heavily as it recorded an impairment of goodwill worth INR 410 Cr on its acquisitions during the year under review. 

upGrad acquired six startups in 2022 – Harappa Education, INSOFE, Centum Learning, Exampur Marking, WOLVES India, and Work Better.

It seems that not all the acquisitions proved successful as upGrad closed several verticals of the acquired businesses in FY23, resulting in impairment of goodwill. For the uninitiated, goodwill impairment takes place when a company pays more than book value for the acquisition of an asset, and later the valuation of the asset declines. 

For instance, upGrad acquired the International School of Engineering (INSOFE) in a $33 Mn (INR 275 Cr) share swap deal. However, as per its filings, upGrad decided to discontinue the programmes offered by INSOFE and refund fees to the enrolled students in FY23 due to tough hiring market and external economic factors. As a result, upGrad recorded an impairment of goodwill worth INR 112.7 Cr (about $13.5 Mn).

The startup also recognised an impairment loss of INR 125.5 Cr due to a reduction in the number of university programmes of Aarina Educational Services Pvt Ltd (TalentEdge), which it acquired, to improve business margins and make it self- sustainable.

Harappa Education, which was acquired by upGrad for $38 Mn in July last year in a mix of cash and share deal, is another such example. upGrad recorded an impairment of goodwill worth INR 175 Cr (about $22 Mn) post this acquisition. 

The startup’s adjusted EBITDA loss came in at INR 558 Cr in FY23 as against INR 572 Cr from previous year. 

Where Did upGrad Spend?

The startup’s overall expenses increased 56% to INR 1,938 Cr from INR 1,241 Cr reported in the previous fiscal year.

Employee Benefit Expenses: The edtech startup spent INR 707 Cr on employee benefits in FY23, an increase of 80% from INR 393.7 Cr in the previous fiscal year. Employee benefit expenses comprise employee salaries, PF contribution, and ESOP costs and was the biggest contributor to the startup’s total expenditure during the year under review.

Advertising Expenses: The edtech startup managed to reduce its marketing expenses by 8% to INR 371.4 Cr in FY23 from INR 403.7 Cr in the previous fiscal year. 

University Fees: upGrad’s university fees jumped 70% to INR 132.7 Cr from INR 77.8 Cr in the previous fiscal year.

In June this year, upGrad announced its foray into the Pacific region with the establishment of its first offline medical institute in the Republic of Vanuatu. Called the upGrad Institute of Medical Sciences (UIMS), the college will train students in modern-day clinical competencies and impart medical skills. 

upGrad has raised over $600 Mn to date and counts marquee investors such as Temasek, International Finance Corporation, and IIFL among its investors. It entered the coveted unicorn club in August 2021 after raising funding of $185 Mn at a valuation of $1.2 Bn. In June last year, the startup’s valuation catapulted to $2.2 Bn after raising $210 Mn led by ETS Global.

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“We have just two months of cash runway,” the top management of Kalaari Capital-backed edtech upskilling startup AlmaBetter told its employees in September and announced pay cuts across the board. 

As per the plan, employees earning above INR 50,000 per month had to take a salary cut of 50% while those making less than INR 50,000 per month had to take a cut of 25%, multiple sources told Inc42.

The startup said that the deducted salary would be paid later either in cash or the employees may get vested ESOPs, they added.

AlmaBetter CEO Shivam Dutta confirmed the pay cuts to Inc42, saying it was a part of the ‘regular salary review process’. However, he denied that the startup has only two month of cash runway.  

“This is part of our regular salary review process to match the salaries to market standards. As part of this process, we had a mix of salary deductions as well as salary increments. ESOPs were also provided to bring more ownership within employees,” Dutta said.

One of the sources cited above said that the pay cuts were necessary to avoid layoffs.

However, the startup undertook a layoff exercise in the very next month. It sacked around 35 employees and, in an email, cited a “financial crunch” as the reason behind it. Inc42 has reviewed the email sent to the employees.

Dutta, however, said that only 22 employees, or about 8% of the total workforce, were laid off.

As per the sources, the layoffs impacted the programme, editing, marketing, and student operations teams, while the entire corporate communications team was sacked. Meanwhile, Dutta claimed that the layoffs were primarily driven by AI-enabled automation on the student operations front.

Commenting on the layoffs, one of the sources said, “This could have been handled in a better way. They could have informed us prior. We understand they don’t have money to pay us, but they could have been professional about this.” 

The startup offered basic pay of two months to compensate for job losses. However, there was a catch. The severance would be paid on March 31, 2024, almost five months after the layoffs, as per an email sent by the startup. Inc42 has reviewed this email also.

“What will the employees do with the severance pay in March? They need the money now to pay their current bills,” one of the sources said.

Rejecting the claims, Dutta said, “Severance has already been paid out to those who have successfully got asset clearance. The last day of submission of assets and the payout of severance has been kept as March 31, 2024.”

Journey Of Pandemic-Era Child AlmaBetter 

Founded by IIT Kharagpur and IIT Delhi graduates Shivam Dutta, Vikash Srivastava, Ravi Kumar Gupta, Arshyan Ahsan, and Alok Anand, AlmaBetter is among the new-age upskilling startups founded at the peak of the Covid-19 pandemic. 

At the outset, the edtech offered upskilling courses under domains such as data science and software development to college students and working professionals. Later, it forayed into providing post-graduate programmes/courses in computer science.

In November last year, the startup raised $2.7 Mn in its seed round from Kalaari Capital. The round also saw participation from 15 angel investors, including Vidit Aatrey and Sanjeev Kumar of Meesho, Rajesh Yabaji of Blackbuck, and Varun Alagh of Mamaearth. 

However, within a few months, the startup found itself grappling with a cash crunch due to its high cash burn (more on this later). Following this, AlmaBetter resorted to layoffs to extend its runway. 

In March this year, Inc42 learnt that the startup laid off around 20 employees, mostly from the growth team. Back then, when Inc42 reached out to AlmaBetter, Dutta said, “… As a part of regular performance evaluation across teams, a few employees were let go due to their underperformance or failure to fully embrace the company’s ethos and values.” 

In a bid to shore up its revenue, the startup launched its post-graduate courses in data science, artificial intelligence (AI) and software development in July. 

What Led To The Latest Crisis?

While AlmaBetter has yet to disclose its financial statements for FY23 with the Ministry of Corporate Affairs, its FY22 numbers highlight the growing concerns within the startup. In FY22, AlmaBetter posted a net loss of INR 4.2 Cr on an operating revenue of INR 2.2 Cr. The startup’s expenses stood at INR 7.8 Cr during the year, which means its expenses were almost 3.5X its operating revenue.

Besides, one of the sources said that the startup’s revenue model was also flawed. “For some courses guaranteeing 100% placements, AlmaBetter would receive fees only after the placement of its students was done. What this meant was that the company was not making any money from its students enrolled under those programmes for almost a year,” the source said. 

Despite issues plaguing the startup, it has been spending heavily on marketing and promotions to create brand awareness and generate new business, we have been told. 

According to a source, AlmaBetter spent heavily on marketing a product just to scrap it later. Similarly, the startup spent a lot of money on floating a new undergraduate course a few months ago. However, has now pulled the plug on it, Inc42 has learnt.

While Dutta claimed that the undergraduate courses are still being offered on a B2B basis, no such courses are currently listed on the startup’s website. Instead, we found that the startup is increasing the fees for its certification courses from January 1, 2024, citing inflation and operational expenses.

Amid all these, AlmaBetter’s efforts to raise fresh funding have failed so far as investors are willing to invest only at its seed round’s valuation or a valuation below what the founders are seeking, the sources claimed.

While the startup’s efforts to raise a bridge round have failed so far, existing investor Kalaari Capital is willing to commit a fresh fund if AlmaBetter can onboard a new investor, they said.

However, Dutta, without giving any additional clarification, called the funding-related comments “false information”.

Meanwhile, AlmaBetter is in discussions with other edtech startups for a potential acquisition, as per the sources. However, Dutta dismissed this, too.

“They are doing everything to keep the company afloat,” one of the sources said, explaining the edtech platform’s current condition. 

Meanwhile, Dutta said that AlmaBetter is in the “best shape as compared to other edtech players” and is on the verge of turning profitable by the next quarter. Without disclosing absolute numbers, he said, “FY23 saw 4X YoY growth and FY24 is expected to have 3X YoY growth”.

[Edited by Rai Vinaykumar]

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Bengaluru-based edtech startup Simplilearn fired around 200 employees citing their poor performance over the last few days, sources told Inc42.

The layoffs affected employees at various levels, with the sales team being hit the hardest. Other departments, including marketing and operations, were also impacted by the layoffs, the sources said.

The startup began downsizing last week, starting with vice-president-level positions.

While Simplilearn told the employees that they were being sacked based on their performance, some of the impacted employees claimed that it happened abruptly and the startup hadn’t conducted any performance reviews recently.

