The troubled ed-tech juggernaut, Byju’s, is reportedly deep in negotiations with the Board of Control for Cricket in India (BCCI) to settle a lingering disagreement over unpaid sponsorship fees amounting to a substantial Rs 158 crore. Nitin Golani, Byju’s India Chief Financial Officer, shared that both parties have reached what he calls a ‘directional agreement’ on a payment plan that spans the next six to eight months.
Charting a Course Through Settlement Talks
Golani expressed optimism regarding the ongoing discussions, stating, “Broadly, we are in conversations with the BCCI. There is a directional agreement on a payment plan that both parties have sort of agreed to, which is what we will now work towards. We will be able to make those payments over the next six to eight months.” He emphasized that the primary objective is to bring the situation under control.
The BCCI had taken legal recourse against Byju’s by filing a case with the National Company Law Tribunal (NCLT) under insolvency and bankruptcy regulations towards the end of the previous year, citing the unpaid dues as the primary cause for the dispute. Despite Byju’s recent attempt to steer the matter toward arbitration, the NCLT suggested that the arbitration process might not hinder the ongoing proceedings initiated by the BCCI under the Insolvency and Bankruptcy Code, 2016.
Deepening Financial Woes for Byju’s
Byju’s recently unveiled its financials for the fiscal year 2021-22 to the Ministry of Corporate Affairs, albeit almost 22 months after the reporting period concluded. The figures painted a picture of a 118 percent surge in consolidated revenue, jumping from Rs 2,428 crore in FY21 to a significant Rs 5,298 crore in FY22. However, the company’s losses witnessed a marked increase, ballooning from Rs 4,564 crore in FY21 to a staggering Rs 8,245 crore in FY22.
Interestingly, Bloomberg reported that Byju’s is actively seeking to raise $100 million at a valuation of less than $2 billion, signaling a substantial 90 percent reduction from its previous funding round, where the company achieved a valuation of a whopping $22 billion. Adding to the financial woes, global investment management firm BlackRock, holding less than a 1 percent stake in Byju’s, has reportedly devalued the ed-tech company to $1 billion from its earlier peak of $22 billion in early 2022.
This development falls in line with a broader trend of valuation downgrades by Byju’s investors over the past year. In November 2023, tech investor Prosus marked down the value of its stake in Byju’s, resulting in a company valuation of less than $3 billion, reflecting an 86 percent decline from the previous valuation of $22 billion.
Byju’s financial struggles have been compounded by a series of operational challenges, leading to a downsizing of its workforce over recent years. The company grappled with a dual setback, including a decline in venture capital funding and a slowdown in demand for online learning services, prompting the unfortunate layoffs of thousands of employees.
Byju’s and BCCI: Unraveling the Sponsorship Saga
The clash between Byju’s and BCCI originates from the cricket body dragging the ed-tech firm to NCLT over unpaid sponsorship dues totaling Rs 158 crore. Reports suggest that, despite facing financial challenges, Byju’s is steadfast in its commitment to honoring its sponsorship contract with BCCI, even in the absence of a written agreement.
The matter reached the NCLT in September, resulting in the registration of a case on November 15, with a scheduled hearing on December 22. Byju’s stepped in as Team India’s official jersey partner following the conclusion of BCCI’s contract with OPPO. While the contractual agreement with Byju’s officially ended in March 2022, the partnership was extended for an additional 18 months without a formal written contract.
Despite the absence of a formal agreement, Byju’s diligently met its financial commitments until September 2022. However, the ed-tech firm opted out of the contract midway through the extended period. Subsequently, BYJU’s Dream11 took over as the jersey sponsor for Team India with a three-year deal worth Rs 358 crore.
A few months ago, Byju’s made a strategic decision not to renew branding partnerships, a move aimed at addressing financial setbacks and working towards profitability in a challenging market landscape. As the settlement talks with BCCI progress, the ed-tech giant faces a complex journey toward financial recovery.