Complaints against Byju’s and group entities were highlighted during a discussion, as the edtech leader caters to a large student base, people briefed on the matter said.
The consumer affairs department aired its concerns regarding this and various other aspects during a meeting with edtech companies and its self-regulatory organisation India Edtech Consortium (IEC) on June 24, sources briefed on the matter told ET.
Senior department officials also relayed their concerns specifically in a follow-up call the same day to executives at Byju’s — India’s most valued startup — saying that most of the complaints they had received were related to the Bengaluru-based startup and its group units, the sources said. The company’s cofounder Divya Gokulnath, wife of founder Byju Raveendran, also attended the call, they added.
Following this, Gokulnath and senior executives shared a detailed action plan with officials to address the complaints, another person aware of the matter said.
The department officials, the sources added, pointed out during the meeting that they had received 147 consumer complaints against edtech startups. It is expected to share the full list of complaints with the edtech companies soon, they said. “Aggressive mis-selling to parents is something that was discussed, among other issues, along with certain claims being made in advertisements. Byju’s was advised to work closely with the Advertising Standards Council of India (ASCI),” one of the people said.
Discover the stories of your interest
Industry self-regulatory body ASCI said last month that of the 5,532 advertisements that it had processed in the previous fiscal year, 33% of the complaints were from the education sector, which includes edtech as well as traditional educational institutes.
“They (Byju’s) are engaging closely now with ASCI,” this person added.
A Byju’s spokesperson and the consumer affairs department did not respond to ET’s emails till press time Thursday.
Gokulnath is a key member of the IEC, which was set up earlier this year under the Internet and Mobile Association of India. Byju’s and group companies, as well as Unacademy and Upgrad, are some of its members.
“They (IEC) have had meetings with education ministry officials but the meeting with the consumer affairs department shows they are aware of consumer complaints that are raised by parents, students and professionals and need to raise it with companies under their purview too,” one industry executive involved in the discussions said.
Separately, IEC has received at least two complaints against Byju’s and its coding unit WhiteHat Jr, people aware of the matter said.
ET could not independently verify the nature of the complaints or if they had been fully addressed yet.
“You can raise a complaint against any edtech firm with the council and it applies its self-regulatory codes through a committee and the same is shared with relevant companies for corrections. The idea of the IEC is that self-regulation should be practised in spirit, or it can lead to a tighter policy regime from the government,” one of the sources said.
The government has grown wary of the rising number of complaints against edtech startups, which also involves mis-selling of loans or financing options for various courses that these platforms are offering, the person added.
“The issue is also important because Byju’s has become a household name and any action against the firm is also not good news for other companies in the space,” another industry executive said.
ET reported on June 30 that
Byju’s was considering rebranding WhiteHat Jr, which has been under the scanner allegedly for some misleading advertisements.
Byju’s fired at least 600 employees recently from group companies WhiteHat Jr and Toppr.
Byju’s, valued at $22 billion, has also not yet closed its last financing round of $800 million and its audited financial results have yet to be filed with the Registrar of Companies (RoC).
Raveendran, according to the company, recently completed investing $400 million, arranged via debt funding from financial institutions, in the company as part of the $800 million round.
On July 4, Byju’s said it would announce its latest audited financials over the next 10 days. Of the $800 million funding announced in March, it is hoping to receive $250 million by August.
Raveendran is also looking to close a potential acquisition of US-based edtech player 2 U for which he is reportedly preparing a $2.4 billion bid through financing from JP Morgan.
Last November, Byju’s closed a $1.2 billion term loan.
“I don’t see a lack of demand for any kind of capital for Byju’s despite strong headwinds out there … This is also a good time for companies to differentiate,” Raveendran told ET in May.
Over the last 12-18 months, Byju’s has spent around $2.5 billion for multiple acquisitions in India and overseas. Its acquisition of brick-and-mortar coaching centre Aakash Institute for nearly $1 billion has been its largest deal yet.
ET reported on July 4 that Byju’s had cleared the necessary payouts for the deal after an initial delay.
“Debt is one of the most efficient ways of raising capital if you have a proven track record of collecting or financing your customers. These are partners who have been with us for the past three to four years,” Raveendran said during the interview in May.
There has been a 37% dip in venture funding for startups in India in the June quarter compared to the March quarter, ET reported on July 4.
ET has reported previously that Unacademy cofounder Gaurav Munjal told his team that it
needed to cut costs significantly and turn cash-flow positive while its senior management, including the founders, are taking a pay cut as well shutting business verticals that do not find a product market fit.
In February, Byju’s had said that it was looking to invest $200 million to grow tuition centres across 200 cities. Rivals Unacademy and Vedantu are also expanding offline.