“These layoffs were unexpected. Although the company cited the reason for this as poor performance, no performance review was conducted earlier. All of it happened suddenly. Now the existing employees are also under high pressure to get more sales,” one of the employees said.

The impacted employees were suddenly called for a one-on-one interaction with the human resources department and informed that they were being laid off, the sources said.

Meanwhile, without confirming the number of the laid off employees, Simplilearn said that performance-based exits do take place. “Our business is going as per the plan, we are hiring on a need basis across teams. Sometimes, performance-based exits do occur,” a company spokesperson told Inc42.

Founded in 2010 by Krishna Kumar, Simplilearn offers online upskilling courses in segments such as cyber security, cloud computing, project management and data science to students and working professionals.

It also offers courses in association with educational institutions and global organisations like IBM, Microsoft, Amazon, Meta, and KPMG.

In 2021, private equity firm Blackstone acquired a majority stake in the startup for $250 Mn. Last year, Simplilearn raised $45 Mn in a fresh funding round led by venture capital firm GSV Ventures.

Simplilearn’s consolidated net loss surged 26X to INR 149.9 Cr in FY22 from INR 5.6 Cr in the previous fiscal year. Total revenue stood at INR 492.8 Cr as against INR 346 Cr in FY21.

The layoffs come at a time when edtech has been among the hardest-hit sectors due to the ongoing funding winter. Edtech startups have laid off nearly 10,000 employees since the beginning of 2022.

Recently, edtech unicorn PhysicsWallah laid off around 70-120 employees. While reports suggested that the move was part of a cost-cutting exercise, the company claimed that the layoffs were due to performance issues.

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Troubled edtech startup BYJU’S, which is facing an acute capital crunch, has not deposited the provident fund (PF) in the EPFO accounts of its employees since August this year despite deducting the amount from their salaries, sources told Inc42.

Data sourced from the EPFO portal confirmed these claims. As per EPFO data, BYJU’S last credited PF for 23,533 employees for the months of May and July in August this year. 

“When I asked for clarification, they simply said they have processed the amount but there is a technical glitch. None of the employees have received the EPF/VPF amount since August of 2023,” said one of the sources mentioned above.

The company deposited a PF amount of INR 63.8 Cr for the first six months of 2023 as against INR 200.6 Cr for the entire 2022.

It is pertinent to note that BYJU’S has laid off thousands of employees since 2022 as part of its efforts to cut costs. This has led to dissatisfaction within the employees, and now, the decision to withhold PF payments has only added to the disgruntlement, as per the sources.

An email sent to BYJU’S seeking comments on the development didn’t elicit any response till the time of publishing this story.

A source close to the company told Inc42 that BYJU’S is trying to fix the issue at the earliest but refused to give any deadline for it.

This is not the first time that BYJU’S has been accused for being late in crediting the PF amount to the EPFO portal. Earlier this year, the company deposited the PF payments of its employees, which were pending for months, after being directed by the EPFO to do so.

The Precarious State Of BYJU’S 

Earlier this week, it was reported that BYJU’S failed to clear the November salaries of about 1,000 employees due to an “unexpected technical glitch”. However, hours after the matter came to light, BYJU’S said it cleared the pending salaries.

Meanwhile, the situation at the company, which is involved in a legal battle with its $1.2 Bn Term Loan B lenders, is so dire that founder Byju Raveendran has reportedly pledged two houses of his family and an under-construction villa to borrow $12 Mn to pay employee salaries.

Besides this, the startup has also reduced the notice period for existing employees to save costs. In September this year, Inc42 also reported that BYJU’S planned to sack around 4,000 employees as part of its newly appointed India CEO Arjun Mohan’s plan to bring the business back on track.

Recently, the Board of Control for Cricket in India (BCCI) also dragged the edtech giant to the National Company Law Tribunal (NCLT) for a pending payment of about INR 158 Cr. 

The startup has also received a show cause notice from the Enforcement Directorate (ED) for alleged FEMA violations to the tune of INR 9,000 Cr.

As per reports, certain shareholders have even asked Raveendran to step aside from the day-to-day operations of BYJU’S. The only respite that the edtech giant seems to have got is the interest that it has received from Joffre Capital and Duolingo for buying its subsidiary EPIC! Creations. As per reports, BYJU’S is banking on the sale of EPIC! to payback a part of its Term Loan B and get over the current financial crunch.

The post BYJU’S Financial Crisis: Employee PF Credit Stopped Again Even After Deduction From Salaries appeared first on Inc42 Media.

While the homegrown edtech sector experienced a severe slowdown this year, Unacademy cofounder and chief executive officer (CEO) Gaurav Munjal claims that the edtech unicorn managed to reduce its cash burn by 60% in 2023.

Ahead of the eighth founding anniversary of Unacademy, Munjal took to X to share some details about the company’s performance in 2023. “This year was a good year for us. And we have a lot to be happy about,” said Munjal.

He said the company’s current cash reserves extend to more than four years. 

This came hours after Entrackr, quoting the company’s internal memo, said that Unacademy had INR 1,800 Cr in their bank and has a runway of four years. This translates into a cash burn of nearly INR 37.5 Cr per month for the edtech giant. 

To be sure, FY24 also saw the first quarter in which Unacademy turned cash flow positive, driven by a reduction in cash burn.

While noting that Unacademy’s online business degrew 30% in 2023, Munjal said that the edtech giant’s EBITDA improved by 87%. Munjal also added that its offline business, Unacademy Centres, saw its learners grow to 32,000 in 2023 from 6,000 in 2022. 

Lastly, Munjal also said that the unicorn’s SaaS platform Graphy grew by 30% and is very close to profitability. Concluding his post, the CEO said that edtech is ‘awesome’ and is ‘here to stay’.

The spell of positive news comes after a tough 2022 and 2023 for the startup. The edtech giant fired thousands of employees to stabilise itself, cut costs and streamlined operations to focus on achieving profitability. 

Just in October, Unacademy fired around 20-30% of its workforce to focus on its offline business. However, a representative of Unacademy stated that the job cuts happened on the basis of performance and had nothing to do with layoffs or revenue growth plan.

The edtech major also saw several top exits, including CFO Subramanian Ramachandran and COO Vivek Sinha.

While Unacademy is yet to file its financial statements for FY23, the startup reported consolidated losses to the tune of INR 2,848 Cr in FY22, up 85% year-on-year (YoY) from INR 1,537 Cr in FY21. On the other hand, revenue from operations also jumped more than 80% You to INR 719 Cr during the year ended March 2022. 

This is largely in line with the situation for the overall edtech ecosystem. Other major players in the space, especially BYJU’S, are also plagued by various problems. This has resulted in 22 Indian edtech startups laying off nearly 10,000 employees since last year, as per Inc42’s Layoff Tracker. 

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Edtech giant upGrad’s revenue almost doubled during the year ended March 31, 2023. The startup said its revenue soared 96% to INR 1,194 Cr during the financial year 2022-23 (FY23) from INR 608 Cr in the previous fiscal year on the back of a strong growth in its paid-learners base.

upGrad said while its gross revenue stood at INR 1,530 Cr, it was adjusted after the startup moved to the widely accepted IndAS accounting standard during the year under review, in line with its long-term public listing plans. It added that its revenue would have been even higher in FY23 if not for deferment of collected revenue of INR 443 Cr. The startup carried forward this revenue into the next financial year as some of its mergers and acquisitions did not consolidate in FY23.

It must be noted that upGrad was on an acquisition spree in 2022, buying a number of edtech companies like data science institute INSOFE, Harappa Education and corporate training solutions provider Centum Learning.

Meanwhile, the strong growth in revenue helped upGrad marginally reduce its adjusted EBITDA loss to INR 558 Cr during the year under review from INR 572 Cr in FY22.

Founded in 2015 by Ronnie Screwvala, Mayank Kumar, Phalgun Kompalli and Ravijot Chugh, the Mumbai-based unicorn offers higher education courses and skilling programmes in collaboration with universities. It is backed by the likes of Temasek, Murdoch’s Lupa Systems, International Finance Corporation, and IIFL. 

upGrad competes with the likes of Coursera, Udemy and Simplilearn. 

The startup said its overall learner base crossed the 10 Mn mark in FY23, with the number of paid learners growing 54% year-on-year (YoY). It claimed it helped 55K learners transition into better job opportunities in the last financial year. 

Where Did upGrad Spend?

upGrad’s non-cash expenses stood at INR 584 Cr in FY23. Of this, goodwill write-down costs stood at INR 410 Cr, while depreciation and amortisation expense amounted to INR 140 Cr. Finance costs came in at INR 34 Cr.

Consequently, its net loss rose over 76% to INR 1,142 Cr from INR 648 Cr in FY22.

Among the major direct costs, upGrad was able to reduce its marketing costs to INR 371 Cr during the year under review from INR 403 Cr in FY22. At 36% of the total expenditure in FY23, employee costs continued to account for the biggest chunk of expenses. Employee expenses stood at INR 707 Cr in FY23 and also included some non-cash ESOP costs.

