Govt asks Byju's to explain delay in filing audited financial accounts

The Ministry of Corporate Affairs has asked Byju’s to explain why it hasn’t filed its audited financials for the year ending March 2021, according to a Bloomberg report.

Earlier this month, the Ministry of Corporate Affairs sent a letter to Byju’s parent company asking them to explain the seventeen-month delay in filing audited accounts.

Byju’s, which is India’s most valuable startup with a valuation of $22 billion, is expected to file the audited financials by next week, according to the sources.

The delay in filing is due to consolidating the accounts of a number of companies that  Byju’s acquired during the accounting year, the company has replied to MCA, according to the report.

An unlisted company has to file its annual accounts within seven months of the financial year-end, according to the experts in the report. Beyond this time period they have to pay an additional fee for each day of delay. The firm  and its directors are liable for fines as well as prosecution, in case of excessive delays in filing annual accounts. The prosecution is filed when the delay exceeds two years.

In July, Congress MP Karti P Chidambaram said he wrote a letter to the Serious Fraud Investigation Office (SFIO) to investigate the finances of Byju’s, according to an IANS report. Chidambaram called for a probe into Byju’s for not filing its 2020-21 (FY21) financial results, which the company had earlier stated to file by July 15, saying that it has yet to secure $250 million (around Rs 2,500 crore) capital from its most recent funding round in March.

On March 17, Byju’s announced that it has raised $800 million (Rs 6,401 crore) from Sumeru Ventures, Vitruvian Partners, and BlackRock. Byju Raveendran, founder and CEO of the company had made a personal investment of $400 million (Rs 3,200 crore) in this fundraise.

According to IANS report, Chidambaram said that "Byju’s has not yet gotten its financial statements for FY2020-21 audited from its auditor Deloitte, and will take more time to file the cost audit Report to the Ministry".

"This is in clear violation of Rule 6(5) of the Companies (Cost Records and Audit) Rules, 2014. At a time when Byju’s  proposes to expand its business and acquire Nasdaq-listed company 2U at a valuation of $2.4 billion, while parallelly firing employees to cut costs, it becomes pertinent to review the company's finances," he had said.

Byju’s had reported its revenues for 2019-20 at Rs 2,434 crore, an 81 per cent jump over the previous financial year. The company had reported a net profit of Rs 51 crore in 2019-20. This was a 152 per cent increase from the previous financial year.