InvestorQ : Why has Byju’s reported such huge losses for FY21 and that too so late?
swati Bakhda made post

Why has Byju’s reported such huge losses for FY21 and that too so late?

Dia Deshpande answered.
2 weeks ago

Byju’s finally reported its FY21 results in September 2022 after a gap of 18 months and after being pulled up by the Ministry of Corporate Affairs (MCA). While Byju’s is a private limited company, it still has to file its annual results within 7 months, so an 18-month delay was almost too much in the first place. Byju’s has given reasons like change in the accounting system, delay in consolidation of subsidiaries etc as the reasons for the delay. However, these are just hard to digest, but we will come back to that point later.

Let me first turn to the numbers announced by Byju’s for FY21. Shockingly, the full year net loss stood for FY21 came in at a rather scary level of Rs4,588 crore. What about the top line. For FY21, the total sales revenues of Byju’s saw a marginal yoy growth of 3.32% to Rs2,428 crore. Net losses had surged from just about Rs231.69 crore in FY20 to Rs4,588 crore in FY21, which is nearly a 20 times expansion in net losses. Byju Raveendran has called this surge in loss an impact of accounting adjustment, so let us look at that in more detail.

Raveendran has said that the huge jump in losses during FY21 was on account of deferral of 40% revenues to subsequent years. This was as per the new accounting model suggested by Deloitte, Haskins and Sells. Under the new method, in the case of EMI fees paid, the company would recognize the revenues only when substantial portion of the revenues were actually received. However, costs were front-ended and incurred and booked in FY21. This led to the huge surge in losses in FY21 and Byju’s is confident of rectifying this situation.

Raveendran has admitted that this delay in results announcement could be attributed to COVID, slew of acquisitions and the change in the method of booking revenues. He admitted to further delay in declaring results for FY22, but should be certainly better than FY21. All this is likely to impact valuations because till date, Byju’s has raised nearly $5 billion in capital and is currently valued at over $22 billion. Edtech is under funding pressure and the last thing that Byju’s needed was allegations that it was trying to conceal its huge loss.