By M. Sriram and Aditya Kalra
MUMBAI (Reuters) -Deloitte and three board members of Byju’s have severed ties with the Indian startup, said sources on Thursday, amid the edtech company’s escalating legal battle with its lenders and its plummeting valuation in the eyes of some investors.
Deloitte, which was slated to audit Byju’s until 2025, has quit with “immediate effect” mid-term, due to “long-delayed” financial statements by the company, according to the auditing firm’s resignation letter filed to the regulator.
Byju’s in a statement said it has appointed BDO as its new auditor, adding this will help it “uphold the highest standards of financial scrutiny and accountability.”
Deloitte, one of the world’s largest auditing firms, said there was a “significant impact” on its ability to perform the audit according to necessary standards and that it has “not received any communication on the resolution of the audit report modifications” for 2020-21.
A Deloitte spokesperson referred Reuters to the regulatory disclosure, declining further comment.
Deloitte’s exit comes even as three board members from key investors Sequoia Capital India, the Chan-Zuckerberg Initiative and Naspers Ventures have resigned from the board, three sources familiar with the matter said.
The three board members include GV Ravishankar, Russell Dreisenstock and Vivian Wu the sources said. Ravishankar and Wu did not immediately respond to calls and messages and Dreisenstock was not reachable.
A Byju’s spokesperson called the news of the resignations “entirely speculative”, adding significant developments or changes within the organization are shared through official channels.
The departures mean Byju’s board now only comprises the founder’s family – Chief Executive Byju Raveendran, his wife Divya Gokulnath, and brother Riju Raveendran, the sources said.
Byju’s is also locked in a dispute with lenders, who allege the company hid $500 million, leading it to sue lender Redwood Management.
The company, whose products range from online tutorials for children to offline coaching for engineering aspirants, became a pandemic darling as locked-down students used its apps increasingly.
This triggered an unprecedented wave of interest, and its valuation ballooned from $5 billion in 2020 to $22 billion in 2022, with investors such as Blackrock and UBS. Byju’s also made acquisitions worth billions of dollars, seeking to expand abroad and in different segments.
The company’s valuation was subsequently slashed to $8.4 billion earlier this year by Blackrock, a minor shareholder.
Byju’s in recent times has also run into governance issues, audit delays and laid off thousands of employees in the past year, seeking to cut costs.
(Reporting by M. Sriram in Mumbai, Aditya Kalra in New Delhi, additional reporting by Rama Venkat in Bengaluru; Editing by Savio D’Souza and Sonia Cheema)
