Byjus Crisis: Know What Led To The Downfall Of Company Which Was Once Valued At $22 Billion | Companies News


New Delhi: Byju’s, founded by Byju Raveendran, once stood at the forefront of the EdTech industry, reshaping global learning paradigms. It wasn’t merely a startup but a symbol of technology’s potential to revolutionize traditional education. However, today the company faces a significant financial crisis, resulting in the depletion of Byju Ravindran’s accounts. Struggling to stay afloat, the founder has been removed from the Forbes Billionaires list, his net worth reduced to zero.

How Byju Ravindran’s fortunes dwindled over the course of a year:

Just a year ago, Ravindran’s wealth was approximately 2.1 billion dollars. However, within a year, his fortunes took a drastic turn, leading to a complete depletion of his wealth. To support his employees, he even mortgaged his house to pay their salaries. (Also Read: This 19 Year Old Student Becomes Youngest Billionaire In the World; Know All About Livia Voigt)

Now, his net worth has dwindled to nothing, depicting a stark tale of his journey from riches to rags. This year, Forbes has removed four individuals, including Byju Ravindran from its list of billionaires compared to last year. The company’s valuation has plummeted to 1 billion dollars, resulting in Ravindran’s wealth reducing to zero. (Also Read: Equity Markets Gain Marginally To Scale New Peaks After RBI Policy Decision)

The company that Ravindran founded after quitting his job is now facing imminent collapse. Byju’s offices and tuition centers are shutting down nationwide, leaving staff without pay. Byju’s is grappling with a severe shortage of funds, with investors pushing for Ravindran’s removal from the board.

Ravindran’s Journey To Inspiring Education

Ravindran, from Azhikode village in Kerala’s Kannur district, was an academic achiever from the start. During holidays, he provided coaching to friends, and those taught by him successfully cleared the IIM exams.

Ravindran decided to pursue an education at IIM after achieving perfect scores. Surprisingly, he scored 100 percent again on his second attempt, leading him to reconsider his career path. Opting for tuition teaching instead, his exceptional teaching methods attracted a large number of students who lined up to learn from him.

Started conducting classes for 25,000 students

As the number of students grew, Ravindran’s house felt increasingly cramped. He began traveling to nine cities each week to teach children, even conducting classes for 25,000 students simultaneously at the Indira Gandhi Stadium in Delhi.

In 2009, he initiated an online video-based learning program for CAT exams. Then, in 2011, Think and Learn was established, leading to the launch of the online version of Byju’s. Finally, in 2015, he introduced Byju’s, The Learning App, which quickly became a game-changer for him, propelling him to billionaire status within seven years.

Byju’s Rise, Acquisitions, and Financial Strain

In 2020, Byju’s emerged as the most valuable edtech startup globally, with a valuation of Rs 85,000 crores. It experienced significant growth during the COVID-19 pandemic and acquired various competitive companies, some of which were successful while others were not.

Byju’s purchased several firms including Aakash Institute, iRobotTutor, HashLearn, White Junior, and Topper. Afterward, the situation took a turn for the worse. Byju, in pursuit of growth, began borrowing large sums of money. However, the decision to take out a 1.2 billion dollars loan ended up causing significant financial trouble, leaving a substantial dent in his business.

Byju’s Post-Pandemic Challenge

As schools and colleges reopened after the COVID-19 pandemic, Byju’s experienced a major setback as students began to leave the platform. Concurrently, the US Federal Reserve began raising interest rates, making borrowing more expensive. Additionally, negative sentiments arose regarding Byju’s affiliated companies. Consequently, Byju’s saw a decline in earnings and an increase in losses.

Company spent Rs 150 crore monthly

The company was expending Rs 150 crore per month on expenses such as salaries, office maintenance, and tuition centers, while its earnings were only Rs 30 crore. Byju’s needed Rs 120-130 crore monthly to sustain its core operations. Consequently, the company’s losses continued to escalate with each passing year.

Debts, Refunds, and Staff Terminations

Byju is facing various financial obligations, including a debt of around Rs 2,000 crores, Rs 200 crore in TDS payments for salaries and vendors, a customer refund of approximately Rs 500 crore, and vendor payments totaling Rs 1,000 crore.

Struggling to meet these obligations, the company has been unable to pay its employees’ salaries and has resorted to terminating staff over the phone. To salvage itself, the company has opted for business restructuring, commencing the process in October 2023 with the aim of reducing expenses.

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