Byju’s, the once most-valued startup in India, is grappling with a severe financial crisis, as indicated by its FY22 financial results.
The edtech giant reported a staggering loss of Rs 8,245 crore, almost doubling from the previous year’s loss of Rs 4,564 crore. This significant loss comes despite an increase in consolidated income, reaching Rs 5,298.43 crore compared to the previous year’s Rs 2,428.39 crore.
Concerns Raised by Auditor MSKA & Associates
Byju’s auditor, MSKA & Associates, expressed concerns about the company’s ability to continue as a going concern, citing “material uncertainty” about its future. The auditor specifically pointed to risks associated with a $1.2 billion overseas loan and ongoing net losses. Byju’s India CFO, Nitin Golani, acknowledged the challenges but emphasized ongoing efforts to improve financial conditions and secure necessary funding.
Valuation Plunge and Investor Downgrades
Byju’s valuation has witnessed a sharp decline, with recent attempts to raise $100 million valuing the company at less than $2 billion. This represents a significant drop from its peak valuation of $22 billion. Notably, investors like BlackRock and Prosus have marked down their valuations of Byju’s, with BlackRock indicating a valuation of $1 billion.
Operational Struggles and Cost-Cutting Measures
The company cited operational challenges, particularly from underperforming acquisitions like WhiteHat Jr. and Osmo, contributing significantly to its losses. Byju’s has implemented cost-cutting measures, including scaling down these businesses, laying off thousands of employees, and considering asset sales. However, one unit, Aakash (AESL), reported an 82% increase in profit, reaching Rs 79.5 crore in FY22.
Path Forward and Optimism Despite Challenges
Despite the financial challenges, Byju’s remains committed to achieving profitability. CFO Nitin Golani expressed optimism about the future, citing improved margins expected in the 2022-23 results. However, the company’s path forward is uncertain, and significant financial restructuring and strategic changes may be necessary to stabilize its operations.