New Delhi:

The fate of ed-tech giant Byju’s founder and CEO Byju Raveendran hangs in the balance as an extraordinary general meeting (EGM) of its investors is scheduled to be held today. A consortium of shareholders including global tech investor Prosus aims to oust Mr Raveendran and install a new board.

Byju’s, once considered one of India’s most profitable start-ups with a valuation of over $20 billion, has seen a massive decline of nearly 90 per cent in the last year. Driven by the surge in demand for online learning during the Covid pandemic, the ed-tech firm is now grappling with several crises. Major investors withdrew support, Deloitte resigned as auditor, and a legal dispute with US lenders over a $1.2 billion loan added to the turmoil.

Ahead of the meeting, Byju’s claimed that the Karnataka High Court had ruled that any decision taken at the meeting would be “invalid” until the next hearing, adding that the move was a mere attempt to disrupt the management and control of the company. There is “smoking”.

Despite the court order, the meeting will continue with the intention of pushing for Mr. Raveendran’s removal as CEO. Byju alleges that investors including General Atlantic and the Chan Zuckerberg Initiative, the venture of Facebook founder Mark Zuckerberg and his wife Priscilla Chan, have violated shareholder agreements by calling the meeting.

investigating agency notice

Adding to Mr Raveendran’s problems, the Enforcement Directorate (ED) yesterday upgraded its Look Out Circular (LC) against him in connection with the Foreign Exchange Management Act (FEMA) probe.

The Look Out Circular, which was initially issued a year ago, has been recently amended to address investor apprehensions and the evolving nature of the FEMA investigation. The ED has requested the Immigration Bureau to extend the circular to ensure that Mr. Raveendran does not leave the country.

The probe agency’s move comes in the wake of a show cause notice issued against Byju’s and Mr Raveendran in November last year for forex violations worth over Rs 9,300 crore. The investigating agency cited multiple grounds for charges, including alleged failure to submit import documents against advance remittances made outside India and documents relating to exports made outside India against foreign direct investment (FDI) received by the company. Delays in filing are involved.

Earlier this month, an overseas unit of Byju’s based in the US state of Delaware had filed for bankruptcy, listing liabilities in the range of $1 billion to $10 billion.

Downfall

Byju’s started its venture in 2006 by providing classes for MBA aspirants preparing for the CAT exam. Over the years, the edtech firm has diversified its offerings, expanding its reach from post-graduate to undergraduate and ultimately to school students. In 2015, it launched Byju’s Learning app, which laid the foundation for the company to become India’s first ed-tech unicorn in just four years.

The Covid pandemic became a turning point for Byju’s as schools closed their doors and education increasingly shifted to online platforms. Byju’s seized the moment, launching an extensive marketing campaign and hiring thousands of people to meet the demands of online education during the pandemic.

The company secured sponsorship deals with the Indian cricket team, and even roped in football maestro Lionel Messi as a global ambassador.

However, allegations of toxic work environments and aggressive marketing practices that allegedly harassed parents began to surface. Prosus, a major shareholder, cut Byju’s valuation by a whopping 75 percent, triggering a chain of events.

Mass layoffs resulted in the company losing billions and getting into a series of legal troubles.