Byju's richest to rags saga

Byju Raveendran was one such parvenu who gate-crashed into a field dominated by the titans of industry. His name soon becoming synonymous with educational technology.

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But then came the ignominy asthe teacher turned entrepreneur joined the elite club of CEO's who were edged out from companies they had created, by their own shareholders on allegations of mismanagement, incompetence. Byju’s fate mirrored by what befell Steve Jobs of Apple and the CEO's of Uber and Twitter to name just  a few.

Not that this should be any consolation for Raveendran, but as one social media post said he should have been a majority shareholder. Instead, he held 26% in his own firm and was ousted as CEO on February 23 this year,  after a four hour long contentious EGM.

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Raveendran who had already fled to Dubai, and for whom there is a lookout notice, scoffed at this, terming the EGM as a "farce" in a communication to his employees. The letter said "contrary to what you may have read in the media I continue to remain CEO and the management remains unchanged. In short its business as usual, and the Board remains the same".

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He further said only 35 of 170 shareholders representing 45% of shareholding voted in favour of the resolution. He reiterated that the company’s governance is anchored in the Articles of Association and the shareholders agreement which are further reinforced by the prevailing Company Law. He has got temporary relief from the Karnataka High Court which ruled that any decision taken at the EGM would not be given effect until this issue is resolved. The next hearing is set for March 13, 2024.

The EGM resolutions accused him of failure to submit documents of imports against advances, remittances made outside India; failure to realise proceeds of exports made abroad and delaying the filing of documents against the FDI investments received.

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PROSUS which initiated the resolution holds 9.1% in the EDTECH Firm invested over $ 500 million.

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Investors also voted for restructuring the board of directors to enhance shareholder representation to incorporate independent perspectives and strengthen corporate governance.

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Byju's net worth of $ 3.8 million has been wiped out by heavy borrowings. It is kind of a riches to rags story. PROSUS is a global consumer internet group and one of the largest technology investors and operators in the world.

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Byju's problems were extenuated in April last year when the Enforcement Directorate raided three of its offices for violation of FEMA regulations totalling Rs 9362.35 crores. Further the US based lender Redwood filed a lawsuit against Raveendran for failing to pay the quarterly interest of Rs 330 crores. Raveendran filed a counter lawsuit against Redwood for demanding payment before the due date ended.

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Besieged by financial problems Byju's retrenched staff in thousands and paid wages erratically to save cost.

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Byju Raveendran’s intentions when he set off on this journey were noble. He had done his B. Tech at the Government College of Engineering, Kannur, and was driven by his passion for learning and communication and making learning more engaging and accessible. He was a born teacher and though he joined a shipping company as service engineer during vacations he helped friends in their CAT exams. He himself scored 100% in CAT. He held classes in auditoriums and through satellite connection. He launched his EDUTECH App in 2015 with his wife Devya Gokulnath.

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According to Wikepedia, he used a unique approach that incorporated adaptive learning technology, and aimed to provide performance learning experiences for students across the country.

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One media post said he reshaped the landscape of online education and garnered attention of students and investors alike.

At its peak Byju’s was the world’s most successful start-up, and had 33 million users and 2.2 million subscribers. It was one of the top 5 most valuable internet companies, with its net worth placed at $ 3.8 Billion. His App is also a business case in Harward Business School. Byju’s platform prepared students for ITT-JEE, NEET, CAT and IAS and also for international studies like GRE and GMAT.

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Raveendran,44, was born in Azhikode district in Kerala and both his parents are teachers in Physics and Maths.

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That something was amiss became clear when Byju’s recorded a surprise fall in its revenues for 2021 whilst many international companies saw roaring profits due to digital adaptation. Byju’s claimed however that its auditors, Deloitte mandated a deferral of 40% of revenues to subsequent years. Deloitte has since resigned.

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Miscalculation? A series of errors? Or alleged fraud? No one really knows. But clearly,Raveendran’s future is cloudy and as critics say ironically his downfall was more due to his high profile presence and glaring publicity. And his biggest problem of all may have been what he didn’t see coming, facing competition from new entrants in the field. Byju’s biggest test is yet to come.

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