Troubled edtech giant Byju's, which was once India's most-valued startup, is facing "material uncertainty" about its future. The company's auditor, MSKA & Associates, expressed doubts about Byju's ability to continue as a going concern.
The warning comes along with Byju's FY22 financial results, which are quite disappointing for its investors.
Surge in losses and escalating debts
Byju's losses nearly doubled to Rs 8,245 crore from Rs 4,564 crore a year ago, despite a rise in consolidated income to Rs 5,298.43 crore from Rs 2,428.39 crore. The company's total financial liabilities soared to Rs 17,678 crore in 2021-22, up from Rs 3,116 crore in the previous year.
The auditor highlighted risks from a $1.2 billion overseas loan and ongoing net losses. However, Byju's India CFO, Nitin Golani, pointed to measures taken to improve financial conditions and the pursuit of necessary funding arrangements.
Valuation and investor interests
Byju's valuation has seen a steep decline, with a recently reported attempt to raise $100 million at a valuation of less than $2 billion, a drastic drop from its peak valuation of $22 billion. Investors like BlackRock and Prosus have significantly reduced their valuation of Byju's, with BlackRock marking it down to $1 billion.
Operational struggles and cost-cutting measures
Byju's said it faced operational challenges with underperforming acquisitions like WhiteHat Jr. and Osmo, contributing significantly to its losses. The company has scaled down these businesses to cut losses.
However, another unit, Aakash (AESL), reported a significant 82% increase in profit, reaching Rs 79.5 crore in FY22. This is a notable rise from the Rs 43.6 crore profit in FY21.
Despite these setbacks, Byju's core business operations reported growth in revenue. However, the company has had to lay off thousands of employees and consider asset sales as part of its cost-cutting measures.
Notably, Byju's is aiming towards profitability. CFO Nitin Golani expressed optimism about the company's future, citing improved margins in the 2022-23 results. However, the company's path forward remains uncertain, with significant financial restructuring and strategic changes likely necessary to stabilize its operations.
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