The discussions with investors – which include Sequoia Capital, General Atlantic, T Rowe Price, and Blackrock – come at a time when Byju’s has delayed reporting its financials for the fiscal year ending March 31, 2021 (FY21). The Bengaluru-based ed-tech firm is India’s most valued startup at $22 billion and has faced heightened scrutiny for the 18-month delay in filing its accounts.
The Ministry of Corporate Affairs has also questioned the company asking it to
explain the reasons for the delay.
“Raveendran has been talking to all investors and explaining to them about the big difference in original numbers and what the company will present now…,” a person familiar with the matter said. “He is pitching it as an accounting policy change which has been enforced by the auditor,” the person added.
A spokesperson for Byju’s did not respond to ET’s email till press time Monday.
The online tutoring firm is expected to hold its annual general meeting (AGM) over the next few days and present its audited financials for FY21 to all stakeholders, three people in the know said.
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The board has approved the results, but the financials have not yet been shared with all investors, said two people in the know. It will be filed with the Registrar of Companies subsequently, they said.
Revenue recognition
Deloitte is the company’s official accountant. So far, the accounting firm had not signed off on Byju’s accounts, raising issues around the company’s revenue recognition practices. Revenue recognition is an accounting term which outlines specific conditions under which revenue is recognized. “They (Byju’s) have had to move parts of their revenue for it to be approved as per Indian Accounting Standard (Ind-AS) 115 rules… For example, revenue projected in one financial year for a multi-year fee can’t be used as that year’s revenue alone,” said an industry executive who spoke to ET recently. Byju’s which sells tablets ( hardware product) to users as part of its subscription programme has been reporting the sale as revenue for a particular year, which has been red flagged by the auditor, multiple people aware of the situation said.
The company is likely to attribute the difference in revenue to “business model changes due to Covid-19,” said another person familiar with the discussions. The uncertainty has resulted in bond prices for its $1.2 billion term loan B (TLB) falling by around 32% to 66 cents on the dollar as of Monday, as per Bloomberg data.
A report in the Financial Times highlighted the sell-off that started in April but had quickened since last week.
ET reported previously that the edtech firm told debt investors it would brief them on the audited financial results on September 6. However, that did not happen as the company kept missing deadlines to file its accounts over the past six months.
In May, Raveendran told ET in an interview that the delay was due to multiple acquisitions the firm had closed, which had taken time to reflect in its financials. He had said that the company was aiming to close FY23 with a revenue of around Rs 17,000 crore. In FY20, the edtech startup reported consolidated operating revenue of Rs 2,381 crore, a jump of over 82% from the previous year, while losses rose to Rs 262 crore in the same period from around a loss of Rs 9 crore in FY19. Byju’s has spent over $2.5 billion in the last two years to acquire multiple mid- to large-scale education firms including Aakash Institute, which runs brick-and-mortar coaching institutes.