Direct costs, including content development expenses, content delivery costs, and university fees, grew 1.8X to INR 382 Cr from INR 211 Cr in FY22 as the company continued its investments in content development, content delivery, and university fees, in line with the growth in its revenue.

Business Outlook

upGrad cofounder and MD Kumar, in the statement, said that while the startup respects profitable growth, it aims to strike the right balance as it continues to make new investments with an eye on the long-term potential of skilling, careers and job placements, formal learning and workforce development space.

“Our gross margins are close to 80%, we have zero net debt and have one of the best ROCE (Return on Capital Employed) ratios for a new-age company, having raised a tight $265 Mn since inception. We are tracking H2 of FY24 and onward to be operationally profitable on an ongoing basis and will continue to look for organic, linear and non-linear opportunities for growth in Asia and around the world,” Kumar said. 

Highlighting its strong enterprise play, upGrad claimed to have served 1,110 clients in FY23 and said it expects to retain at least 75% of these clients in FY24. 

The edtech startup said its enterprise arm has expanded its global footprint and now expects international revenue to account for 21% of its total revenue in FY24 as against 10% in FY23.

The startup also claimed that it did not undertake any ‘material’ layoffs in the last 12-18 months, during which a number of edtech unicorns fired employees amid the ongoing funding winter. However, it is important to note that upGrad laid off 40% of the workforce at Harappa Education in January 2023. It also fired 120 employees at its video learning arm upGrad Campus in March this year. 

upGrad stated that the layoffs affected less than 4% of its total workforce (or 193 employees), out of its overall headcount of around 5,100.

It is pertinent to note that upGrad is among the few major edtech startups in India that have revealed their financials for FY23. In October, Tiger Global-backed Classplus disclosed that it recorded a 4X jump in its operating revenue to INR 102.04 Cr in FY23 from INR 25.9 Cr in the previous year. The edtech soonicorn’s net loss also grew 57% to INR 256.6 Cr from INR 163.5 Cr in FY22.

The post upGrad’s FY23 Revenue Almost Doubles To INR 1,194 Cr, Adjusted EBITDA Loss Shrinks appeared first on Inc42 Media.

Edtech giant BYJU’S saga of troubles continues unabated. The National Company Law Tribunal (NCLT) has now issued a notice to the decacorn in connection with a petition filed by the Board of Control for Cricket in India (BCCI).

In an order issued on November 28, the Bengaluru bench of the insolvency tribunal admitted BCCI’s petition that pertains to a dispute over the sponsorship rights of the Indian cricket team’s jerseys. 

The tribunal, comprising Member (Technical) K Biswal and Member (Technical) Manoj Kumar Dubey, directed the edtech major to furnish a reply in connection with the case within two weeks (December 12) of the issuance of the order. It also allowed the cricket board to file a rejoinder, if any, in the matter by December 19. 

“Issue notice to the respondent (BYJU’S)…. Two weeks is granted to the respondent to file reply and one week thereafter is granted to the Applicant to file rejoinder, if any, after duly serving the copy on the other side,” noted the NCLT bench. 

The case has now been listed next for hearing on December 22. 

At the heart of the matter is the plea filed by BCCI that claims dues to the tune of INR 158 Cr from BYJU’S as an operational creditor under section 9 of the Insolvency & Bankruptcy Code 2016. The order also noted that BCCI issued a general notice to BYJU’S through an e-mail on January 6, 2023 with a default amount of INR 158 Cr, excluding TDS.

The matter pertains to 2019, when the edtech major took over the mantle of the sponsorship of the Indian cricket team from OPPO till March 2022. BYJU’S took over the rights in the middle of the smartphone brand’s tenure and the former stayed on for two-and-a-half years. 

The edtech major eventually sought an extension of the sponsorship for an additional year till 2023-end, reportedly for a cumulative sum of $55 Mn. 

The deal fell apart as BYJU’S unceremoniously exited its jersey sponsorship deal with the BCCI in December 2022 as financial and regulatory troubles began to pile up. Last month, it emerged that BCCI had filed a case against the company. In response, the company said that it was in discussions with the cricket board and was looking to settle the matter soon

As the funding winter began to unravel, the startup hit the headlines for all the wrong reasons. As capital became scarce, the company began a cost cutting exercise, which saw jobs of more than 5,500 employees being axed beginning 2022 with another 4,000 on the way. 

Meanwhile, losses continued to balloon even as a debt crisis, involving $1.2 Bn Term Loan B (TLB), loomed over the company. BYJU’S also publicly sparred with its lenders even as acquisitions pummeled its financial health. 

The company has also faced a regulatory crackdown as the Enforcement Directorate (ED) has accused BYJU’S of flouting FEMA norms. The decacorn has also been under the spotlight for delayed financials which saw the exodus of auditor Deloitte and three key board members earlier this year. 

While the company released its partial financial results for FY22 just a few months back, there seems to be no clarity on FY23 numbers. It is now preparing for its upcoming annual general meeting (AGM) slated for December 20, where it will seek shareholder approval for audited FY22 financial statements.

The post BCCI Vs BYJU’S: NCLT Issues Notice To Edtech Giant Over Jersey Sponsorship Deal appeared first on Inc42 Media.

Troubled edtech giant BYJU’s, which is fighting fires on multiple fronts, has convened an annual general meeting (AGM) to discuss a host of issues, including seeking approval for its much delayed financial statements for FY22. 

As per a copy of the notice sent to shareholders and accessed by Inc42, the company has scheduled the meeting on December 20 at 6 PM. 

“Notice is hereby given that the 11th AGM of the members of Think & Learn Private Limited will be held on Wednesday, 20th day of December 2023 at 6.00 P.M. (IST) through video conferencing or other audio-visual means…,” stated the notice. 

The meeting has been called to consider and seek approval of the shareholders for the audited financial statements of FY22. Besides, the company also plans to seek approval for the appointment of MSKA & Associates as the statutory auditors of the company for the next five years. 

In addition, the company will also place before the board the proposal for approving the remuneration of its cost accountants, BY & Associates, for the period between FY22 and FY24. 

This comes hours after it was reported that BYJU’S delayed the salaries of 1,000 employees for the month of November due to an “unexpected technical glitch”. Hours later, a company spokesperson told Inc42 that it cleared the payments of the employees in the first half today.

Besides, Bloomberg reported today that BYJU’S cofounder and chief executive officer (CEO) Byju Raveendran had reportedly pledged three properties to pay employee salaries.

The latest development comes days after Dutch investor Prosus slashed the valuation of its stake in BYJU’S to under $3 Bn, down 85% from $22 Bn valuation that BYJU’S was pegged at during the last fundraise.

Prosus’ interim chief executive Ervin Tu, during an earnings call, also added that BYJU’S was facing multiple challenges and that the investor was working to get the startup ‘back on track’.

BYJU’S has been mired in multiple troubles over the past two years. The company recently came under regulatory scrutiny after the Enforcement Directorate (ED) alleged that it violated FEMA rules. The Board of Control for Cricket in India (BCCI) has also dragged the edtech giant to the NCLT over a dispute pertaining to sponsorship rights for the Indian cricket team’s jerseys.

However, the trouble runs deeper. BYJU’S is mired in heavy losses and a looming debt crisis involving a $1.2 Bn Term Loan B (TLB). It has also undertaken multiple rounds of layoffs and cost-cutting measures to tide over liquidity challenges. 

It is also under fire for multiple delays in releasing its financial statements for the financial year 2021-22 (FY22). Last month,

 for FY22. The parent Think and Learn Private Ltd raked up standalone EBITDA loss of INR 2,253 Cr in FY22 against an EBITDA loss of INR 2,406 Cr in FY21.

The post BYJU’S Convenes AGM On Dec 20 To Approve Audited Financial Statements For FY22 appeared first on Inc42 Media.

Allen Career Institute has acquired AI-led doubts solving platform Doubtnut with an eye on building technology-led learning solutions focused on improving students’ learning outcomes.

In a statement, Allen said that Doubtnut’s team will continue its focus on building doubt resolution experience for students.

Founded in 2017 by IIT-Delhi alumni Tanushree Nagori and Aditya Shankar, Doubtnut offers a multilingual online learning platform using technologies such as image recognition, natural language processing and proprietary AI/ML algorithms. It provides video-based solutions to students’ queries and currently has a monthly reach of 32 Mn students across digital apps, websites and YouTube channels.

While the financial details of the deal were not disclosed, Entrackr said it was a fire sale for about $10 Mn.

Allen said it will provide its enriched curriculum and academic offerings to Doubtnut’s students and cater to their needs for a better education.

Commenting on the acquisition, Allen CEO Nitin Kukreja said, “Timely and effective resolution of doubts is a core consumer need in education. Doubtnut’s platform will allow us to greatly enhance the learning experience for our students. We are also excited by the prospects of offering Allen’s high quality academic products to a wider audience.”

