New Delhi: In more trouble for edtech giant Byju's, the Enforcement Directorate has barred its founder Byju Raveendran from travelling outside the country. The central agency has issued a lookout circular against the 43-year-old entrepreneur. Earlier, the ED had issued a lookout circular 'on intimation' meaning that immigration authorities would inform officials concerned about any foreign trip by Raveendran, but now he can be stopped from leaving the country.
The edtech firm, once valued at over $20 billion and the poster child of India's start-up ecosystem, suffered massive losses last year and about a 90 per cent dip in valuation. It has last key investors and its auditor Deloitte has resigned. Byju's is also locked in a legal fight with lenders in the US over a $1.2 billion loan.
Raveendran, a former engineer who witnessed a meteoric rise before the ongoing crisis, has been under fire for the edtech firm's dipping fortunes.
A group of shareholders had requested for an extraordinary general meeting (EGM) tomorrow to oust Raveendran and appoint a new board. But the edtech firm's founder has got some relief from a Karnataka High Court order that has said any decisions taken at the meeting would be invalid till the next hearing.
Byju's has said the meeting was "merely a smokescreen designed to disrupt the management, control, and functioning of the company".
Sources among the investors have told news agency AFP that the court had not prohibited the shareholder meeting from taking place. They said the meeting would be held and investors would still push to remove Raveendran as CEO.
A company spokesperson said, "This EGM is procedurally invalid, contractually in contravention of our Articles of Association and Shareholders' Agreement, legally on the wrong side of the Companies Act, 2013. Byju Raveendran or any other Board member will not attend this invalid EGM. This means the EGM, if it is still summoned, will not have the required quorum and cannot proceed to discuss or vote on the agenda. As custodians of BYJU'S, it is the responsibility of the founders to respect the established procedures of law and protect the company's integrity.”
Byju's key investors include tech investor giant Prosus, US growth equity firm General Atlantic and the Chan Zuckerberg Initiative -- a philanthropic venture founded by Facebook boss Mark Zuckerberg and his wife Priscilla Chan. Representatives of Prosus and the Chan Zuckerberg Initiative stepped down from Byju's board last year.
Byju's Rapid Rise Before Crushing Fall
Back in 2006, Byju Raveendran formally launched classes for MBA aspirants preparing for the CAT exam. The edtech firm gradually expanded to undergraduate and then school students. In 2015, the Byju's learning app was launched. In the next four years, it had become the country's first ed-tech unicorn. The Covid pandemic saw rapid expansion of Byju's network as schools were shut, and school teaching shifted online.
Then the troubles began. Allegations of toxic work atmosphere and aggressive marketing that harassed parents started emerging. Last year, Prosus cut Byju's valuation by 75 per cent, leading to layoffs and allegations of financial mismanagement. At its peak, the edtech firm had spent massively on sponsorship. It had sponsored the Indian cricket team, the Football World Cup, and signed football legend Lionel Messi as global ambassador. Growth slowed down after schools reopened and Byju's stared at towering losses. Late last year, Byju Raveendran had to mortgage personal properties to arrange a loan to pay staff salaries.
Byju's foreign investment has come under the scanner of the Enforcement Directorate. Before the lookout circular against its founder, the ED issued showcause notices to Byju's parent firm Think & Learn over alleged violations worth over Rs 9,362 crore under Foreign Exchange Management Act.