Deloitte, one of the world’s largest auditing firms, has severed ties with Indian edtech giant Byju’s, along with the resignation of three board members, amidst the company’s legal battle with lenders and a decline in its valuation. Deloitte, originally slated to audit Byju’s until 2025, resigned mid-term due to prolonged delays in the company’s financial statements, as mentioned in their resignation letter filed with the regulator. Byju’s has appointed BDO as its new auditor to ensure rigorous financial scrutiny and accountability.
The resignation of Deloitte is significant, as it cited a substantial impact on its ability to perform the audit according to necessary standards. Deloitte expressed that it has not received any communication regarding the resolution of audit report modifications for the period of 2020-21. A spokesperson for Deloitte declined to comment further and referred to the regulatory disclosure.
Simultaneously, three board members from key investors, including Sequoia Capital India, the Chan-Zuckerberg Initiative, and Naspers Ventures, have also resigned from Byju’s board. The departing board members are GV Ravishankar, Russell Dreisenstock, and Vivian Wu. However, a spokesperson from Byju’s deemed the news of resignations as speculative and emphasized that official channels would be used to share significant developments or changes within the organization.
As a result of these departures, the Byju’s board now consists solely of the founder’s family, including Chief Executive Byju Raveendran, his wife Divya Gokulnath, and his brother Riju Raveendran. This comes at a challenging time for Byju’s, as the company is involved in a dispute with lenders who allege that the company concealed $500 million, leading to a lawsuit by lender Redwood Management.
Byju’s, known for its range of educational products, experienced a surge in popularity during the pandemic. Its valuation skyrocketed from $5 billion in 2020 to $22 billion in 2022, attracting investments from notable firms like BlackRock and UBS. Byju’s also made significant acquisitions in an effort to expand both domestically and internationally.
The resignation of Deloitte and the board members highlights the challenges faced by Byju’s and raises concerns about its financial reporting and corporate governance. The appointment of BDO as the new auditor signals Byju’s commitment to maintaining high standards of financial scrutiny. The company’s ongoing legal battle and declining valuation add further complexity to its current situation.