upGrad called the visit a routine survey, adding that the startup was fully compliant and cooperating with the department
There was no immediate clarity on why and where the ‘survey’ took place
The development comes at a time when the startup has seen mass layoffs and exit of CEO Arjun Mohan earlier this year
Officials from the goods and services tax (GST) on Wednesday (July 19) visited one of the offices of edtech startup upGrad.
Confirming the development, upGrad’s head of legal Koell Hemdev said, “It’s a routine survey and we are fully compliant and cooperating with the department.”
There is no immediate clarity on why and exactly where the ‘survey’ was conducted. The GST Act empowers officials to conduct inspections, raids and seizure if they suspect a GSTIN holder is evading tax.
Founded in 2015 by Indian film mogul Ronnie Screwvala, Mayank Kumar, Phalgun Kompalli and Ravijot Chugh, upGrad is an edtech unicorn that offers higher education courses in collaboration with various universities.
Backed by the likes of Temasek, Murdoch’s Lupa Systems, and International Finance Corporation, the startup has so far raised more than $600 Mn from investors and was last valued at around $2.2 Bn.
upGrad’s Saga Of Troubles
The latest development adds to the slew of issues that have surrounded upGrad in the last one-and-a-half years. The raids come in the midst of widespread layoffs at the company. The edtech startup first laid off 40% of its staff at newly-acquired subsidiary Harappa Education in January this year. It then also fired 120 employees at its video learning arm upGrad Campus in March this year.
upGrad also abruptly shut its data science training platform, International School of Engineering (INSOFE) in Hyderabad, in April, inviting protests from students who were reportedly promised jobs at the end of the course.
Making matters worse was the exit of India CEO Arjun Mohan. He recently joined back competitor BYJU’S.
Another issue has been the mounting losses, which surged 3X to INR 626.6 Cr in the financial year 2021-22 (FY22) from INR 211.1 Cr in FY21. In contrast, the operating revenue grew two-fold to INR 679.2 Cr from INR 327.1 Cr in FY21.
This has cast a spotlight on the especially fragile Indian edtech startups, which seem to have borne the brunt of the ongoing funding winter. With capital scarce, upGrad has been looking to raise money to fuel and scale up operations. The edtech unicorn recently raised INR 300 Cr via a rights issue from Temasek and cofounder Screvwala in March, just seven months after it raised $210 Mn in August last year.
With all this at play, the survey by the GST department has also added more fuel to the fire. However, this is nothing new for Indian edtech startups as government agencies have ramped up efforts to ensure compliance.
Earlier in April, Enforcement Directorate (ED) officials landed at the offices and premises linked to BYJU’S to conduct search and seizure operations over alleged foreign exchange violations.