Fall of the Titans: How shoddy corporate governance destroys companies
Two new-age tech companies, which set out to revolutionise the Country’s financial and education landscape for inclusive growth, met with a disastrous turn of events. The writing was on the wall for some time. But unfettered ambition, greed, and a hint of arrogance blinded the founders, marquee investors, and the board to the imminent fall. Byju’s, an edtech giant, was valued at $22 billion less than two years ago. Its valuation crashed to under $1 billion last month. After years of alleged lapses, shareholders, collectively owning about 30 percent stake in the cash-strapped startup, have called for an EGM later this month to oust Byju Raveendran, founder and CEO, and his family members from the board. Paytm, the fintech giant, received a major jolt from the Reserve Bank of India on January 31. After a rap on March 11, 2022, the banking regulator barred Paytm Payments Bank from accepting deposits, credit transactions, and top-ups from customers after February 29. The central bank said it had given the fintech “sufficient time” for course-correction. Timely action by its board of directors could have saved the company from this crisis. The Paytm and Byju’s debacle only adds to the long list of companies that have seen deep value erosion due to poor governance structures and an ineffective board that failed to discharge its duty towards minority shareholders and other stakeholders.
