For the second in a year, Prosus has marked down the value of its stake in Think And Learn, Byju's parent company. After slashing the fair value of beleaguered edtech to $5.1 billion in March this year, the venture capital company valued Byju's at less than $3 billion yesterday. 
Prosus holds around 10 per cent stake in the unicorn. 

In the company's second-quarter earnings call for FY24, Ervin Tu, interim CEO of Prosus, told analysts, "We have turned our attention significantly to the three problematic assets and businesses in our (edtech) portfolio… Stack Overflow, Skillsoft and Byju's. And we are working every day trying to improve returns there. Those situations, in our judgement, are not emblematic of a change in the overall thesis for edtech." 

This is a massive 86 per cent drop from the $22 billion valuation Byju Raveendran's eponymous start-up posited while raising $250 million in October 2022.

Prosus is not the only investor relooking at Byju's valuation, and that too repeatedly. In April 2023, BlackRock slashed the valuation of the edtech, once touted as India's most valuable start-up, by around 50 per cent to $11.5 billion. In its AMC filing with the Securities and Exchanges Commission, the American investment company, which owns less than 1 per cent equity in the edtech, estimated its fair value at $8.4 billion as of March 31, 2023.

The markdown of its valuations is another salvo that Byju's is fighting this week. According to media reports, the Board of Control for Cricket in India (BCCI) filed a case against the edtech in the National Company Law Tribunal after the latter decided not to renew its exorbitant branding partnerships to conserve cash.

While this unfolded, news did the rounds that the Enforcement Directorate (ED) sent a show cause notice to Think and Learn Private Limited and Raveendran for violating the country's stringent Foreign Exchange Management Act, amounting to Rs 9362.35 crores. Quick to control the damage, the company released a statement claiming that the queries received in the notice were solely technical in nature "such as delay in filing Annual Performance Reports (APRs) with respect to duly compliant ODI investments of close to around Rs 8000 crores that arose from the delayed statutory audit (FY22)."

It also claimed that it had filed "requisite intimation contemporaneously for all FDI which is received in accordance with the eligibility criteria in law and not affected by the alleged non-filing of APR" and anticipated nominal fines, if any. 

The irony of this speedy response to the show cause notice was not lost on many industry observers who noted that the company had dragged its feet while filing its annual statements and also delayed the settlements of employees it had laid off employees.

But then again, Byju's (the company, and its founder) has a lot on its plate. Right on top of the list is raising funds to manage its operations whilst making pending vendor payments and other liabilities that have piled up. For now, it has found a benefactor in Manipal Group's chairman Ranjan Pai, who bought out the debt investment by the US Hedge Fund in a Rs 1,400-crore deal, as reported by Moneycontrol. 

However, there is a good chance that even such patrons will look askance to government agencies sniffing in a company's backyard, especially after it undertook a rapid scale-up and an acquisition spree during the pandemic and cooking a snook at corporate governance fundamentals, which has landed it in a liquidity crunch and in the administrative crosshairs. 

Over several months, Byju's has tried to curtail its loss-making subsidiaries to reduce its operating burn rate. 

In November this year, the edtech successfully resolved a longstanding issue with Davidson Kempner, related explicitly to covenants on the subsidiary, Aakash, which it bought months ago. Simultaneously, in September, it presented a proposal to its lenders, outlining the company's commitment to fully repay its $1.2 billion term loan B within the next six months. Its strategy involves an initial payment of $300 million within three months.

In pursuit of the funds required for loan repayment, Byju's has initiated a strategic review of its critical assets, including putting up for sale its upskilling platform, Great Learning and book reading platform Epic. This move is anticipated to generate approximately $1 billion for the company, according to a report by Moneycontrol.

But will these measures help it avoid another valuation markdown with a barrage of issues staring down the barrel?