In a new setback for the education technology giant Byju’s, the Enforcement Directorate (ED) has prevented its founder, Byju Raveendran, from traveling abroad. The central agency has issued a lookout circular, restricting the 43-year-old entrepreneur from leaving the country. This move follows the edtech firm’s substantial losses and a sharp decline in valuation by about 90% last year.
Byju’s, once valued at over $20 billion, faced challenges, including the departure of key investors and the resignation of its auditor Deloitte. Additionally, a legal dispute with lenders in the US over a $1.2 billion loan further added to the company’s woes.
Raveendran, who experienced a rapid rise in the edtech industry, now confronts pressure from a group of shareholders seeking to oust him and appoint a new board. An extraordinary general meeting (EGM) was scheduled, but a Karnataka High Court order has temporarily halted any decisions until the next hearing.
Byju’s contends that the EGM is procedurally invalid and aims to disrupt the company’s management. However, sources among investors indicate that the meeting will proceed, with a push to remove Raveendran as CEO.
The company’s spokesperson stated, “This EGM is procedurally invalid and legally on the wrong side of the Companies Act, 2013. Byju Raveendran or any other Board member will not attend this invalid EGM.” The founders emphasize the importance of respecting established legal procedures to safeguard the company’s integrity.
Reflecting on Byju’s journey, the edtech firm, which began in 2006 with classes for MBA aspirants, expanded rapidly over the years. The launch of the Byju’s learning app in 2015 marked a turning point, propelling it to become India’s first ed-tech unicorn by 2019. However, challenges arose, including allegations of a toxic work environment, aggressive marketing, and a significant cut in valuation by Prosus, leading to layoffs and financial mismanagement allegations.
As the Covid pandemic fueled the demand for online education, Byju’s saw exponential growth. Yet, the company’s troubles persisted, prompting Raveendran to mortgage personal properties to secure a loan for staff salaries.
Amidst these challenges, the Enforcement Directorate scrutinized Byju’s foreign investments, issuing showcause notices to its parent firm, Think & Learn, over alleged violations exceeding ₹9,362 crore under the Foreign Exchange Management Act. The recent lookout circular against Raveendran adds another layer of complexity to Byju’s ongoing struggles.