MCA seeks explanation from Byju’s for delay in FY21 results

It is said that when troubles come, they come in droves. For the last 5 years, it looked like the Edtech companies in general and Byju’s in particular could just not even put one wrong step. In the last few months, the sheen appears to have faded. Amidst falling valuations, tighter cash flows and lay-offs, Byju’s has just run into some regulatory and compliance related questions. This time around, it pertains to the delay in filing the financial results and other statements more than 17 months after the closure of FY21.

Yes, we are talking of not finalizing the accounts for FY21 and not FY22. Even through Byju’s is a private limited company, the extant rules stipulate that even private limited companies must file their statements with the MCA withing 7 months of the completion of the fiscal year. Obviously, we are not talking about the results of FY21 not being filed even 17 months. That does not look too good for a start start-up, which is backed by formidable names and which is on track to launch its IPO in the next one year. That is not good news.

Obviously, the Ministry of Corporate Affairs (MCA) was not too happy and has specifically written to the promoter of Byju’s asking them to explain this inordinate delay. Byju’s has proffered a reason for the delay, but that looks far from convincing. According to Byju’s, it had delayed filing its audited financial results for FY21 since it was still consolidating the spate of acquisitions done in FY21. In early July, Byju’s had promised to file the annual results for FY21 in 10 days. However, there is no progress after a full 50 days.

This has become a clear breach since all private limited companies must file their annual results with the Ministry of Corporate Affairs within a period of 7 months from the end of the financial year. Listed companies have to do it within 3 months each year. Apparently, Byju’s has sent its response to the MCA, although the details of the communication are not known. At one point, Byju’s employed over 50,000 employees but to prevent cash burn, it has already laid off over 1% of the workforce. Employees confirmed it was much higher.

The valuations of Byju’s stands at close to $22 billion as of the last round of funding, but it is apprehended that such valuations may have come down recently. Byju’s had a tremendous appetite for fresh capital and has raised close to $5 billion in capital till ate. In FY21 alone, Byju’s acquired over 12 companies at a time when the edtech sector was booming. That was at the time of the lockdowns post COVID when people were forced to stay at home and opt for online courses. That is no longer the case with most students going back to classrooms.

The change in the fortunes of the Edtech industry started after the Covid-related restrictions were lifted and schools and colleges resumed physical classes. This has reduced the interest in the edtech sector, or at least the frenetic pace of growth has come down. Of course, the good news is that big names like Byju’s have already increased their focus on hybrid classroom models. Here, students get to learn from online sessions and physical classes, via a slew of offline centres. However, the fact is that amidst such difficult times, the MCA fiasco could have been avoided by Byju’s.