Founded by Rajesh Maheshwari in 1988, Allen Career Institute is a test-prep brand that has a pan-India base with more than 200 classroom centres in 53 cities. The institute offers a range of programmes, including classroom coaching, distance learning, online tests, and study material, tailored to the needs of students at different levels.

Doubtnut counts big names like Peak XV Partners, Omidyar Network India and Waterbridge Ventures among its investors. The platform last raised INR 224 Cr (about $31 Mn) in a round led by Hong Kong-based venture capital firm SIG Investments and James Murdoch’s Lupa Systems in 2021.

The development comes at a time when the edtech ecosystem is reeling due to a decline in demand and capital crunch due to the ongoing funding winter. This has resulted in a number of edtech unicorns like BYJU’S, Vedantu and Unacademy laying off employees in the last two years.

Meanwhile, Allen has been looking to further strengthen its position in the education sector by making the most of the slowdown in the edtech space. Last year, it also launched its digital vertical – Allen Digital.

Earlier this year, Allen appointed Meta executive Abha Maheshwari as the CEO of Allen Digital to build digital and tech teams in Bengaluru to help create digital-first products for the students.

Last year, Allen was also involved in a legal dispute with Unacademy regarding the recruitment of teachers for its offline coaching centres. The conflict unfolded as Unacademy sought to enlist instructors associated with Allen.

The post Allen Acquires Peak XV-Backed Doubt-Solving Edtech Platform Doubtnut appeared first on Inc42 Media.

Update | 04:15 PM, December 4

Hours after the publishing of this story, a BYJU’S spokesperson told Inc42 that the edtech firm cleared the payments of the employees in the first half of the day.

Original Story | 10:58 AM, December 4 

Embattled edtech startup BYJU’S has delayed the November salary of around 1,000 staff, citing an “unexpected technical glitch”.

The beleaguered company’s salary cycle resets on the first day of each month.

The company assured those impacted that the overdue sum would be credited by Monday (December 4), ET reported.

The affected employees fall under Think & Learn, the parent company of BYJU’S. However, this situation does not extend to its test prep subsidiary Aakash Institute.

“We have noticed a delay in processing salary for some limited employees (<5%) due to an unexpected technical glitch. The issue is being rectified over the weekend and payment will be processed by Monday,” BYJU’S spokesperson told Inc42.

The delay in November salaries at BYJU’S is affecting employees across various levels within the organisation. As per the report, the company is currently working on securing new financing to address the delay and ensure that fixed costs are managed smoothly without any disruptions.

This comes at a time when Dutch investor Prosus has marked down the value of its stake in BYJU’S, taking the valuation of the troubled edtech firm to under $3 Bn. This is a sharp decline of over 85% from $22 Bn, the valuation of BYJU’S during its last fundraise.

During its earnings call, Prosus interim chief executive Ervin Tu said BYJU’S has been facing multiple challenges and Prosus, along with the edtech giant’s investors, has been helping the startup get back on track.

BYJU’S seems to be contending with a series of challenges beyond the minor concerns of a valuation markdown.

Recently, the Board of Control for Cricket in India (BCCI) brought BYJU’S to the National Company Law Tribunal (NCLT) over a dispute concerning sponsorship rights for the Indian cricket team’s jerseys.

Besides, the Enforcement Directorate (ED) has issued show cause notices to BYJU’S and its founder, Byju Raveendran, regarding alleged Foreign Exchange Management Act (FEMA) violations amounting to over INR 9,000 Cr.

Meanwhile, after multiple delays in releasing its financial statements for FY2021-22, BYJU’S released some numbers for its core operations last month. Think and Learn Private Ltd reported an EBITDA loss of INR 2,253 Cr in FY22, as against an EBITDA loss of INR 2,406 Cr in FY21.

The post BYJU’S Delays November Pay Of 1K Staffers Citing Technical Glitch appeared first on Inc42 Media.

Dark clouds have circled BYJU’S all through the past two years. The edtech giant, once heralded as a beacon for Indian tech and innovation, has had a monumental slip and cofounder and group CEO Byju Raveendran is facing his biggest test so far.

While there is growing pressure on Raveendran to reduce operational involvement as per reports this week, the company is also battling a huge image crisis. Today, instead of being an example of how to scale up, BYJU’S has become an example of what startups ought not to do.

But before we delve into these lessons for startups from the BYJU’S journey, let’s take a few minutes to look at some of the top stories from our newsroom this week:

• BharatPe’s Super App: With its product expansion in recent months, BharatPe is pulling into the fintech super app race with the likes of Paytm, PhonePe, CRED & Co. But unlike these rivals, the company has taken a B2B first approach; will it pay off? 
• Decoding APAAR ID: India’s new Aadhaar-like student ID system has the potential to completely revolutionise the education sector just like UPI did for fintech. We dive into the ABC of this new paradigm.
• Taj Breach Explained: The data breach at Taj Hotels which is said to impact over 1.5 Mn customers underscores how critical cybersecurity is today for even the biggest companies, but what can be done to fix this?

Five Lessons From BYJU’S 

As if months of stories and speculation about dealing with lenders, cash crunch, layoffs, departures of key personnel and other corporate governance lapses were not enough, three separate reports this week have worsened the year for BYJU’S:

• First, Anil Goel, the group CTO and president of technology, announced his departure from the company
• Then, the Board of Control for Cricket in India (BCCI) dragged the edtech decacorn to the National Company Law Tribunal over a sponsorship matter
• And finally, Netherlands-based Prosus marked down the value of its investment in the edtech giant, which theoretically means BYJU’S is now valued at $3 Bn, a steep fall from the previous $22 Bn

By themselves, these developments are not significant in nature, but given what has transpired in the months prior, the question is how long Raveendran can withstand pressure. But more importantly, what can startups learn from the edtech giant’s slide?

We spoke to industry stakeholders to get an idea of what went wrong and how other startups can avoid these pitfalls. Here are five things we learnt:

‘Go Tech-Heavy, Not People-Heavy’

There’s a world of difference in scaling up using technology, rather than throwing people at the problem. Tech companies are supposed to have great economies of scale, but BYJU’S banked on tens of thousands of employees to support the scale, which broke this promise.

“It also created immense pressure on the sales teams at BYJU’S to keep selling more and more to justify their own costs. The company should have seen much earlier that this was unsustainable in the long run and looked for a tech-based solution like they did in late 2022,” says one Bengaluru-based fund manager for a US-based firm.

The pressure also resulted in accusations of toxic work culture, a badge that BYJU’S has not been able to shake off even now, in its now leaner avatar. Some reports indicate over 10,000 employees have been laid, though the company insists it has only laid off 2,500 employees Another 4,000 are expected to be let go in the next few months.

Of course, BYJU’S is not the only company to lay off employees since last year, and most companies have rationalised hiring since then, so in some ways, this is one harsh lesson that startups have already learnt.

‘Acquire Only What You Can Sustain’

Another major problem was BYJU’S failure to integrate the acquired companies Aakash, WhiteHat Jr, Great Learning and others well into the main business. This has created a lopsided reliance on one or two companies such as Great Learning and Aakash and these are pretty much the only lucrative part of BYJU’S for investors.

The reports of the edtech giant putting up Aakash, Great Learning and US-based Epic on sale shows that these acquisitions are merely assets and not an indispensable part of BYJU’S. This also resulted in massive marketing costs for BYJU’S as these individual products had different acquisition channels and strategies.

As many have pointed out in the past, a monolithic infrastructure would have enabled a better mix of unit economics and improved economies of scale for BYJU’S. One can even say that the founders of the acquired companies were not brought into the leadership fold as one might expect after an acquisition. This meant those who were closest to the original business were left without a say.

‘Be Serious About Corporate Governance’

It’s one thing to miss a filings deadline by a few weeks or months, another to be two years behind the ball, as BYJU’S has.

“Look at most big startups today; even those who were always a few months late have pulled up their socks. And many have streamlined their financial reporting to eliminate delays. And now founders cannot stall VCs for MIS numbers either as that is seen as a red flag,” says a Bengaluru-based corporate accounting and audit expert.

In other words, no one wants to be in a position like BYJU’S where even the government has asked for filings and investors have been left in the dark about the financial performance of one of their biggest investments.

A fellow Benglaluru-based edtech founder told us investors now tend to paint edtech companies with the same brush as BYJU’S and tend to suspect claims even when there is adequate reporting.

‘Pay Attention To Debt’

Individuals need to plan for a rainy day, companies need to plan for a rainy few years.

In 2021, BYJU’S — like Pharmeasy — made a bold bet at a time when bank lending rates were low (zero interest rate policy or ZIRP) and took a $1.2 Bn loan. Most of this money went to acquire Aakash for nearly $1 Bn. But as we said above, the acquisition has not exactly been a success.

Like BYJU’S, Aakash has also not filed its FY22 and FY23 numbers, so we don’t know its financial state for certain. Plans to raise funds by selling stake in Aakash have also hit a wall due to this gap.

