Byju’s, the once-celebrated Indian edtech giant, faces mounting troubles as BDO, its auditor, resigns with immediate effect. This resignation, the second in less than a year, has intensified concerns about the company's financial stability and governance.
In its resignation letter, BDO’s subsidiary MSKA cited a host of issues, including significant delays in financial reporting, insufficient management support, and difficulties in recovering dues from a Dubai-based entity. These concerns come as Byju’s, valued at $22 billion and once hailed as India’s most valuable startup, battles a series of crises. This includes a recent Supreme Court decision to resume insolvency proceedings against the company.
MSKA, which took over the auditing role in August 2023, described the management's support as inadequate, citing difficulties in obtaining essential financial documents and evidence required to complete the audit for the fiscal year 2022-23. The letter also flagged ongoing legal battles, including liquidation proceedings initiated by lenders and allegations of mismanagement by minority shareholders.
In response, Byju’s spokesperson accused BDO of unethical behavior, claiming that BDO sought to have the company backdate reports and suggested a firm that could facilitate such actions. Byju’s has strongly denied these allegations, asserting that BDO’s resignation was due to a refusal to engage in illegal activities.
The resignation adds to Byju’s challenges, which include a plummeting valuation, missed financial deadlines, and conflicts with investors. The company's troubles have been exacerbated by a recent Supreme Court ruling halting a tribunal decision that had paused insolvency proceedings. Additionally, U.S. creditors are now seeking to recover $1 billion, further intensifying the pressure on the embattled startup.
As Byju’s navigates these turbulent waters, the departure of its auditor underscores the critical need for transparency and stability in its financial practices. The coming months will be crucial in determining the company's path forward amidst a backdrop of escalating legal and financial challenges.
