Global giant Deloitte quit as the auditor of Byju’s and three board members resigned from the most valuable Indian startup on Thursday, sending a shockwave through the industry, a year after the Indian firm’s tardy financial reporting attracted global scrutiny.
Byju’s, valued at $22 billion, in a statement termed Deloitte’s resignation as a “planned transition” and refuted resignations of its board members. Deloitte, which fanned concerns as it submitted its resignation to Byju’s board, was slated to work with the Indian startup until 2025. The startup said it has appointed BDO (MSKA & Associates) as its statutory auditor.
In a letter to Byju’s board on Thursday, Deloitte said that it had not undertaken the auditing of the edtech giant’s accounts for the year ending March 2022 and cited the delay as a reason for its resignation.
The financial statements of the company for the year ended March 31, 2022 are long delayed. In accordance with the Companies Act, 2013, the audited financial statements for the year ended March 31, 2022 were due to be laid before shareholders in the Annual General Meeting by September 30, 2022.
We have also not received any communication on the resolution of the audit report modifications in respect of the year ended March 31, 2021, status of the audit readiness of the financial statements and the underlying books and records for the year ended March 31, 2022 and we have not been able to commence the audit as on date.
As a result, there will be significant impact on our ability to plan, design, perform and complete the audit in accordance with the applicable auditing standards. In view of the aforesaid, we are tendering our resignation as statutory auditors of the company with immediate effect.
Byju’s attracted intense scrutiny last year from the government, investors and creditors after it repeatedly failed to publish its accounts. In September, Byju’s finally published its accounts for the year ending March 2021, revealing revenue figures that fell short of its own projections.
The company did not address the concerns raised by Deloitte but said it extends its “sincere gratitude” to the outgoing auditor.
GV Ravishankar of Peak XV Partners (formerly known as Sequoia India and Southeast Asia), Vivian Wu of Chan Zuckerberg Initiative and Russell Dreisenstock of Prosus have stepped down from the board, a person familiar with the matter said.
In response, Byju’s said: “A recent media report suggesting the resignations of board members from Byju’s is entirely speculative. Byju’s firmly denies these claims and urges media publications to refrain from spreading unverified information or engaging in baseless speculation.”
Byju’s co-founders — Byju Raveendran and Divya Gokulnath — and Riju Raveendran continue to sit at the startup’s board.
The startup, also the world’s most valuable education technology company, is grappling with a series of challenges. It refused to make a $40 million payment earlier this month and counter-sued its lenders. Byju’s said its lenders were operating in “bad-faith negotiating tactics.” Lenders allege that Byju’s has technically defaulted on the loan.
The startup is also cutting about 1,000 jobs as it pushes to improve its finances. BlackRock cut Byju’s valuation by nearly two-thirds to $8.4 billion at the end of March this year, TechCrunch first reported.