Priority for Byju’s is reduce cash burn, improve governance : ex-SBI chief Kumar

As an advisor to Byju’s, is there any hope for turnaround in the company?

I am hopeful because there is no problem with the product. So, if the product is good, then the only issues which need to be sorted are the governance ones. If governance issues are sorted, then there’s a future for Byju’s.

What are the priorities for Byju’s in the short term?

FY23 financials are under audit, and they will be out. A lot of effort is going on to reduce the cash burn. Issues with investors and the term loan must get sorted, and then focus needs to be on growth and content. Attention should not be on legal battles but on growth.

In both the case of Byju’s and BharatPe, you had to deal with ambitious young entrepreneurs. What advice do you have for them?

My advice to everybody is that transparency, honesty, and integrity of the financials, is all that matters. And no sustainable business can be built, unless you take care of all the stakeholders, whether it is your investors, your employees, or your people. In this whole saga of Byju’s or BharatPe, it came out very clearly there are not enough people who had sufficient experience to guide and that is the biggest learning. That if there are young people who have ideas, who have energy, then there also has to be someone to guide them. So, that was the missing piece.

Are all the major issues with BharatPe sorted?

BhartPe, in terms of its governance structure and in terms of compliances, a lot of ground has been covered and there are no major issues. There was no major issue in our financials as of March 2023. It’s a clean balance sheet. And there has been a huge shift in business strategy, too. Focus is not only on growth, but also on profitability. So a lot of steps have been taken to make the operations profitable. From October it has been Ebitda positive.

You always said that the market undervalued SBI. But SBI’s market cap has increased to ₹6.77 trillion. Do you still think it is undervalued?

Whoever was writing the obituary of SBI or undervaluing back then, they have all been proved wrong because the bank has some internal strengths, which were not being valued or recognized by the market, at that time. They may have their own reasons, because for the last couple of years, its earnings were very, very subdued. There were issues around non-performing loans, issues about the book value. But the market realized that SBI has put all those issues behind it, and now it is getting close to where it should be. Still, there’s scope for improvement.

Raising current account and savings account (Casa) is becoming a big issue in the banking industry. What do you think banks should be doing?

Now the term deposit rates are going up. So, there will be a challenge because people will shift their money from savings account to fixed deposits. Current accounts are still a very profitable business. Savings account per se I don’t think it’s a very profitable product for the banks. It’s a huge operational cost. We need Casa but the major advantage is in current accounts.

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Published: 11 Mar 2024, 07:13 PM IST