India's largest ed-tech company facing insolvency proceedings

Byju, India’s largest ed-tech company, are facing a turbulent future as insolvency proceedings have been revived by India’s Supreme Court. Once India’s most valued startup at $22 billion the company is now reportedly valued at $2 billion.

Rise

Byju enjoyed a rapid rise and became popular during the covid-19 pandemic by offering extensive online educational courses. Their website boasts 150 million+ users operating across 21 countries, 25% outside of India. In 2019 the ed-tech company replaced Oppo to become the main sponsor for the Indian Cricket team, appearing prominently on all their kit. The deal was reportedly worth $35 million.  At one stage Byju was considering going public with an IPO. But their recent financial issues look set to severely block that avenue.

Byju is not the first Indian Cricket team sponsor to endure financial difficulties. Other former sponsors including Sahara, Oppo and Dream 11 have also faced financial challenges since sponsoring the Indian national team in what is being called the “jersey jinx”. Although there is a clear marketing logic to appearing on the front of the current T20 World Cup champions jersey’s in terms of visibility and coming to the attention of millions of viewers across the word, this comes at an enormous cost.

Turmoil

Byju’s troubles began several years ago and it decided to cease the sponsorship deal with the Indian national cricket team.  Speaking to CNBC about the cessation of the sponsorship deal, the company’s co-founder Divya Gokulnath stated that the company was focussing its attention to profitability and the potential for an initial public offering.

“We are doing really well … the last 12 months have been really good for us in terms of the number of products that we’ve added, in terms of the different formats that we’ve launched and in terms of the geography and the subjects that we’ve scaled into,” Gokulnath said in the interview conducted in January 2023.  She went on to say that the company were “very hopeful” of becoming profitable by March 2024.

However, last year the Board of Control for Cricket in India (BCCI) instigated insolvency proceedings against Byju in respect of a Byju defaulting on $19million due in respect of the sponsorship deal. The dispute was later settled with Byju agreeing to pay the debt in full and the insolvency proceedings stayed. However, the dispute with the BCCI has prompted US lenders represented by Glas Trust, a global independent provider of debt administration and trustee services), to reignite proceedings.

On Wednesday 7th August, India’s Supreme Court revived insolvency proceedings against the ed-tech startup will put further pressure on the board following boardroom exits, resignations and disputes with foreign investors over mismanagement.