New Delhi:
In more trouble for edtech giant Byju’s, the Enforcement Directorate has barred its founder Byju Raveendran from traveling outside the country. The central agency has issued a lookout circular against the 43-year-old entrepreneur. Earlier, the ED had issued a lookout circular ‘on information’, which meant that immigration officials would inform the authorities concerned about any foreign travel of Raveendran, but now he may be prevented from leaving the country.
The edtech firm, once valued at more than $20 billion and the most prominent offspring of India’s start-up ecosystem, suffered massive losses last year and valuations that fell by nearly 90 per cent. Its last major investors and its auditor Deloitte have resigned. Byju’s is also locked in a legal battle with lenders in the US over a $1.2 billion loan.
Raveendran, a former engineer who had seen tremendous growth before the current crisis, has been drawing criticism for the declining fortunes of the edtech firm.
A group of shareholders had requested for an extraordinary general meeting yesterday to oust Raveendran and appoint a new board. But the founder of the edtech firm has got some relief from the Karnataka High Court order, which says that any decision taken in the meeting will be invalid till the next hearing.
Byju has said that the meeting was “only a cover designed to disrupt the management, control and functioning of the company”.
Investor sources have told news agency AFP that the court has not banned the holding of the shareholder meeting. He said the meeting would be held and investors would still insist on removing Raveendran as CEO.
Byju’s key investors include tech investor giant Prosus, US growth equity firm General Atlantic and the Chan Zuckerberg Initiative – a philanthropic venture founded by Facebook boss Mark Zuckerberg and his wife Priscilla Chan. Representatives from Prosus and the Chan Zuckerberg Initiative had resigned from Byju’s board last year.
Byju’s rapid rise before crushing fall
In 2006, Byju Raveendran formally started classes for MBA aspirants preparing for the CAT exam. The edtech firm gradually expanded to graduate and then school students. Byju’s Learning App was launched in 2015. Over the next four years, it became the country’s first ed-tech unicorn. Byju’s network expanded rapidly due to the Covid pandemic as schools were closed and schooling went online.
Then the troubles started. Allegations of toxic work environments and aggressive marketing that harassed parents began to emerge. Last year, Prosus cut Byju’s valuation by 75 per cent, leading to layoffs and allegations of financial mismanagement. At its peak, the edtech firm had spent extensively on sponsorships. It sponsored the Indian cricket team, the Football World Cup and signed football legend Lionel Messi as a global ambassador. After schools reopened, growth slowed down and Byju’s started incurring heavy losses. Late last year, Byju Raveendran had to mortgage personal property to arrange a loan to pay employees’ salaries.
Byju’s foreign investment has come under the scanner of the Enforcement Directorate. Before the lookout circular against its founder, the ED had issued a show cause notice to Byju’s parent company Think & Learn over alleged violations of over Rs 9,362 crore under the Foreign Exchange Management Act.
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