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A day after the Directorate of Enforcement (ED) conducted searches and seizure action at the premises of Byju’s, the founder and chief executive officer of the edtech giant Byju Raveendran said that the company has taken all efforts to fully comply with all applicable foreign exchange laws.
“All our cross-border transactions have been duly vetted by both its (company’s) professional advisors and counsel and advisors and counsel of the investment funds and other sophisticated counterparties,” said Raveendran, in a letter addressed to the employees and reviewed by Business Standard.
“Additionally, all such transactions are routed only through regular banking channels (and) the RBI’s authorized dealer banks and the requisite documentation and statutory filings have been duly submitted. I want to reassure you that we are fully cooperating with the authorities,” he added.
ED on Saturday conducted searches and seizure action at three premises of the Bengaluru-based firm which achieved a valuation of $22 billion in a funding round last year in March. These three premises include two business units and one residential property in Bengaluru in the case of Byju Raveendaran and his company ‘Think & Learn Private Limited’ under the provisions of the Foreign Exchange Management Act (FEMA).
During the search and seizure action, various incriminating documents and digital data were reportedly seized. FEMA searches also revealed that the company has received foreign direct investment to the tune of Rs 28,000 crore (approx.) during the period from 2011 to 2023.
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Raveendran said in the letter that Byju’s has made a number of overseas acquisitions (investing an amount of approx. Rs. 9,000 crore) over the years as part of its growth strategy. These acquisitions have been instrumental in expanding its reach and impact.
“In order to fund these acquisitions, we have remitted some of our funding overseas,” said Raveendran. “I also want to highlight that Byju’s has brought more FDI (foreign direct investment) to India than any other Indian startup (Rs. 28,000 crore), and as a result, we have been able to create job opportunities for more than 55,000 talented professionals. This makes us India’s largest employer among startups.”
He said the recent visit by the ED is an enquiry under FEMA (Foreign Exchange Management Act). He said the information requested by and furnished to the officers in connection with the FDI raised, overseas investments made, and cross-border transactions relating to marketing and branding activities by Byju’s has previously been submitted by our authorized representatives.
Byju’s has raised a total funding of $5.8 billion from investors like Qatar Investment Authority (QIA), Sumeru Ventures, Vitruvian Partners, BlackRock, Chan Zuckerberg Initiative, Sequoia, Silver Lake, Bond Capital, Tencent, General Atlantic and Tiger Global. The firm has over 150 million learners.
“As we are funded by over 70 impact investors who have satisfactorily done due diligence on our operations, including all FEMA compliance, we are confident that the authorities will also come to the same conclusion,” said Raveendran.
He further said, “ I want to assure you that we remain steadfast in our commitment to our students and our vision. Let us continue to focus on our goals and work together towards achieving our mission.”
The ED statement also said that the company has not prepared its financial statements since the financial year 2020-21 and has not got the accounts audited, which is mandatory. Hence, the genuineness of the figures provided by the company is being cross-examined by the banks. The investigation against the platform was initiated on the basis of various complaints received from various private persons.
“During the investigation conducted by the ED, several summonses were issued to the founder & CEO Raveendaran Byju, however, he always remained evasive and never appeared during the investigation. Further investigation is under progress,” said the statement from ED.
In the recent past, Byju’s has been in the news for the wrong reasons. These include sacking employees, alleged harsh and "abusive" work culture and facing challenges to raise fresh capital amid funding winter and macroeconomic uncertainty.
Last year, the Ministry of Corporate Affairs asked edtech giant Byju’s to explain why it hasn’t filed its audited financials for the year ending March 2021. It also sent Byju’s parent company a letter asking them to explain the seventeen-month delay in filing audited accounts. Earlier this year Byju’s reportedly sought more time from lenders to renegotiate an agreement governing a $1.2 billion loan that is in breach of covenants, according to people familiar with the matter. One of the terms set by the lenders was asking the firm to hire a chief financial officer (CFO).
The firm recently appointed Ajay Goel as its CFO. The seasoned global finance professional has been hired to strengthen the company's financial operations, long-term business strategies, and path to profitability.
The US-based asset manager BlackRock has reportedly reduced the valuation of the Byju’s by about 50 per cent to $11.5 billion. This is a sharp decrease from the $22 billion at which the Bengaluru-based edtech decacorn was last valued in 2022. Byju’s posted losses of Rs 4,588 crore in FY21, 19 times more than the preceding year, according to the latest available financial report. Byju’s, valued at $22 billion, was targeting to be profitable by March this year.
Byju’s is in the process of raising $700 million from investors. According to the sources, the due diligence has been completed, but the money has not been transferred to Byju’s yet.
Early this year, Byju’s handed the pink slip to 900-1,000 employees in a fresh round of layoffs, according to media reports, although sources in the company said the move was part of the “optimisation” strategy that the edtech giant had announced last year that included sacking 2,500 workers.
