BCCI is set for another shocking exit of its sponsors as EdTech major Byju’s wants to terminate its sponsorship agreements.
In June, Byju’s extended its jersey sponsorship agreement with BCCI until Nov 2023 for an estimated $35 million. Now, the company wants to terminate the agreement but the Board has asked Byju’s to continue it for at least until March 2023.
But why is Byju’s terminating the agreement? It’s because Byju’s is looking to aggressively cut costs as the demand for EdTech services has taken a serious hit.
“BCCI received an email from Byju’s on 4.11.2022 requesting terminating the association post the recently concluded T20 World Cup. As per our discussions with Byju’s, we have asked them to continue the current arrangement and continue the partnership at least until 31.3.2023,” read a note by BCCI.
This is not the first time that Byju’s is coming into the headlines. It has been happening for quite a long time now. We all know that EdTech platforms are hogging headlines for all the wrong reasons- the mass layoffs, shutting down of verticals, and more. Currently, Byju’s being the most valued EdTech platform stays on top of the list.
Serious Allegations on Byju’s
The National Commission for the Protection of Child Rights (NCPCR) has alleged that Byju’s is buying children’s and their parent’s phone numbers and forcing them to buy courses.
“We came to know how Byju’s buying phone numbers of children and their parents, rigorously following them and threatening them that their future will be ruined. They’re targeting first-generation learners,” told Priyank Kanoongo, the Chairperson of NCPCR to ANI. He also added, “We’ll initiate action and if need be will make a report and write to the government.”
The commission asked Byju Raveendran to appear on December 23 in person to respond to the allegations. He has been instructed to provide the complete details of the course, its structure, fee details, number of students enrolled, refund policy, legal documents that recognise Byju’s as a valid edtech firm and other relevant documents.
However, Byju’s has denied any such claims.
Official statement from BYJU’S pic.twitter.com/iOPqW5FoM7
— BYJU’S (@BYJUS) December 21, 2022
In the recent past, Byju’s is facing a range of complaints on consumer websites and social media platforms from customers regarding being exploited and deceived.
Mass Layoffs By Byju’s
To achieve profitability by March 2023, the platform decided to lay off around 2500 employees. Byju blamed external macroeconomic conditions behind the mass layoffs.
“I realise that there is a huge price to pay for walking on this path to profitability. We are having to part ways with 2500 of our colleagues to avoid role duplication across our businesses…Some business decisions have to be taken to protect the health of the larger organisation and pay heed to the constraints imposed by external macroeconomic conditions,” said Raveendran in an internal mail sent to employees.
New Trouble For Byju’s
A new issue has popped up for Byju’s as some lenders have asked the company to repay part of a $1.2 billion loan that they recently bought into as they renegotiate terms of debt.
Renegotiating the debt terms which include faster repayment is unlikely to be accepted as these lenders make up a minority and can’t influence the terms they previously agreed on. The demands from creditors come at a time when the edtech platform is restructuring the loan amid incurring huge losses.
As per some sources, at least 51 per cent of the lenders have to agree with new terms of the loan, including the terms framed for repayment as well. If this condition stands unmet, this large loan issue cannot be rewritten. This is the standard clause in any loan term issue.
According to a person close to Byju’s, “The originally agreed loan repayment terms will be met.”
The Bottom Line
India’s most valued EdTech platform, Byju’s was valued at $22 billion but it has reported a loss of Rs 4,588 crore for FY 21, up from just Rs 262 crore in the last fiscal year.
The EdTech bubble has burst in India. The current scenario appears gloomy. Only time will help us understand the future of Byju’s and the entire EdTech industry.