Byjus is an Ed-tech firm. After COVID-19, the firm struggles to settle the payment disputes. The teleperformance business services initiated insolvency operations after the delay in the payment of five crore rupees by Byju. The teleperformance business services is an operational creditor of the Byjus. The mismanagement and accounting irregularities made the firm an underperformer. In 2022, the value of the firm was $22 billion. In 2024, the value of the firm is $1 billion. According to the data, Byju’s firm attracted global players and funding sources. In 2021, the firm received a debt finance of 1.2 billion. The blog walks through the journey of Byjus with an insight into the audit firms of Byjus, restructuring plans of Byjus and the role of cost accountants in restructuring. Corporate stories educate the current demand of professionals. In complex situations, professionals with CA/CMA and ACS qualifications solve the problems and ensure growth.
Audit firms of Byjus:
Deloitte was taking care of the auditing operations of Byjus. Deloitte quit its dealings with Byjus in 2023. In 2022, there was a delay in the preparation of financial statements. After Deloitte, the auditing operations of Byjus are with the BDO. The global firm BDO {Binder Dijker Otte} is the fifth-largest accounting firm. MSKA and Associates is the arm of BDO. The MSKA and Associates is the auditing partner of Byjus.
Byju is restructuring the business unit with three divisions: The three divisions of services are learning apps, tuition centres and online classes. The new structure taps the market opportunities and is designed with cost-effectiveness.
Byjus has the following names in the acquisition list: Aakash Educational Services, U.S-based kid’s digital reading platform Epic, online coding school WhiteHatJr, and educational games maker Osmo. Educational games maker Osmo is a $120 million company. U.S-based kid’s digital reading platform Epic is a $500 million Company. In 2022, the company merged with nine big companies to provide better services. Byjus solved the problem of using online platforms for mainstream learning.
In the press release, the company officials said that these three units will have separate leaders. The leaders take care of the profitability and cost strategies. The officials of Byjus declare that the new structure is under seven months of extensive operational review. CEO Arjun Mohan takes care of the cost optimization.
The group CEO and founder of Byju Raveendran says that reorganisation shows the quick adaption of the business. The restructuring helps in understanding the evolving market dynamics. On March 29, 2024, the company conducted a voting process through postal ballot and EGM. The approval from the voters of 55 per cent paved the way for the proposal of a fresh issue of shares and rights shares.
The issue and restructuring is to manage the unpaid salaries, vendor payments, regulatory dues and liquidity crunch. Byju says that the foreign shareholders behaved with irrational hostility. Byju team thank the investors for their extended support in the pivotal phase of the management. The renewed growth after the restructuring solves the problems of working capital and finance.
What is the difference between corporate restructuring and business restructuring?
In the corporate world, corporate restructuring and business structuring have different meanings. The following points explain the difference between the two terminologies.
Corporate restructuring:
- Corporate restructure focuses towards ownership change, financial changes, and changes in the organisational structure.
- The corporate restructuring of the company promotes profitability, competitiveness and efficiency.
- The names of corporate restructuring are joint venture, acquisition, divestitures, financial reorganisations, debt restructuring, and spin-offs.
- Corporate restructuring creates broader changes in the market.
- Business restructuring:
- Business restructuring is the change of the departments, business units and divisions of the company.
- Business restructuring makes operational adjustments, strategic changes, and rearrangement of resources.
- The other names of business restructuring are as follows: outsourcing, reorganizing departments, downsizing, rightsizing, changes in the distribution channels, and changes in the product line.
- Business restructuring involves specific units.
The role of chartered accountants in restructuring:
Chartered accountants can work as restructuring managers. The responsibilities of a restructuring manager demand communication, interpersonal and management skills. The US GAAP and IFRS explain that restructuring activities involve cost and cost recognition. The following points explain the challenges of corporate restructuring.
- Restructuring managers take care of the insolvency process, and financial turnarounds, and advise the management team about the reasons for underperformance.
- Restructuring managers do financial and commercial analyses to understand the underlying reasons for the underperformance.
- The professionals find out the recovery options and plan the corporate restructuring.
- Professionals understand the risk with past trading operations, assumptions, performance, and market competition.
- Chartered accountants help the management to understand the financial data and the most efficient tax structure for the business model.
- Chartered accountants review the funding facilities, finance and terms.
- Restructuring managers look into the performance, processes and methods in the business.
The role of cost accountants in restructuring:
Cost accountants understand the market competition, cost analysis, risk analysis and restructuring. A cost accountant thinks about the following points before the restructuring process.
- A cost accountant divides the business and parts of the business to make it profitable.
- A cost accountant understands the profit from prime locations.
- A cost accountant projects the termination of service of the employees, location-based services and other functions.
- Cost accountants project the expenditure of the restructuring process.
- Cost accountants also prepare a plan for implementation and completion of the restructuring plan.
Final Thoughts:
ICAI has set up a committee for the aggregation of CA firms. The committee works for the betterment of the Indian CA firms. The committee is about to release the guidelines within three months. The Gujarat International Finance Tec-city International Financial Services Centre is a Global Accounting Hub for professionals. The aggregation committee is framing guidelines for mergers, acquisitions, and advertisement of CA firms. The establishment of GIFT City helps the chartered accountancy firms operating in India to work with international clients. The chartered accountants, cost accountants and company secretaries dominate the space of the financial news. Corporate and business restructuring requires masterminds to make it as successful.