But what we do know is that the debt has become a burden on BYJU’S. It has resulted in a long-drawn battle with lenders in the US and plenty of allegations of impropriety, leading to more pressure on Raveendran.

The uncertainty around the closing terms of the deal have left Aakash’s original promoters with several doubts about the Raveendran’s leadership capabilities. There was even speculation that Aakash Chaudhry would return to his role as CEO of Aakash, and wrest control of the company.

In other words, BYJU’S best bet to get out of the capital crunch has also lost faith in the company.

‘Have A Vision And A Plan To Execute It’ 

“Whenever you spread yourself too thin with many verticals, you defocus on your core and that’s exactly what BYJU’S did in 2020 and 2021,” said the edtech founder quoted above.

When there was a new trend or theme in edtech, BYJU’S went out and acquired someone that fit the bill. The core platform of BYJU’S stagnated and barely saw any innovation as a result. BYJU’S had a first-mover advantage in online learning in many ways, but this lead was squandered as the company went chasing the shiny new thing, repeatedly.

As it became clear that online coding was picking up, it acquired WhiteHat Jr, even though the platform which was said to have rather basic features might not have justified the $300 Mn price tag. Similarly, when offline coaching was bouncing back in 2021 or when higher education was gaining traction, it acquired Aakash and Great Learning.

Instead of building slowly and with the right principles, BYJU’S went in with wads of cash and no real plan. Truly, the lack of vision has been a major problem for BYJU’S and this question also needs to be posed to investors in the company.

“Raveendran was the brand that pulled in people in the early days, but who was thinking about the long-term? Shouldn’t investors have asked for a plan beyond acquiring XYZ company?” added the fund manager quoted earlier

Is it too late for BYJU’S to answer these questions? Perhaps the new India CEO Arjun Mohan can change things. But BYJU’S missteps are unlikely to be forgotten soon. Indeed, they can be a guiding light for thousands of other startups looking to scale up.

2023 In Focus: Inc42’s Review Series Is Back

As 2023 draws to a close, it’s time to reminisce about everything that shaped this year for the Indian tech & startup ecosystem— from the key deals to breakthroughs from trends to controversies galore and more.

As every year, Inc42 is back with the 10th edition of its annual review series — 2023 In Review!

Bookmark this page to see what we have in store!

Sunday Roundup: Startup Funding, Tech Stocks & More 

• Funding Goes Flat: After a brief resurgence in early November, weekly startup funding has plateaued in the past couple of weeks. This week’s tally of $62 Mn is barely higher than the total funding seen in the previous week.
• UPI Boom Continues: The number of UPI transactions crossed the 11 Bn mark for the second consecutive month in November, with a total of 1,124 Cr transactions recorded.

• Alipay Exits Zomato: The Chinese payments group sold its entire 3.44% stake in Zomato for a cumulative INR 3,336.7 Cr, booking a $40 Mn in profit for its investment,
• Mobikwik IPO Back? The fintech startup has reportedly revived its IPO plans and is looking to file its papers for a $84 Mn public listing this month,

That’s all for this week folks. We’ll be back next week with another roundup as we close the curtains on 2023.

Don’t forget to stay tuned to our social media channels during this time of the year. Join Inc42 on Instagram, X/Twitter and LinkedIn for the latest news as it happens.

The post Lessons From BYJU’S appeared first on Inc42 Media.

Edtech decacorn BYJU’S on Wednesday (November 29) termed show cause notices issued by the Enforcement Directorate (ED) ‘solely technical in nature’ and asserted that it is confident of ‘successfully dealing’ with the matter. 

In a statement, the company said that the queries raised by the ED largely arose from delayed statutory audit of the financial year 2021-22 (FY22), adding that it had already filed all requisite documents contemporaneously within the prescribed time. 

“The queries received in the notice are solely technical in nature…The company has however filed requisite intimation contemporaneously for all FDI which is received in accordance with the eligibility criteria in law and not affected by the alleged non filing of APR (annual performance reports). The company has also issued/allotted shares within the prescribed time against the FDI so received,” said a BYJU’S spokesperson.

Giving further insights into the ED probe, the company said that the queries received from the agency largely centred around delays in filing APRs. These delays, the edtech giant said, pertained to nearly INR 8,000 Cr worth of overseas direct investments that arose from the late audit of FY22 numbers. 

The edtech giant emphasised that the ED notices did not specify any fines and appeared unbothered about any prospective penalties. In the statement, the edtech major said that it expects fines, if any, in the matter to be nominal. 

“Based on precedent actions by the Adjudicating Authority, we anticipate that the fines, if any, will be nominal. To cite an example, the late submission fee for such reporting delays that can be imposed pursuant to the RBI regulations with respect to APRs is very nominal (INR 7,500) and by no means does the notice denote a fine,” the spokesperson added. 

The company also reiterated that it was completely compliant with all relevant FEMA regulations, and would continue to maintain adherence to existing laws. 

The clarification came a week after the ED shot off show cause notices to the embattled edtech giant over FEMA violations. In its notice, the agency alleged that the company failed to submit documents against remittances made outside India and failed to allot shares against FDI received into the company.

The agency also alleged that the edtech behemoth made ‘significant foreign remittances outside India and investments abroad’ which caused loss of revenue to the exchequer. 

It is pertinent to note that ED conducted search and seizure operations at multiple premises linked to the edtech giant and its founder Byju Raveendran in April this year. During the crackdown, documents related to overseas investments as well as funding raised by the company were seized by the agency. 

The clarification by BYJU’S came on the same day as Dutch investor Prosus marked down the valuation of its stake in the edtech giant, valuing it at under $3 Bn. This is a far cry from the peak $22 Bn valuation that the startup picked up during its last fundraise. 

However, the valuation markdown seems like a small concern for BYJU’S which has been in the news for all the wrong reasons over the last year or so. From a looming debt crisis to the exit of its auditor and board members, BYJU’S has been grappling with fires on multiple fronts. On top of that, it is also under fire for mass layoffs, mounting losses, delays in filing financial statements and the exodus of top leadership.

The post Compliant With Law, Confident Of Dealing With The Matter: BYJU’S On ED’s FEMA Notices appeared first on Inc42 Media.

Dutch investor Prosus has marked down the value of its stake in edtech giant BYJU’S, taking the valuation of the embattled company to under $3 Bn. This is a sharp decline of over 85% from $22 Bn, the valuation of BYJU’S during its last fund raise.

During its earnings call, Prosus interim chief executive Ervin Tu said BYJU’S has been facing multiple challenges and Prosus, along with the edtech giant’s investors, has been helping the startup get back on track.

Tech Crunch was first to report on this development.

Prosus, which owns a 9.6% stake in the Byju Raveendran led startup, has been marking down the valuation of its stake in the startup since the beginning of this year. Its last such mark down in June valued BYJU’S at $5.1 Bn.

Besides Prosus, BlackRock, which owns less than 1% stake in BYJU’S, also slashed BYJU’S valuation earlier this year.

It is also pertinent to note that Prosus’ Russell Dreisenstock resigned from the board of BYJU’S, along with Peak XV Partners’ GV Ravishankar and Vivian Wu of Chan Zuckerberg Initiative, in June this year. 

Later, Prosus said that Dreisenstock’s decision to step down from the board of BYJU’S was taken after it became clear that he was unable to fulfil his fiduciary duty to serve the long-term interests of the company and its stakeholders.

“Despite repeated efforts from our director, executive leadership at BYJU’S regularly disregarded advice and recommendations relating to strategic, operational, legal, and corporate governance matters,” Prosus said in a statement on Dreisenstock’s exit from BYJU’S board.

No End To BYJU’S Troubles 

The valuation markdown appears to be a minor concern for BYJU’S at this point, considering the multiple challenges it is facing right now. On Tuesday, it was reported that the Board of Control for Cricket in India (BCCI) has dragged BYJU’S to the National Company Law Tribunal (NCLT) in relation to a dispute around the sponsorship rights of the Indian cricket team’s jerseys.

Besides, the Enforcement Directorate (ED) has sent show cause notices to BYJU’S and its eponymous founder Byju Raveendran in regards to alleged FEMA violation worth over INR 9,000 Cr.

Multiple delays in releasing its financial statements for the years FY22 and FY23, layoffs of thousands of employees, multiple top-level exits, and a potential debt crisis have further added to the woes of BYJU’S, once the posterboy of the Indian startup ecosystem. 

The post Prosus Marks Down BYJU’S Valuation To Under $3 Bn From Peak $22 Bn appeared first on Inc42 Media.

In another trouble for embattled BYJU’S, the Board of Control for Cricket in India (BCCI) has dragged the edtech decacorn to the National Company Law Tribunal (NCLT). 

As per the details available on the NCLT website, the case was filed in November this year. 

The case likely pertains to the dispute around the sponsorship rights of the Indian cricket team’s jerseys, according to The Morning Context, which was the first to report the news. 

The publication quoted a source as saying, “There is no way to be sure about the amount, but I hear it can vary between INR 100 Cr and INR 250 Cr.”

