In seemingly fresh trouble for BYJU’s, some lenders have now asked the edtech unicorn to repay part of a $1.2 billion loan they recently bought into as they renegotiate terms of the debt…reports Nishant Arora
As the year comes to a close, edtech platforms have hogged headlines for all the wrong reasons — from leading layoffs in the Indian startup ecosystem to shuttering several verticals — and top on the list is BYJU’s, be it sacking employees, alleged harsh and “abusive” work culture and now a reportedly “working capital crisis” as lenders ask the edtech unicorn to repay part of a $1.2 billion loan.
New reports have emerged that BYJU’s, which may have seen a definite erosion in its last market value at $22 billion, hasn’t paid several of its vendors for months.
According to Morning Context, “some of the payments are due since March and there is trouble with their clearance. In the eight months to October 2022, cumulative dues to vendors have crossed Rs 90 crore”.
When reached, BYJU’s did not offer a comment on this report.
Some employees at the edtech major also reportedly complained about harsh work conditions and “mistreatment” by managers at the company, apart from several complaints from parents and customers making rounds on social media platforms and online consumer forums about being exploited and deceived by its sales teams.
Such complaints against BYJU’s have been there in the past too, as India reopened amid ‘hybrid normal’ and schools and colleges return to normal earlier this year and edtech platforms see a significant dip in the demand for online learning.
BYJU’s decided to lay off as many as 2,500 employees or 5 per cent of its workforce in order to achieve profitability by March 2023.
Estimates suggest that the edtech sector has seen more than 7,000 layoffs across companies including BYJU’s, Unacademy, Vedantu, Lido Learning, FrontRow, Brainly and more.
In seemingly fresh trouble for BYJU’s, some lenders have now asked the edtech unicorn to repay part of a $1.2 billion loan they recently bought into as they renegotiate terms of the debt.
Renegotiating the terms of the debt, including faster repayment are unlikely to be accepted since these lenders make up a minority and can’t sway the previously agreed terms, sources told IANS.
The demand from creditors comes at a time when BYJU’s is in the process to restructure the loan, amid mounting losses.
Sources told IANS that at least 51 per cent of the lenders have to agree with the new terms and conditions of the loan, including repayment.
If this condition is not met, such a large loan issue cannot be rewritten and this is the standard clause in any term loan issue.
“Moreover the originally agreed loan repayment terms will be met,” according to a person close to the edtech major.
The edtech unicorn reported a loss of Rs 4,588 crore for the fiscal year that ended on March 31, 2021.
The losses in the 2020-21 fiscal widened from Rs 231.69 crore in 2019-20 while revenue during FY21 dropped to Rs 2,428 crore from Rs 2,511 crore in FY20.
According to the company, the losses widened in FY21 mainly on account of deferment of some revenue and losses incurred from WhiteHat Jr.
Last month, global investment group Prosus put the fair value of its 9.67 per cent stake in BYJU’S at $578 million, which technically puts the current valuation of the edtech major at nearly $6 billion — last valued at $22 billion.
In its September quarter results, Prosus classified BYJU’s as a non-controlling financial investment rather than an associate, as its shareholding dropped below 10 per cent.
After six “stressful and tough learning months” as it delayed the audited FY21 financial reports for nearly 18 months, inviting government scrutiny and serious questions from the public, Byju Raveendran finally told IANS in September that “the worst is finally over” and there is only “growth ahead” as seen in the company’s FY22 financial results.
The edtech major clocked gross revenues of nearly Rs 10,000 crore in FY22.
Last year, he went on an acquisition spree. The edtech unicorn made at least 10 acquisitions for a cumulative transaction value of about $2.5 billion — including Delhi-based offline test preparatory services provider Aakash for over $950 million.
Raveendran said that loss-making acquisitions like WhiteHat Jr, the beleaguered coding platform BYJU’s acquired for $300 million, are now being consolidated.
However, if we look at the big picture, BYJU’s is facing another litmus test in 2023 as the edtech bubble has finally burst in the country.
How far can BYJU’s avoid a super-strong headwind in the online education space? Time will tell us shortly.