Also in this letter:
■ Disruption in stock broking space
■ Tata closes semicon deal with Tesla
■ All you need to know about Airchat
Exclusive: Byju’s India CEO Arjun Mohan resigns, founder Raveendran to head daily ops
Byju’s founder Byju Raveendran (left) and former India CEO Arjun Mohan
In a major top-level rejig at troubled edtech firm Byju’s, its India CEO Arjun Mohan has resigned, after just a little over six months in the position. Founder Byju Raveendran will be returning to the helm of affairs to oversee day-to-day operations. ETtech first broke the news on Monday morning, citing sources.
Driving the news: “By focusing on our core strengths with three specialised business units, we will unlock new growth opportunities while continuing to focus on profitability,” Raveendran, group CEO at Byju’s, said, adding that the restructuring will pave the way for ‘Byju’s 3.0’.
“Arjun has done an outstanding job steering Byju’s through a challenging period. We are grateful for his leadership and look forward to his continued contributions as a strategic advisor,” he said.
What’s the significance? Raveendran’s plan to return as operational CEO at the firm assumes significance as a group of the company’s investors voted in February, at an extraordinary general meeting (EGM), to oust him as the chief executive. The outcome of this EGM is being challenged in the Karnataka High Court and the matter is under an interim stay. Therefore, the resolutions can’t be enforced.
What happened with Mohan? Mohan, who joined Byju’s in September last year, led the business restructuring and clean-up of a large employee base and was spearheading the ‘Byju’s 2.0’ business plan. He was also closely involved in the daily affairs of the Byju’s-owned bricks-and-mortar coaching firm Aakash, a key asset for the edtech group.
Mohan was in the running for the CEO’s post at Aakash, but Byju’s appointed Deepak Mehrotra as the managing director and CEO.
Byju’s troubles: The development, signalling a deepening of the crisis at the firm, comes at a time when Raveendran is grappling with multiple issues that have hit the company over the past year.
Byju’s, in a separate statement, said it received the independent scrutiniser’s report on the EGM to increase the share capital. The report said shareholders have approved the resolution with a majority 55% of the total votes polled being in favour of increasing the share capital for the rights issue.
A majority of its employees are yet to be paid salaries for the past two months, and several senior executives have left amid a severe cash crunch at the firm.
ShareChat valuation drops 60% to under $2 billion post new funding
Ankush Sachdeva, cofounder and CEO, ShareChat
The valuation of homegrown social media platform ShareChat has plummeted by more than 60% to $2 billion after a recent debt fundraise of $49 million via convertible debentures. The platform had a peak valuation of $5 billion in 2022.
Why the funds? According to the firm, the funding will help invest further in its Ad targeting technology and continue the growth of consumer transactions business on ShareChat and Moj. It claimed ShareChat – as a standalone business – is operationally profitable, and Moj is expected to achieve the same over the next few months.
Convertible notes in play: For funding through convertible notes, a certain price range is determined for when the next round of cash infusion happens in a company. “For ShareChat, it’s below $2 billion now. Whenever the next liquidity event happens it won’t be above this price,” a participating investor in the latest funding round said.
Why the funds? A spokesperson for the company denied the development saying there is no “ceiling provision made in the documentation,” adding that “the conversion will be linked to future valuation without any ceiling.”
Trimming expenses: Mohalla Tech–which houses ShareChat and short-video app Moj–has been cutting operating costs over the past year in a bid to turn profitable amid intensifying competition from rivals like Meta’s Instagram Reels and YouTube’s Shorts. Over the past year, it has undertaken multiple rounds of layoffs to cut costs. Currently, it has more than 800 employees from a peak of around 2,700 people.
Sources said it is estimated to close FY24 with a revenue of around Rs 750 crore.
Also read | ShareChat parent’s FY23 losses jump 38% to Rs 4,000 crore
When Bharat places a buy on India, D-Street can thank discount brokers
A decade ago, discount brokers began democratising equity exposure and since then they have harnessed the mobile data revolution to tell India’s eye-popping growth story to ordinary savers in Madurai, Moradabad or Mangaluru. Today, they wrest a three-fifths share of the investing market by adding the equivalent of Australia’s population to their active client lists in only a few years.
A driving force: The Big Four in this business – Groww, Zerodha, Angel One and Upstox – continue to displace traditional brokers with a 63% combined market share of active clients by the end of FY24, up 4 percentage points in a year, NSE data showed.
What’s behind the gains? These gains come at the expense of traditional brokerage firms that continue to see a decline in the number of clients and market share. Analysts attribute the trend to the new-age savers’ familiarity with complex products, ability to do their research, and positive fee arbitrage on discount platforms.
Verbatim: “Discount brokers offer products 90-95% cheaper than traditional brokers with a simple and fast trading platform with all essential services,” said the CEO of a discount broking firm. “Traditional brokers provide research reports and additional services like a relationship manager, which the new generation does not prioritise.”
Catch-up quick: ET reported on Monday that these new-age brokers are diversifying from broking into fund management. They are betting big on two aspects of this business: passive funds and retail investors.
Data sourced from the Association of Mutual Funds of India (AMFI) shows that around 70% to 80% of the AUMs created by these fintechs are from retail investors, and a sizeable portion is from beyond the top 30 cities in India.
Tata Electronics seals semicon deal with Tesla
Tesla is understood to have signed a strategic deal with Tata Electronics to procure semiconductor chips for its worldwide operations, officials close to the development told ET.
Tell me more: The deal underscores the electric carmaker’s increasing interest in India beyond local revenue generation.
Executed discreetly a few months ago, the deal is significant as it positions Tata Electronics as a reliable supplier for top-tier global clients seeking to establish a pivotal segment of their semiconductor value chain within India. The US-based electric vehicle (EV) major is keen to enter India, the world’s fastest-expanding major automotive market.
Meeting with Modi: Tesla promoter Elon Musk will be visiting India this month for a meeting with Prime Minister Narendra Modi.
Musk is expected to announce the company’s potential Indian investments, including a commitment of funds toward EV manufacturing facilities.
Although estimates vary, most industry experts believe Tesla is likely to invest at least $2-3 billion in India to manufacture electric cars, which have a small but expanding share in the local personal mobility market.
Catch up quick: Recent policy changes have allowed automakers to import EVs priced at $35,000 or higher at a reduced import duty of 15%. This would, however, be contingent on automakers committing to invest $500 million within three years to establish manufacturing plants in India.
Meanwhile, Tesla will lay off more than 10% of its workforce.
ET Explainer: How Airchat works, and what its relaunch means for the social audio segment
AngelList founder Naval Ravikant and former Tinder executive Brian Norgard have relaunched their voice-centric social media application, Airchat, for iOS and Android users. The app has quickly gained traction, ranking among the top 24 social networking apps on Apple’s App Store. Here are the details.
How does it work? While it visually resembles familiar social networking apps, offering features such as following other users, scrolling through post feeds and engaging with posts through replies, likes, and shares, Airchat is accessible only by invitation, and focuses on audio recordings that are transcribed within the app.
Is it the first? No. Social networking platforms have previously explored the potential of voice-based interactions, as seen with Clubhouse, which saw high user interest initially, but struggled to sustain and capitalise on that momentum.
Airchat’s approach with asynchronous, threaded posts is aimed at offering users a different experience compared to the live chat rooms, which briefly gained popularity on Clubhouse.
Today’s ETtech Top 5 newsletter was curated by Gaurab Dasgupta in New Delhi.