Meanwhile, a BYJU’S spokesperson told Inc42 that the company is in discussions with the cricket board and expects to settle the matter soon. 

“We are in discussions with the BCCI to settle the matter and we hope to achieve that soon,” the spokesperson said, without giving any additional details about the case.

Troubles Continues Unabated At BYJU’S

While details are still scarce, the story traces its origins to 2019 when BYJU’S took over the sponsorship of the Indian cricket team from OPPO till the end of March 2022. This came after the smartphone brand handed over the remaining term of its sponsorship to the edtech giant after headlining the Indian team’s jersey for two-and-a-half years. 

Subsequently, BYJU’s sought an extension of the sponsorship for an additional year till 2023-end, reportedly for a cumulative sum of $55 Mn. 

However, BYJU’S unceremoniously exited its jersey sponsorship deal with the BCCI in December 2022 amid financial troubles as the funding winter began to hit the Indian startup ecosystem.

Over the course of the next few months, BYJU’S grabbed the limelight for all the wrong reasons. As funding taps ran dry and investors tightened their purse strings, the edtech company began a cost-cutting exercise. Overall, it has laid off over 5,000 employees till date since 2022 and about 4,000 more are expected to face the axe. 

Meanwhile, losses also piled up as BYJU’S acquisitions hammered its financials. The startup recorded a nearly 20X year-on-year (YoY) surge in net loss to INR 4,588 Cr in the fiscal year 2020-21 (FY21), while revenue was almost flat at INR 2,280 Cr. 

Meanwhile, the delay in releasing the financial statements for FY22 and FY23 resulted in heightened investor scrutiny. This delay also led to the departure of auditor Deloitte and, subsequently, three key board members. 

Recently, BYJU’S released parts of its standalone FY22 results but failed to furnish audited financial statements for the period. 

Alongside, there appears to be a looming debt crisis involving its lenders in connection with the $1.2 Bn Term Loan B (TLB). There have also been delays in vendor payments, provident fund payments for laid off employees, and outstanding transactions involving customer refunds. 

Making matters worse seems to be the long line of top-level exits at the company, including those of group chief financial officer (CFO) and India CEO. 

The company is also facing regulatory scrutiny for the delay in filing financial statements. Meanwhile, the Enforcement Directorate recently sent a show-cause notice to the company for allegedly flouting anti-money laundering norms.

The post BCCI Takes BYJU’S To NCLT Over Jersey Sponsorship Dispute appeared first on Inc42 Media.

Google and Peak XV-backed edtech startup Cuemath has become the latest Indian edtech startup to enter the offline segment with the launch of its first physical centre in Gurugram.

The learning centre includes maths classrooms, maths play areas with physical maths manipulatives, and a maths library, the startup said in a statement. It added that the learning centre will be open to K-12 students all seven days a week.

The startup said it aims to open more such learning centres in India and the UAE in 2024.

Founded in 2013 by Manan Khurma and Jagjit Khurma, Cuemath offers maths courses to K-12 students and claims to have a presence in over 80 countries.

Cuemath said it has hired a new set of teachers for the offline learning centre, in addition to its network of over 5,000 maths tutors. 

The development comes months after Cuemath fired 200 employees across two layoff rounds in May and August this year. 

The edtech startup, valued at $407 Mn post-money during its $57 Mn fundraise last year, counts the likes of Google, Peak XV Partners, Lightrock India and Alpha Wave among its backers. 

In the statement, Cuemath said the UK, the US and Singapore have emerged as a significant market for it, besides India, in recent times.

With the opening of the physical centre, Cuemath has joined the likes of BYJU’S, Unacademy, PhysicsWallah (PW) and many other edtech startups which have taken the offline route.

After two years of hypergrowth during 2020 and 2021, during which the pandemic forced schools and colleges to remain closed, the edtech segment has faced two harsh years in 2022 and 2023, resulting in thousands of layoffs. The reopening of educational institutions after the pandemic resulted in a slowdown in the business for edtech companies, as a result of which they have been foraying into the offline market.

Earlier, BYJU’S acquired a stake in Aakash Educational Services Limited (AESL) for nearly $1 Bn to enter the offline coaching space. Meanwhile, the likes of Unacademy and PhysicsWallah are organically expanding their presence offline.

The post Cuemath Follows BYJU’S, Unacademy; Launches First Offline Centre appeared first on Inc42 Media.

The Indian government has transformed the country’s cash-heavy financial ecosystem into a digital haven, thanks to the ubiquitous biometric identity cards (Aadhaar) and universal banking enabled via mobile. What matters most is the ‘inclusiveness’ – even people in remote areas can carry out digital payments without a hitch.

Revolutionising India’s payment system was tough, but the success was phenomenal. Now, the country wants to up its digital play and delve into another core area – education, to be precise. The goal is to build a robust, unified education ecosystem to power human resources and accelerate economic growth.

Built on the core vision of the National Education Policy or NEP 2020 to create a connected and multidisciplinary learning system, a new Aadhaar-like card is in circulation to implement the idea of ‘One Nation, One Student ID’. 

Unboxing The ABC ID: A Digilocker For Authenticated Academic Credentials

Every student in India, from pre-primary to higher education, now needs to register for a unique 12-digit code to digitally store, manage and access all their academic credits, including degrees, diplomas and certificates, training and skilling details, co-curricular accomplishments or any other achievements obtained from formal educational channels and informal learning.

Known as ABC (Academic Bank of Credits) IDs, these Aadhaar-like lifelong student IDs are rolled out by APAAR (acronym for Automated Permanent Academic Account Registry) with the idea of authenticating students’ identities through their Aadhaar IDs and other official documents (overseas students can use passports). 

In simple terms, it is a registry (broadly, a well-managed and regularly updated database) covering the country’s entire education ecosystem (including students, schools, higher education institutes, teachers, and skill providers), allowing students to store the credits earned in the Academic Bank of Credits in the Digilocker.

“The Academic Bank of Credits (ABC) is where the records of academic credits are deposited by institutions/universities. The account number or the ID to access the same will be called APAAR ID, which is permanent (like Aadhaar). Those seeking admission to educational institutions or applying for jobs only need to share their APAAR IDs, and their academic records can be authenticated in seconds,” said Anil Sahasrabudhe, chairman of National Educational Technology Forum, National Board of Accreditation and National Assessment and Accreditation Council and the man behind the APAAR project.

This allows the institution or the company offering admission, job or scholarship to decide quickly. Earlier, candidates had to send in photocopies signed by gazetted officers as part of the authentication process. 

However, access to authenticated digital records means photocopying of documents will no longer be required and the risk of faked records will be minimised. Besides, data can only be uploaded by institutions and universities, which means anyone can rely on this data authenticated at the source. So, depositing credits at the ABC is like building a curriculum vitae.

The APAAR ID of a student is linked to the ABC, a digital repository developed in conjunction with the National Academic Depository (NAD). Whenever academic credits are generated and uploaded by educational institutions, whether after a full academic year, just one semester, or on any specific occasion, these get added to the ABC via the National Credit Framework (NCrF), responsible for the creditisation of all learning outcomes. As the ABC data is deemed official nationwide, access to academic information and verification will be fast and seamless. 

To speed up the procedure, the Union Ministry of Education (MoE) has recently notified state governments and UTs to implement APAAR ID. All registered educational institutions have been asked to procure parents’ consent and keep their students’ degrees and awards in the digital locker to ensure authenticity and safe storage.  

Globally, academic credits are useful in many ways. They keep track of a student’s progress, help evaluate the efficacy of an education system/course, propel one to a higher programme, help get a transfer to another institution without losing previous credits and even enable overseas studies as these are internationally recognised. Most importantly, it is the non-tamperable proof of one’s prior studies and outcomes at each level, often sought by companies, academic institutions and governments for candidate verification. 

Understandably, various critical components, including NCrF, NAD and APAAR, are working in tandem to combine formal, non-formal, and informal learning modes. The aim is to break academic barriers (art, science and commerce streams suffer in silos here), recognise efforts through transparent educational credits for easy mobility across domains, provide multiple entries and exits for smooth progression, and ensure efficient tracking of one’s academic journey.

The Academic Bank Of Credits: The Pain Points It Promises To Eliminate  

For context, India is home to nearly 15 Lakh schools, three lakh secondary and senior secondary schools, 43.8K colleges and a little over 1,100 universities where more than 30 Cr students study.

Given these numbers, verifying credentials for admissions, transfers and employment-related checks remains a time-consuming and expensive affair for institutions and companies. As a result, fake degrees abound throughout the country and go unchecked for years. In the past, the police busted several rackets that used to issue thousands and lakhs of fake degrees and certificates, charging around INR 1 Lakh per document. 

Also, students tend to lose original documents during interviews and verification, and retrieving a copy is not hassle-free. One has to file an FIR reporting the loss and then request the institution concerned to release another copy. It may take weeks or months to repossess the precious document.

