Compliant With Law, Confident Of Dealing With The Matter: BYJU’S On ED’s FEMA Notices

Edtech decacorn BYJU’S on Wednesday (November 29) termed show cause notices issued by the Enforcement Directorate (ED) ‘solely technical in nature’ and asserted that it is confident of ‘successfully dealing’ with the matter. 

In a statement, the company said that the queries raised by the ED largely arose from delayed statutory audit of the financial year 2021-22 (FY22), adding that it had already filed all requisite documents contemporaneously within the prescribed time. 

“The queries received in the notice are solely technical in nature…The company has however filed requisite intimation contemporaneously for all FDI which is received in accordance with the eligibility criteria in law and not affected by the alleged non filing of APR (annual performance reports). The company has also issued/allotted shares within the prescribed time against the FDI so received,” said a BYJU’S spokesperson.

Giving further insights into the ED probe, the company said that the queries received from the agency largely centred around delays in filing APRs. These delays, the edtech giant said, pertained to nearly INR 8,000 Cr worth of overseas direct investments that arose from the late audit of FY22 numbers. 

The edtech giant emphasised that the ED notices did not specify any fines and appeared unbothered about any prospective penalties. In the statement, the edtech major said that it expects fines, if any, in the matter to be nominal. 

“Based on precedent actions by the Adjudicating Authority, we anticipate that the fines, if any, will be nominal. To cite an example, the late submission fee for such reporting delays that can be imposed pursuant to the RBI regulations with respect to APRs is very nominal (INR 7,500) and by no means does the notice denote a fine,” the spokesperson added. 

The company also reiterated that it was completely compliant with all relevant FEMA regulations, and would continue to maintain adherence to existing laws. 

The clarification came a week after the ED shot off show cause notices to the embattled edtech giant over FEMA violations. In its notice, the agency alleged that the company failed to submit documents against remittances made outside India and failed to allot shares against FDI received into the company.

The agency also alleged that the edtech behemoth made ‘significant foreign remittances outside India and investments abroad’ which caused loss of revenue to the exchequer. 

It is pertinent to note that ED conducted search and seizure operations at multiple premises linked to the edtech giant and its founder Byju Raveendran in April this year. During the crackdown, documents related to overseas investments as well as funding raised by the company were seized by the agency. 

The clarification by BYJU’S came on the same day as Dutch investor Prosus marked down the valuation of its stake in the edtech giant, valuing it at under $3 Bn. This is a far cry from the peak $22 Bn valuation that the startup picked up during its last fundraise. 

However, the valuation markdown seems like a small concern for BYJU’S which has been in the news for all the wrong reasons over the last year or so. From a looming debt crisis to the exit of its auditor and board members, BYJU’S has been grappling with fires on multiple fronts. On top of that, it is also under fire for mass layoffs, mounting losses, delays in filing financial statements and the exodus of top leadership.