In all, three premises – two official and one residential – linked to the founder Byju Raveendran, and his company ‘Think & Learn Private Limited’ were searched under the provisions of the Foreign Exchange Management Act (FEMA).
The company runs online education platform Byju’s, India’s most-valued startup at $22 billion, and counts several marquee investors, including Tiger Global, Sequoia Capital, General Atlantic, Prosus, BlackRock and Tencent as its backers.
“During the search & seizure action various incriminating documents and digital data was seized,” the statement released by the agency said.
According to the ED, FEMA searches also revealed that the company allegedly received foreign direct investment to the tune of Rs 28,000 crore during the period from 2011 to 2023. Further, the company has also remitted around Rs 9,754 crore to various foreign jurisdictions during the same period in the name of overseas direct investment.
“…the company has booked around Rs 944 Crore in the name of Advertisement and Marketing expenses including the amount remitted to foreign jurisdiction. The company has not prepared its financial statements since financial year 2020-21 and has not got the accounts audited which is mandatory. Hence, the genuineness of the figures provided by the company are being cross examined from the banks,” the statement further read.
Discover the stories of your interest
Investigation against the company was initiated on the basis of various complaints received from various private persons. During investigation conducted by the ED, several summonses were issued to the founder and CEO Raveendaran Byju, “…however, he always remained evasive and never appeared during the investigation,” the agency saidIn a statement on the development, Byju’s legal team spokesperson said, the recent visit by ED officials “was related to a routine inquiry under FEMA..” The company added, “ We have been completely transparent with the authorities and have provided them with all the information they have requested. We have nothing but the utmost confidence in the integrity of our operations, and we are committed to upholding the highest standards of compliance and ethics,” the spokesperson said.
“We will continue to work closely with the authorities to ensure that they have all the information they need, and we are confident that this matter will be resolved in a timely and satisfactory manner”.
Byju’s under fire
Byju’s troubles began to come to the fore when its audited financial statements for 2020-21 were delayed. The company filed its audited results with an 18-month delay with major changes made to its revenue recognition methods.
![byjus-audited-financials. byjus-audited-financials.](https://img.etimg.com/photo/msid-42031747/et-logo.jpg)
The company is yet to make its results public for the year ending March 31, 2022. The delay in filing earnings for FY21 and FY22 also prompted Byju’s to offer to increase the rate of interest on its $1.2 billion term loan B (TLB) as part of renegotiating debt-financing arrangements, as reported by ET.
We also reported earlier this month that Byju’s lenders have sought a prepayment of $200 million, in addition to a higher rate of interest as a precondition to restructuring the $1.2 billion loan.
During FY21, Byju’s had come under the scanner of the Directorate General of Goods and Services Tax Intelligence over alleged evasion, but the matter was settled after the company agreed to pay its liabilities.
More recently, Byju’s has been in the market to raise $400-600 million for the parent company, and its subsidiary Aakash. The delay in financial reporting is having a bearing on Byju’s fundraising plans as well.
ET had reported that the edtech firm, which has been under scrutiny for issues such as corporate governance, audit lapses, business practices, poor financial results and layoffs, was also planning a funding round through convertible notes.
However, in the absence of audited financial results, big four accounting firm KPMG has conducted a detailed diligence report for incoming investors, which is being used for financial references and latest performance updates.
For FY21, Byju’s had reported losses of Rs 4,588 crore, up from Rs 262 crore in the previous financial year. Its readjusted revenue from operations stood at Rs 2,280 crore, down 48% from the projected revenue of about Rs 4,400 crore cited in the unaudited results of its parent company Think & Learn.
BlackRock, the world’s largest asset manager, marked down the valuation of Byju’s in its books by almost 50% as of December 2022, when it valued the company’s stock at $2,400, down from $4,600 at the end of April last year. Byju’s was valued at $22 billion at the time of its last fundraise in October 2022.