Indian startup

Global auditing firm Deloitte resigned as the auditor of Byju’s, the most valuable Indian startup on Thursday, feeding into concerns about the company’s financial state. Initially scheduled to collaborate with the company until 2025, Deloitte’s unexpected departure, coupled with the resignation of three board members, reverberated through the industry.

The move comes one year after Byju’s, a prominent player in the Indian startup scene, encountered global criticism for its delayed financial reporting.

The edtech firm, currently valued at $8.5 billion, labeled Deloitte’s resignation as a “planned transition” and dismissed the resignations of its board members.

Byju’s has since named BDO (MSKA & Associates) as its new statutory auditor.

Audit Delays Stir the Waters of the Indian Startup

In a letter to Byju’s board, Deloitte disclosed that it had not audited the accounts of the Indian startup for the year ending March 2022, citing the delay as the reason behind its resignation.

In accordance with the Companies Act, 2013, the audited financial statements for the year ended March 31, 2022, should have been presented to shareholders in the Annual General Meeting by September 30, 2022.

The absence of communication regarding the resolution of the audit report modifications for the year ended March 31, 2021, compounded the problem. Consequently, Deloitte tendered its resignation, signaling a major disruption in Byju’s financial administration.

Byju’s fell under intense scrutiny in the previous year due to repeated failures in publishing its accounts. The accounts for the year ending March 2021, finally revealed in September 2022, displayed revenue figures below the company’s own projections.

Despite the concerns flagged by Deloitte, Byju’s only expressed gratitude to its former auditor and did not directly address the issues raised, according to TechCrunch.

In a further setback for the Indian startup, GV Ravishankar of Peak XV Partners, Vivian Wu of Chan Zuckerberg Initiative, and Russell Dreisenstock of Prosus have resigned from the board.

Byju’s’s refuted these claims, urging media outlets to desist from spreading unverified information. The founders, Byju’s Raveendran, Divya Gokulnath, and Riju Raveendran, remain on the board.

The issues plaguing Byju’s extend beyond the auditor’s resignation and board changes. Earlier this month, the edtech firm refused to make a $40 million payment and counter-sued its lenders, leading to allegations of a technical default on the loan.

In 2022, Karti Chidambaram, a member of the Indian Parliament, raised concerns about Byju’s’s financial practices, and Byju’s has since been unsuccessful in securing $250 million from its most recent funding round.

Byju’s remains undeterred despite the onslaught of criticisms, continuing its aggressive expansion strategies, such as attempting to acquire US firm Chegg, valued at over $2 billion.

However, concerns are escalating, as the Indian startup is also grappling with other challenges, including job cuts and lowered valuations. As it ventures deeper into rough waters, Byju’s resilience will be tested, shaping the future course of India’s startup ecosystem.

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