A crucial extraordinary general meeting (EGM) of Byju’s investors is set to unfold today, with the future of founder and CEO Byju Raveendran hanging in the balance. Led by global tech investor Prosus, a consortium of shareholders aims to instate a new board and potentially remove Mr. Raveendran from his leadership role.
Once lauded as one of India’s most lucrative startups, Byju’s has faced a tumultuous decline, experiencing a staggering 90% decrease in valuation over the past year. The ed-tech behemoth, once propelled by the surge in online learning demand during the pandemic, now grapples with a series of crises including key investor withdrawals, auditor resignations, and legal disputes with US lenders.
Amidst mounting challenges, Byju’s asserts that the Karnataka High Court has deemed any decisions made at the meeting “invalid” until the next hearing, dismissing the move as a “smokescreen” aimed at disrupting the company’s management.
Notwithstanding the court order, the meeting proceeds as planned, with investors seeking Mr. Raveendran’s removal. Byju’s contends that investors, including General Atlantic and the Chan Zuckerberg Initiative, violated shareholder agreements by initiating the meeting.
Further complicating matters for Mr. Raveendran, the Enforcement Directorate (ED) has escalated its scrutiny, enhancing a Look Out Circular (LC) against him in connection with a Foreign Exchange Management Act (FEMA) probe. The ED’s action follows a substantial foreign exchange violation notice issued against Byju’s and Mr. Raveendran last year, exceeding ₹9,300 crore.
In a recent setback, a foreign unit of Byju’s filed for bankruptcy, listing liabilities between $1 billion to $10 billion, adding to the company’s woes.
Byju’s journey, which began in 2006 offering classes for MBA aspirants, expanded rapidly, culminating in the launch of the Byju’s learning app in 2015. The onset of the Covid pandemic propelled the company to unprecedented heights, with aggressive marketing strategies and high-profile sponsorships.
However, allegations of a toxic work environment and aggressive marketing practices tarnished the company’s image, leading to a significant devaluation by Prosus and subsequent financial setbacks.
As Byju’s navigates its precarious position, today’s meeting marks a pivotal moment in determining the company’s trajectory amidst mounting internal and external pressures.