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Case Study

Uploaded by

rupanisravani477
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1.

The Downward Trajectory of Byju`s: Is Revival


Possible?
Byju Raveendran founded Byju’s in 2011 and launched a learning app in
2015 that promised personalized, interactive and adaptive learning benefits
for school students. The Byju’s app found many takers. Even venture
capitalists got interested in Byju’s and India’s ed-tech growth story and
poured millions of dollars into the company.

The pandemic impacted the world of education in a big way. Learning


online was the new normal and Byju’s was among the harbingers of this
change. Buoyed by the growing demand for its courses, Byju’s attracted
more venture funding. Flushed with funds it went on an acquisition spree to
expand its offerings into different domains and its business into foreign
countries. Its valuation continued to increase, reaching US$ 22 billion in
2022. After the end of the pandemic, online teaching and learning took a
backseat. This started impacting Byju’s as students stopped renewing their
subscriptions. The investors were unhappy with Byju’s delaying the
announcement of financial results year after year and started demanding
higher interest and prepayment of loans. The auditor, Deloitte, severed its
ties with Byju, citing its inability to conduct an audit. Three directors
representing the leading investors in the company resigned from the board.
Raveendran needed to address the challenges and steer the company ahead.

Introduction

In June 2023, three board members representing major investors of Byju’s India-
based, world’s largest Edtech company announced their resignation from its board.
The non-executive board members from Peak XV Partners , Prosus , and Chan
Zuckerberg Initiative exited from the board of Byju’s due to differences with the
founder and CEO Byju Raveendran (Raveendran). People aware of the issue..
The Beginning…

Byju’s was founded in 2008 by Raveendran, an engineer-turned-entrepreneur, and


his wife, Divya Gokulnath (Gokulnath). Raveendran started his career in 2003 as a
service engineer in the UK with a shipping company..

… And Growth

Byju’s started exploring more avenues for growth. It found several opportunities in
teaching in different Indian languages, learning beyond K-12, coding, computer
classes, and also overseas markets. On the growth plans, Divya Gokulnath,

The Other Side…

Indications that Byju’s might be facing challenges emerged when it did not release
the annual financials for the year ending March 2021, even till June, and delayed it
further. By June 2022, signs of trouble were more evident as Byju’s deferred
payment of US$ 180 million to Blackstone..

Students and Employees’ Woes

The staff at Byju’s, which witnessed several of their colleagues being fired, feared
for their jobs. When a newspaper interviewed a few staff members, most said that
they work more than 12 hours a day, six days a week. They said they sometimes
worked on Sundays when their managers asked them to for fear of losing their
jobs..

Owners’ Stake Dilution

Since 2015, the promoters of Byju’s – Raveendran, Gokulnath, and Riju have sold
shares worth US$ 408 million in 40 secondary market transactions. Raveendran
sold 29,306 shares (US$ 3.28 million)..

Term Loan B

One of the major setbacks faced by Byju’s was Term Loan B. In late 2021, Byju’s
wanted to take a term loan of US$ 500 million..
More Troubles

Byju’s inability to pay loans on time and the fact that some of the investors did not
give the money promised raised several red flags about the finances..

Raveendran’s Next Course

In January 2023, Raveendran said that Byju’s would change its sales strategy. As a
part of the new strategy, salespeople..

Exhibits

Exhibit I: Byju’s– Funding


Exhibit II: Byju’s Acquisitions
Exhibit III: Byju’s – Expenses
Exhibit IV: Byju’s Shareholding as of 2022

1. What were the primary factors contributing to the financial decline of Byju’s
(Laximi Priya)

2. How have Byju’s acquisition strategies impacted its current financial and
operational challenges? (Swetha)

3. What role did regulatory scrutiny and consumer backlash play in Byju’s
downward trajectory? (Shravani-Marketting)

4. How has Byju’s handled workforce challenges, and what impact did layoffs
have on the organization? (Jahnavi)

5. What measures can Byju’s implement to regain consumer trust and stabilize its
operations? (Sai Kiran-marketting)

6. Do you think Byju’s current market position and brand recognition can be
leveraged for a successful revival? Why or why not? (Astro)
2. Johnson & Johnson Spin-off

The case study is about Johnson & Johnson Corporation’s (J&J) spin-off of its
consumer health business. The company came into existence in the year 1886 and
grew significantly over the years. Over a period of 135 years, J&J expanded its
business to countries around the world but it also faced various issues related to its
products, among them its baby powder. The case highlights how these issues
affected the performance of the company and increased its liability to about US$24
billion by the end of September 2021. To rid itself of such liabilities, J&J came up
with the plan of restructuring its business and started looking for various
restructuring alternatives.