However, the ABC (in collaboration with the NAD) can quickly address these challenges by offering instant access to digitised and authenticated credits as often as required. The data can be shared with third parties, eliminating the need for physical document transfers. 

Additionally, when a student completes a course or reaches a significant educational milestone, their academic credits are prepared and directly uploaded to the ABC by the educational institution, thus guaranteeing maximum authenticity compared to other databases. As for changing schools/colleges, the data within the ABC system seamlessly migrates to the new organisation.

Generating an ABC ID is a straightforward process via the DigiLocker platform. After logging in, a student can search and select the educational institution, complete the registration process and set up the unique ABC ID.

Not a duplication of efforts: DigiLocker allows people to store digital documents securely. So why do we need a separate ID to manage educational data?

Speaking to Inc42, Slideshare founder and DigiLocker architect Amit Ranjan said, “DigiLocker is a horizontal platform [to store all sorts of documents such as educational certificates, driving licence, Aadhaar card, vehicle registration papers and more]. But the ABC and NAD are vertical. Developed on the DigiLocker platform, they solve vertical problems and offer solutions like an academic credit system.”

Seconding Ranjan, Sahasrabudhe confirmed that Edulocker is being developed as a vertical on digilocker platform.

How India’s Education Credit System Is Built, Block By Block 

NEP 2020 tabled a comprehensive policy framework, including a system of educational credits to enable inclusive learning, interdisciplinary mobility and reliable tracking of academic progress. Similar to how financial credits determine one’s eligibility for a loan, educational credits would help institutions and companies determine their candidate’s eligibility. 

Two significant initiatives, the National Credit Framework (NCrF) and APAAR have been introduced to achieve these goals and develop an interconnected and flexible environment for multidisciplinarity and diverse learning needs. These initiatives cover all formal, non-formal and informal educational modes and ensure a strategic thrust on technology-driven interventions to streamline the current system, standardise content and set up guidelines for digital teaching-learning.

The new framework will promote a much-needed equivalence between academic and vocational domains. Its key objective is to provide seamless mobility between school education, higher education and vocational training, thus creating various pathways for students to progress and achieve their full potential.

The credit system designed by the NCrF awards 40 credits for a full study year and details credit hours. This helps integrate skill-based/vocational training with mainstream education for better flexibility and outcomes.

“With this initiative, we are going into a granular level, where credits for specific courses offered by institutions (even those like Microsoft and Google) not classified as traditional universities) can be recognised and integrated into what we refer to as the Academic Bank of Credits. This concept is analogous to our banking system, where we deposit and withdraw money as needed. Similarly, we envision an ABC where students can accumulate and redeem their credits when necessary,” explained Sahasrabudhe.

In a country like India, where 16-39% of students drop out at various levels and fail to get recognition for the hours they studied, the ABC system under the NEP 2020 is set to help significantly and earn certifications for their efforts even when they do not complete degrees/diplomas. Most importantly, if they decide to resume studies, they need not begin from scratch, as the credits earned will allow them to start from where they left off.    

Of Data Leaks & Security Breach: Will APAAR-ABC Go The Aadhaar Way?

Only recently, the media was abuzz with the massive Aadhaar leak of 81.5 Cr Indians. Time and again, these data leaks displayed critical information such as name, address, mobile number and more. As Aadhaar is mandatorily linked with PAN, health ID and now with APAAR-ABC, cybersecurity experts say there can be heightened risk to one’s data privacy. Some parents and students have also raised concerns about sharing their Aadhaar details (currently optional) for APAAR-ABC. 

However, the government has reassured that the information furnished by students will not be disclosed to third parties, except for entities engaged in educational activities. For instance, the Unified District Information System for Education Plus (UDISE+) database, which manages student, teacher and school data, will have access to the information. 

Institutions or companies can access APAAR ID data only with the user’s explicit consent, which the student can revoke at any time.

“Aadhaar is necessary for establishing an individual’s authenticity so that the same person does not get two IDs or multiple people are not given the same ID. So, Aadhaar is to be used only to establish the identity of a student. Thereafter, it will never be required. It is only used for verification purposes,” clarified Sahasrabudhe. 

Until the authentication, a provisional ID would be provided, he added.

More importantly, students can stop sharing their information with these entities at any time, and data updates will cease upon the withdrawal of consent. However, previously processed personal data will remain unaffected.

Although data security will likely improve over time, there is still a critical issue. Will the APAAR-ABC ecosystem cover the most vulnerable and the underprivileged – the out-of-school children who have never enrolled? The NEP seeks to reach a 100% gross enrolment ratio for preschool students by 2030, but the data looked grim only a couple of years ago. 

According to a 2019 National Sample Survey Office (NSSO) report, 32 Mn Indian children aged up to 13 never attended school. A Statista report also revealed that between June 2019 and April 2021, only 88.2% of the boys (aged 6-17) and 86.5% of the girls in the same age group attended school in India.

 Again, one in four of the differently abled children in the 5-19 age group never attended any school per a 2019 report by UNESCO and Tata Institute of Social Sciences, while three-fourths of five-year-olds with disabilities were not in school. Add to that the hours women spend on skills training at self-help groups or the education systems run by open schools and minority groups, and the non-inclusive areas tend to get bigger.

Without a comprehensive quantification of all informal channels and their inclusion in mainstream education, even the vastly improved NEP 2020 or a nationwide registration and credit system similar to Aadhaar may not see the desired outcomes.

APAAR To Bring A Breath Of Fresh Air To Indian Edtech Startups

The implications of the APAAR ID for Indian edtech startups are significant and manifold. Experts think APAAR, clubbed with NEP 2020, may drive edtech in India in the same way UPI (United Payments Interface) saw the emergence of new fintechs. 

“Imagine how PhonePe, Google Pay, Paytm and other fintechs came up based on the UPI ecosystem and changed payments in India forever. APAAR will trigger a similar wave of change,” said Sahasrabudhe.  

The key areas where edtech startups could play a critical role include:

Customising learning through enhanced access to student data: The APAAR ID grants edtech startups access to a comprehensive and standardised set of student data, encompassing academic records, attendance and extracurricular activities. This wealth of information is valuable for designing personalised learning experiences and tailoring educational content to meet individual requirements.

Improving student tracking and analytics: With the help of APAAR ID, edtech startups can monitor students’ progress systematically and track the areas where additional support is required. This data plays a crucial role in developing predictive analytics models to identify students who may be at risk of falling behind.

Streamlining student enrolment and verification: The APAAR ID simplifies student enrolment and verification processes for edtech startups. This streamlined approach saves time and resources and gives students easy access to learning materials.

Mitigating fraud and data misuse: This unique ID is crucial in reducing fraud and misuse of student data as it provides a secure, tamper-proof storage and access system for student records. Implementing the APAAR ID ensures the responsible use of student data and safeguards privacy.

In essence, the APAAR ID has the transformative potential to revolutionise a fragmented Indian education system by establishing a secure, standardised and accessible framework for updating, storing and sharing student data as and when required. However, implementing the system nationwide in a hurry can cause glitches similar to those of Aadhaar.

Even after a decade, enrolling for Aadhaar or updating data takes repeated efforts or leads to inordinate delays. Add to that repeated data leaks, which have given rise to Aadhaar-related banking scams all over the country. 

Similar time lags and security breaches would beat the purpose of introducing a seamless and secure educational ecosystem where data can be updated, accessed and verified at a click without the fear of misuse. Otherwise, the government will be compelled to raise a red flag for APAAR users while citizens’ data and privacy rights will be at stake, again. For now, it is wait and watch.

[Edited by Sanghamitra Mandal]

The post Decoding APAAR ID — India’s New Aadhaar-Like Student ID System To Secure & Verify Academic Credits appeared first on Inc42 Media.

The beleaguered edtech giant BYJU’S seems to be catching no break when it comes to grabbing the headlines. In the latest development, edtech unicorn’s Group CTO and President of Technology, Anil Goel, is set to leave his position after nearly three years with the organisation.

Goel’s exit has paved the way for Jiny Thattil, who is now being elevated as the group CTO. As per his LinkedIn profile, Thattil was the senior vice president at BYJU’S owned EPIC. It must be highlighted that BYJU’S is trying to sell EPIC for $400 Mn – $500 Mn in a bid to pay debt. 

Prior to EPIC, Thattil had previously worked with marquee companies like Happay, Amazon, InMobi, GE Healthcare, among others. 

 Goel joins the long list of key people who have left the edtech unicorn this year.

His exit comes almost a month after Ajay Goel, BYJU’S group CFO, stepped down from his role within six months of joining the firm. Nitin Golani, the president – finance at BYJU’S, was later elevated to the India CFO role.

In September this year, BYJU’S also appointed Arjun Mohan as India CEO, replacing Mrinal Mohit, who has been a founding partner at BYJU’S.

The latest top-level rejig has come at a time when there’s mounting pressure on BYJU’S to release its FY22 audited financial statements with the Ministry of Corporate Affairs. Earlier this month, the startup disclosed selective numbers with the media regarding its financial performance in FY22.

