After TFI’s explosive story about BYJU’s, the company pays Blackstone for Aakash deal

The biggest success of writing is the impact it leaves on society. There are multiple stories important to the common public that are neglected by the mainstream media. Either paid to not cover the story or influenced by some sort of quid-pro-quo, the news which affects poor people is side-lined. In this environment, alternate media like The Frustrated Indian (TFI) try to become the beacon light of truth and public stories. The effects further multiply when our stories create some positive impact on society. It not only gives the confidence to work on more such stories but also provides satisfaction.

Taking the public cause at hand, we did a story related to BYJU’s on July 1st, 2022, highlighting the financial discrepancies of the company. Enumerating the company’s acquisition, we highlighted some serious misgovernance on parts of the company. Subsequently, we followed the story and constantly raised questions in the public domain regarding the unethical business practices of the company. In the follow-up, we also faced a rebuttal from BYJU’s co-founder. But, at last, we are successful in bringing the change we intended to achieve. We were able to hit the bull’s-eye.

BYJU’s Cleared Bills To Blackstone

According to latest reports, after months of deadline extension, the Indian EdTech company, BYJU’s, has cleared the bill of $234 million to Blackstone Group. The payment was made in response to the April 2021 buyout of Aakash Educational Services Limited (AESL).

It is pertinent to note that last year BYJU’s had made a deal with Aakash Educational Services Limited (AESL) at $950 million in cash and stock payments. The deal is said to be one of the largest buyouts by any start-up. Other than Blackstone Group, which held 38% stake in AESL, every shareholder was paid by BYJU’s.

In June this year, BYJU’s sought an extension from Blackstone and other former stakeholders of the tutorial chain Akash Education Services. BYJU’s spokesperson informing about the delayed payment had said, “Akash is our most successful acquisition to date and we are very proud to have them in our fold. The acquisition process of Akash is fully on track and all payments are expected to be completed by the agreed-upon date which is August 2022.”

August was the last date announced to clear the payment. But subsequent delay in filing of annual financial statements and delays in other payments developed a financial constraint. As the news of payment default spread, the company was attracting more criticism. That is why, the company resorted to urgent payment clearance of the Blackstone group.

TFI Follows BYJU’s

It is also important that in the age when political misgovernance is taken more seriously than business, TFI took them to public court. We followed the financial misgovernance of the company and highlighted their misdeeds.

First we did an article titled ‘BYJU’s on the road to become the next SAHARA..’ on 1st July 2022. In that article, we highlighted the subsequent acquisitions of BYJU’s in the post Covid scenario. Enumerating the reckless EdTech acquisitions of the world, we analysed how these decisions brought the company under the financial drought.

Further, on August 30 this year, we did an article titled ‘BYJU’s is (almost) bankrupt’. We highlighted two very important aspects of the company. First, explaining the fraud sales strategies of the company it was highlighted how poor people are being thrown into the debt cycle.

To sell their online course, first, they target the lower and middle-class parents who would do anything to make lives of their children better. The salesman of the company lures parents with a dreamy future for their children and makes them ready for the loan process. Poor and illiterate parents unaware of the EMIs and interest process agree to take loans. As they realize the recurring cost of the purchase, the damage has already been done. The salesman subsequently blocks the parent’s number and moves on to the next target.

Secondly, we highlighted that BYJU’s had not filed the mandated financial statements and annual returns for the financial year 2020-21. The Companies Act 2013 requires every company to conduct an audit of its financial accounts and submit it to the Ministry of Corporate Affairs within one year of the financial year.

The Confused Loss

On 17 September 2022, we published an article titled ‘BYJUs is inching towards a slow and torturous death’ highlighting the company’s financial conditions. After 18 months of delays, BYJU’s submitted its mandated financial statements and annual returns for the financial year 2020-21 last week.

In its statement, BYJU’s stated that it had earned Rs 2,428 crore in revenues and incurred a loss of Rs 4,588 crore in financial years 2020-21. As in 2019-20, the education technology company had incurred a loss of Rs 300 crore, the loss is reportedly 15 times higher than 2019-20.

The financial report confirmed our earlier prediction in which we had highlighted the company’s financial condition. The audit report concluded that the company is going through a huge financial burden as we predicted.

The Frustrated Co-Founder

Frustrated by our true story, Divya Gokulnath, the Co-founder of BYJU’s, sharing the morphed screenshot of our article, wrote a long post on LinkedIn against the media coverage of her company’s financial conditions.

Comparing her company’s financial results with the movie Brahamstra, she said that the second blockbuster release of this year, after Brahmastra, was BYJU’s financial results. She said, “..I have not seen Brahmastra yet, but I do happen to know BYJU’s results. Because, as its Director, I was involved in its making.”

Targeting tfipost’s article against her company’s financial health, she further wrote, “Whether or not you have seen the Bollywood blockbuster, I am sure you would have ‘seen’ our results. But have you seen the complete picture? Because just like movie reviews, sensationalism results in more clicks than truth in this age of 280-character reading attention spans.”

Further, complaining about our story and headline, she said, “I have never had any problems with the stories written about us. In fact, the content of most of the reports on our results is positive. But some of the headlines are another matter. It’s easy for forget that we are 18 months post FY21, and that BYJU’S has grown more than 4 times in this span. Or that our ‘widening losses’ in FY21 have been cut to half in FY22.”

Misgovernance On The Part Of BYJU’s

After which, we wrote another article on 21st September 2022 titled ‘BYJU’s Co-Founder, TFI challenges you to prove us wrong’, refuting her claim about the company’s financial condition. We highlighted that based on an unaudited report, how the company is claiming Rs 10,000 crore revenue in the financial year 2022.

We also exposed the official auditor Deloitte Haskins & Sells’ abuse of Generally accepted accounting principles (GAAP) in the audit of the company’s account. By abusing GAAPs, the auditors front-loaded multiple years of recurring revenue to boost its numbers. Further, the interest paid by BYJU’s to its partner finance companies, who provide loans to customers to buy courses, has been accounted for under revenue and not in finance costs as to create favourable results in numbers.

The hurried clearance of AESL purchase bill is the result of our constant objection to misgovernance of the company. It is the fruitful result of our constant reporting that the company has started to look around their misdeeds. It is important that these misgovernance are clearly pointed out in public discourse as these companies not only affect the public as general but also the next generation.

The EdTech company claims to owe about 50,000 family members and 150 million plus students. But, the manner in which they are adding these students also needs to be highlighted. There are countless reports that suggest that BYJU’s salesmen are committing fraud by manipulating parents to buy the course.

It is the recurring effect of financial burden the company has invited and their greed to earn profit in less time that they have resorted to unethical sales practices. As our earlier report has hit bull’s-eye, we will continue to bring BYJU’s other misgovernance reports into the public domain.

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