ED examines Byju's numbers, probing foreign remittances to tune of nearly Rs 10,000 cr

BYJU’s

The Enforcement Directorate (ED) on April 29 carried out searches at three locations in Bengaluru related to Byju Raveendran and his company, Think & Learn Private Limited, which operates the popular online learning platform, in the latest setback for India's most-valued startup.

The search was conducted under the provisions of the Foreign Exchange Management Act (FEMA), and resulted in the seizure of incriminating documents and digital data.

ED has conducted searches at 3 premises in Bengaluru in the case of Raveendaran Byju and his company ‘Think & Learn Private Limited’ (Byju online learning platform) under the provisions of FEMA. During the search, various incriminating documents and digital data was seized.

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— ED (@dir_ed) April 29, 2023

FEMA searches revealed that the company has received foreign direct
investment to the tune of approximately Rs 28,000 crore during the period from 2011 to 2023, the ED said in a statement.

Further, Byju's has also remitted about Rs 9,754 crore to various foreign jurisdictions during the same period in the name of overseas direct investment, ED said.

The company has booked around Rs 944 crore in the name of advertisement and marketing expenses including the amount remitted to foreign jurisdiction, according to ED. The company has not prepared its financial statements since the financial year 2020-21 and has not got the accounts, audited which is mandatory. Byju's filed its FY21 results after a long delay of 18 months in September 2022. The company reported a widening loss of more than Rs 4,500 crore.

Hence, the genuineness of the figures provided by the company are being cross-examined from the banks, ED said.

Further, ED said that 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 Raveendaran, however, he always remained evasive and never appeared during the investigation.

Further investigation is under progress, ED said.

A spokesperson from Byju's said that the recent visit by officials from the ED to one of their offices in Bangalore was related to a routine inquiry under FEMA. The spokesperson added that they have been completely transparent with the authorities and have provided them with all the information they have requested.

"The company is committed to upholding the highest standards of compliance and ethics and will work closely with the authorities to ensure that they have all the information they need."

ED's searches have become the latest setback for Byju's, which is currently renegotiating terms with its creditors (of term loan B) after having defaulted on certain conditions including providing monthly business updates, hiring a CFO, and increasing the interest rate on the loan. Byju's, however, hired Vedanta's executive Ajay Goel as its CFO earlier this month.

Byju's had raised a term loan B (TLB) of $1.2 billion from a clutch of investors in 2021, one of the largest for Indian startups. The company also offered to increase the rate of interest on its $1.2 billion TLB as part of renegotiating its debt-financing arrangements. Creditors were also seeking prepayment of $200 million, according to a media report.

Byju's has also been trying to raise as much as $700 million, part of which will be used to repay the debt. The company is planning to raise the new funds at its existing $22 billion valuation. This will be Byju's second flat fundraise since October.