BYJU’S, in a statement, said excluding all acquisitions, Think and Learn Private Ltd (TLPL) – the parent entity of BYJU’S – reported an EBITDA loss of INR 2,253 Cr in FY22 as against an EBITDA loss of INR 2,406 Cr in FY21. Total income stood at INR 3,569 Cr as against INR 1,552 Cr in FY21.

The country’s most valued edtech startup has been battling on multiple fronts since last year. 

Recently, when it seemed to find some relief with Ranjan Pai, Chairman of Manipal Group, taking over the $250 Mn debt of its offline coaching division, Aakash Educational Services Limited (AESL), from Davidson Kempner, the situation took another turn. The Enforcement Directorate (ED) issued a show-cause notice to BYJU’S, alleging violations of the Foreign Exchange Management Act (FEMA) exceeding INR 9,000 Cr.

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Troubled edtech giant BYJU’S employees at the Incuspaze co-working space in Gurugram were reportedly asked to evacuate the premises on Tuesday (November 21) due to non-payment of rent. 

The office was primarily occupied by the company’s technology teams, Financial Express reported.

While BYJU’S declined to comment on Inc42’s queries on the matter, a company spokesperson told Financial Express that BYJU’S has made all the payments on time and is now reconsidering if it should continue using the co-working space in the coming months.

BYJU’S, the spokesperson added, is in the process of negotiating a notice period and this has led to a dispute between the parties.

The development comes at a time when the cash-strapped edtech giant has laid off thousands of employees over the last year or so. Earlier this month, Inc42 exclusively reported that BYJU’S fired about 600 employees from its content and marketing teams as part of the ongoing restructuring exercise which would see about 4,000 employees losing their jobs.

Earlier in July, BYJU’S vacated multiple offices in Bengaluru in a move to save rental costs. BYJU’S had three offices in Bengaluru, including two buildings in Kalyani Tech Park, nine floors in Prestige Tech Park and its largest office in India at IBC Knowledge Park, Bannerghatta.

The latest development comes a few days after the Enforcement Directorate (ED) stated it has issued show cause notices to the embattled edtech giant over FEMA violations. 

“The Adjudicating Authority under the Foreign Exchange Management Act (FEMA), 1999 has issued show cause notices to Think & Learn Private Limited and Byju Raveendran on the basis of the complaint filed by the Directorate of Enforcement… with respect to the contraventions of the provisions of FEMA, 1999 to the tune of INR 9,362.35 Cr,” the ED said in a statement. 

The agency had conducted search and seizure operations at multiple premises linked to the edtech giant and Raveendran in April this year. During the operations, the ED seized documents related to overseas investments as well as funding raised by the company. 

Earlier this month, the embattled company released parts of its financial statements for 2021-22 (FY22) after missing the deadline multiple times. BYJU’S, excluding its acquired businesses, reported a standalone EBITDA loss of INR 2,253 Cr in FY22 compared to INR 2,406 Cr in FY21. However, it is yet to release its consolidated financial statements for the year.

The delay in release of financial statements also resulted in the departure of BYJU’S statutory auditor Deloitte earlier this year. Subsequently, half of BYJU’S board members also resigned. The company is also entangled in a legal case with the lenders for $1.2 Bn term loan B (TLB).

The post Now, BYJU’S Employees Asked To Vacate Gurugram Office Space appeared first on Inc42 Media.

Hours after BYJU’S unequivocally denied reports of it receiving show cause notices from the Enforcement Directorate (ED), the agency has now publicly stated that it has issued show cause notices to the embattled edtech giant over FEMA violations. 

“The Adjudicating Authority under the Foreign Exchange Management Act (FEMA), 1999 has issued show cause notices to Think & Learn Private Limited and Byju Raveendran on the basis of the complaint filed by the Directorate of Enforcement… with respect to the contraventions of the provisions of FEMA, 1999 to the tune of INR 9,362.35 Cr,” the ED said in a statement. 

Inc42 has reached out to the company for a response on the development. The story will be updated on receiving a comment from the edtech giant. 

In the statement, the ED flagged a slew of contraventions by Think & Learn, the parent company of BYJU’S, and the edtech giant’s founder Raveendran:

• Failure to submit documents of imports against advance remittances made outside India
• Failure to realise proceeds of exports made outside India
• Delaying filing of documents against foreign direct investment (FDI) received into the company
• Failure to file documents against the remittances made by the company outside India
• Failure to allot shares against FDI received into the company

The agency said it initiated a probe into BYJU’S after receiving various complaints pertaining foreign investments and business conduct of the edtech startup. 

Reiterating its stance, the ED noted that the startup made ‘significant foreign remittances outside India and investments abroad’ which caused loss of revenue to the exchequer. 

Eventually, the agency conducted search and seizure operations at multiple premises linked to the edtech giant and Raveendran in April this year. During the operations, the ED seized documents related to overseas investments as well as funding raised by the company. 

The ED, then, also recorded statements of Raveendran as well as the then chief financial officer (CFO) of BYJU’S. Eventually, the enforcement sleuths zeroed in on the charges and ‘concluded’ that the edtech juggernaut flouted various provisions of the foreign exchange laws. 

BYJU’S Saga Of Troubles

The late evening development adds to a flurry of activity that BYJU’S braced during the entire day. First, reports surfaced that the probe agency had sent show cause notices to BYJU’S. The company quickly responded and rejected all such reports. 

“BYJU’S unequivocally denies media reports that insinuate it has received a (any) notice from the Enforcement Department. The company has not received any such communication from the Enforcement Department,” the edtech major said. 

Later in the day, BYJU’S assuaged its shareholders, saying it is fully compliant with the regulations and termed reports of ED notice as being entirely based on hearsay. It also told the shareholders that a recent due diligence exercise by a top law firm found no FEMA violations by the company and that it has maintained a ‘cooperative stance’ with the ED and answered all the agency’s queries. 

The public statement by ED has now put all the claims by BYJU’S under the scanner. This comes as the embattled edtech juggernaut has been in the news for all the wrong reasons. 

Earlier this month, the company released parts of its financial statements for 2021-22 (FY22) after missing the deadline multiple times. BYJU’S, excluding its acquired businesses, reported a standalone EBITDA loss of INR 2,253 Cr in FY22 compared to INR 2,406 Cr in FY21. 

It was this very delay that led to the departure of its statutory auditor Deloitte earlier this year, which was followed by the exit of half of BYJU’S board members. The company, which has been hit by mass layoffs and high-level exits, has also been embroiled in a potential debt crisis pertaining to its $1.2 Bn term loan B (TLB). 

The post After BYJU’S Denial, ED Says Issued Show Cause Notice For FEMA Violation Of INR 9,362 Cr appeared first on Inc42 Media.

Amid reports of the Enforcement Directorate (ED) issuing show cause notice to BYJU’S for alleged Foreign Exchange Management Act (FEMA) rules violation, the embattled edtech giant told its shareholders on Tuesday (November 21) that it is fully compliant with the regulations. 

“Dear shareholders… We want to assure you that BYJU’S has always been fully compliant with FEMA regulations. The news story in question is entirely based on hearsay and lacks any factual basis,” the edtech giant said in an email sent to its shareholders. BYJU’S also denied receiving any notice from the ED on the matter.

Inc42 has accessed a screenshot of the email.

The company also said that a recent due diligence exercise by a top law firm found no FEMA violations by BYJU’S and attached an email from the said law firm.

“BYJU’S has maintained a cooperative stance with the ED throughout their inquiries. We have satisfactorily answered all their queries, both verbally and on record,” the edtech giant added.

Earlier today, media reports said that BYJU’S has received a show cause notice from the ED for alleged FEMA violation of over INR 9,000 Cr. However, BYJU’S rejected this claim.

In a statement, the company said, “BYJU’S unequivocally denies media reports that insinuate it has received a (any) notice from the Enforcement Department. The company has not received any such communication from the Enforcement Department.”

It must be noted that the ED conducted search and seizure operations at premises linked to the edtech giant earlier this year.

The development comes at a time when BYJU’S has been in the news for all the wrong reasons over the past year. After missing multiple deadlines for filing its financial statements for the financial year 2021-22 (FY22), BYJU’S, earlier this month, released some select numbers. 

Excluding its acquired businesses, BYJU’S reported a standalone EBITDA loss of INR 2,253 Cr in FY22 as against an EBITDA loss of INR 2,406 Cr in FY21. The entity’s total income stood at INR 3,569 Cr in FY22 as against INR 1,552 Cr in FY21. However, there is no clarity on the release of consolidated financial numbers for FY22.

Amid all this, the edtech giant has also been engaged in negotiations with its lenders to restructure its $1.2 Bn Term Loan B (TLB). Further, the company has also been looking to sell two of its US-based entities, Epic and Great Learning, to raise up to $1 Bn to clear all debt and fuel business operations.

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