Enforcement Directorate (ED) Operation:
Byju's, the Edtech start-up, faced scrutiny when the Enforcement Directorate (ED) conducted searches and seizures at three premises in Bengaluru, including those belonging to its CEO and founder Byju Raveendran.
Complaint under FEMA:
The ED's action followed a complaint against Byju Raveendran and his company, 'Think & Learn Private Limited,' under the provisions of the Foreign Exchange Management Act (FEMA).
FDI Investments and Remittances:
The searches revealed that Byju's received Foreign Direct Investment (FDI) totaling Rs 28,000 crore from 2011 to 2023.
The company remitted Rs 9,754 crore to various foreign jurisdictions during the same period in the name of overseas direct investment.
Financial Irregularities:
Byju's allegedly booked around Rs 944 crore in the name of advertisement and marketing expenses, including amounts remitted to foreign jurisdictions.
The company is accused of not preparing financial statements since FY21 and not getting accounts audited, which is mandatory.
Genuineness of Figures:
Officials from ED are cross-examining and tallying the figures provided by the company with banks to verify their genuineness.
Non-compliance with Auditing:
Byju's has allegedly not prepared financial statements since FY21 and has not undergone mandatory auditing, according to ED officials.
Byju's Response:
Byju's legal team spokesperson issued a statement, terming the ED operation as a "routine inquiry under FEMA."
The spokesperson expressed confidence in the integrity of Byju's operations and commitment to compliance and ethics.
Cooperation with Authorities:
Byju's, in response to the ED's operation, assured cooperation with authorities, stating that they have provided all requested information.
Byju's legal team spokesperson stated that the company would work closely with authorities to ensure they have all the necessary information.
Byju's CEO's Email to Employees:
Byju Raveendran sent an email to employees, addressing the ED's searches and characterizing them as an inquiry under FEMA.
He mentioned that information related to FDI, overseas investments, and cross-border transactions had been previously submitted by authorized representatives.
Commitment to Compliance:
Byju's, through its spokesperson and CEO's email, emphasized its commitment to upholding the highest standards of compliance and ethics.
In summary, Byju's is facing ED heat due to allegations of financial irregularities, non-compliance with auditing requirements, and the scrutiny of its FDI investments and remittances under FEMA. Byju's maintains that it is cooperating with authorities and is committed to transparent and compliant operations.