What are the big red flags you see from what Byju’s has reported now?
Byju’s red flags are well reported; Deloitte has pointed them out, media has pointed out. These are not Deloitte pointing out the age-old accounting standards. The reporting is fair across all companies and investors and the stakeholders see all companies equally. All financial statements are the same length, That is the reason accounting standards are there.
Deloitte is just applying Ind Accounting Standards to Byju’s books. So Byju’s or any other company for that matter can hope to have its own revenue numbers, its own expense numbers etc. but at the end of the day, that was the red flag.
Byju has had growth and that seems to be without adequate processes in place, without adequate resources and systems in place, Only the valuations seem to have mattered.
Tamanna Inamdar: All of the startup boom is coming to the fore and there have been massive amounts of funding for new age companies. Byju’s reported these numbers for a pandemic year in which they did very well as there was a massive need for their product and services. Does this also give an insight into how some of the growth reported by these companies in the public listed space needs to be looked at more carefully?
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Shriram Subramanian: Yes, valuations trumped values for investors, media and other stakeholders. There were valuation per headline numbers. What was the company delivering if the company had good business practices? If the company caters to the needs of all stakeholders, be it food delivery. There are so many complaints from all the stakeholders. All the hotels are complaining against hotel aggregators. In the case of edtech, miss-selling is happening and students are complaining. Borrowers complaining against the fintechs.
So the valuations seem to have trumped even the core business processes. At the end of the day, these companies should be increasingly seen from the angle of what value they are adding to society at large; whether these companies are going to be sustainable; whether we are going to see many of these names 10 years down the line. Whether they would have created jobs for everyone, whether they would take all stakeholders along with them. Those are the metrics on which these companies should be viewed.