J&J decided to spin off its consumer health business to reduce its debt burden.
With this separation, the company was expected to increase its focus on each
business, strengthen their financial position, and offer more products and better
health products to patients and consumers. It remained to be seen whether the
decision of a spin-off was really going to help J&J revamp its position.

Introduction

On November 12, 2021, Johnson & Johnson Corporation (J&J), a US-based


healthcare conglomerate, announced that the company was going to spin-off its
consumer health business. The Spin-off was expected to complete by November
2023. As per the plan, J&J was going to split its business into two separate public
companies. One company would deal with drugs and medical devices carrying the
brand name of J&J, whereas the other company would deal with consumer health
business carrying the brands like Neutrogena, Aveeno, Tylenol, Listerine, and
Band-Aid. The new company’s name was going to be Kenvue. The name was
inspired by the Scotland word ‘ken’, which was related to knowledge and ‘vue’
was related to sight..

Earlier Spin-Offs in The United States


J&J was not the first company to go for Spin-off. There were many companies across the
US, which opted for such type of company separation in the past. Companies opted for
this method of restructuring to meet certain objectives. Those objectives were to get
the advantage of tax benefits, to increase focus on core business and to reduce
undesirable collaborations, to separate unrelated or unprofitable businesses, and to
increase investment efficiency by reducing debt and other liabilities..

About J&J
In 1886, Robert Wood Johnson along with his brothers James Wood Johnson and Edward
Mead Johnson founded a company in New Brunswick, New Jersey, US under the name of
J&J..

Performance
J&J had shown an uneven growth trend over the last few years (2016-2020) (Refer to
Exhibit III and Exhibit IV for Income Statement and Balance Sheet of J&J From 2016-
2020)..

The Spin-Off Proposal


On November 12, 2021, J&J announced its intent to spin-off its consumer health
business. It aimed to create two global leaders by offering better health products to
patients and consumers through innovation and pursue strategies that would benefit
various stakeholders of the company..

Steps Towards Spinoff


J&J formed a committee named ‘Company’s Executive Committee’ within one month of
the release of the plan (by the end of December 2021). In December 2021, J&J
announced the names of new members of the Executive committee..

Evaluation of Spin-Off
J&J followed the footsteps of its competitors, GSK, and Pfizer. Both companies were
expected to spin-off their joint consumer health business in mid-2022. According to
some analysts, the global consumer health sector was likely to get consolidated. In this
sector..

Exhibits
Exhibit I: Timeline of J&J
Exhibit II: Division Wise Product Details of J&J
Exhibit III: Income Statement of J&J
Exhibit IV: Balance Sheet of J&J
Exhibit V: Segment wise Sales and EBT contribution of J&J (2016-2020)
Exhibit VI: J&J’ Quarterly Growth of Sales by Segment
Exhibit VII: Details about J&J’s Executive Committee
1. What were the key reasons behind Johnson & Johnson’s decision to spin off
its consumer health division? (? ( Bala Nikita))
2. How does the spin-off align with Johnson & Johnson’s long-term business
strategy and goals? ( Sai Kiran -Finance)
3. What are the potential benefits and risks associated with the separation of
the consumer health division from the pharmaceutical and medical device
segments?(Shravani-Finance)
4. How is the spin-off expected to impact Johnson & Johnson’s financial
performance and market positioning?( Tarun)
5. What challenges might Johnson & Johnson face during and after the spin-
off process, and how could these be mitigated? ( Abhinandan)
6. How will the spin-off affect Johnson & Johnson’s stakeholders, including
investors, employees, and customers?( Hassan)

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