Can the settlement with BCCI resolve Byju's woes?

Byju's got a relief of sorts when the Board of Control for Cricket in India (BCCI) informed the National Company Law Appellate Tribunal (NCLAT) that it reached a settlement with beleaguered edtech major on the repayment of over Rs 158 crore dues from the company under sponsorship deals. Byju's settlement agreement with the BCCI is a crucial step in addressing some of its financial woes as it will help the company avoid immediate insolvency proceedings initiated by the BCCI. The payments are being made by Riju Ravindran, the brother of Byju's CEO, Byju Raveendran.

However, experts with whom THE WEEK spoke feel that this settlement doesn't completely solve Byju's broader financial problems. The company has been facing several challenges, including layoffs, the closure of coaching centers, and the inability to pay salaries on time. Additionally, Byju's is under scrutiny from its US lenders, who raised concerns about the source of the funds used for the settlement. This indicates that while the settlement with BCCI is a positive development, it does not address the underlying financial instability and operational challenges the company is facing.

“This settlement has not fully alleviated Byju's legal and financial pressures. The company still needs to navigate through its obligations to other creditors and stakeholders. The scrutiny from US lenders and the ongoing insolvency proceedings highlight the complexity of Byju's financial situation. While the settlement with BCCI is a crucial step in mitigating immediate legal threats, Byju's must continue to address its broader financial and operational challenges to achieve long-term stability,” said Girish Linganna, aerospace and space expert who also follows the edtech sector.

He adds that settling the dues might help Byju's improve its brand image, which has taken a hit due to financial issues and negative news. Showing a commitment to pay off debts can be seen as a responsible action, potentially boosting confidence among stakeholders. “Byju's ability to settle with BCCI may positively affect investor confidence. However, concerns from US lenders about where the funds came from could still make it hard to attract new investments. The settlement shows that Byju's is taking steps to manage its financial obligations. However, the company might need to make further changes, like cutting costs and realigning strategies, to ensure long-term stability,” added Linganna.

Byju's is a leading player in the edtech market, but financial issues could weaken its competitive edge. While the settlement offers temporary relief, the company needs to focus on innovation and expanding its market to stay ahead.

“It was widely believed that Byju's was hesitant to address its outstanding liabilities. Although they have paid one of the creditors, this does not necessarily inspire confidence that all liabilities will be settled. Several other creditors are still waiting, and there is a possibility that some of them may have to accept a haircut,” remarked Alok Shende of Mumbai-based Ascentius Consulting.

The ongoing scrutiny from US lenders and potential legal challenges could have regulatory consequences for Byju's. It will be crucial for the company to follow financial regulations and maintain transparent operations to avoid further legal problems. Addressing financial problems and settling dues can boost employee morale. However, the company must also work on creating a stable work environment and addressing internal concerns to keep talent and maintain productivity.

Marketing and branding experts agree that while not fully restoring trust, the settlement can help improve Byju's public image to some extent, demonstrating a willingness to resolve disputes. “The settlement with BCCI alone is unlikely to significantly boost investor confidence. To regain trust, Byju's needs to chart a clear path to profitability and sustainable growth. Beyond this settlement, Byju's requires a robust long-term strategy to address other challenges, including fierce competition and global scaling. To overcome these hurdles, Byju's should prioritise strengthening its core edtech business by improving student outcomes, enhancing product quality, and optimising cost structure. Regardless of the outcomes and next moves, the black mark earned is likely to be permanent. The challenge for Byju's will be to take this in stride and work around it—or better yet, turn it into an opportunity to create a brand new Byju's 2.0,” remarked Pavan Padaki, author, Brand Vinci and Brand Doctor.

Marketing experts say while a settlement with BCCI would give the much needed reprieve from being insolvent for Byju's it is just a small mercy. “Byjus has a long way to go in mending its finances, regaining its market potential and addressing its legal fights with shareholders. They do not have too much time to bring the company back to its normalcy but the fights are still multi-dimensional and the morale does not seem to high. Sad to see an Indian unicorn heading that way, but Byju's can still be hopeful if it addresses internal conflicts with shareholders. It should not be fighting both internally and externally,” Subramanian S, founder, president and CEO of Ascent HR told THE WEEK.