MCA Refutes Reports Of It Clearing BYJU’S Of Fraud, Says Probe Ongoing

Hours after a news report claimed that the Ministry of Corporate Affairs (MCA) has cleared BYJU’S of any financial fraud, the ministry rejected the report. 

In a statement, the ministry said that its probe into the affairs of the troubled edtech startup is “ongoing”. 

“It is categorically clarified that such reports are factually incorrect and misleading. The proceedings initiated by MCA under the Companies Act, 2013, are still ongoing and no final conclusion should be drawn in this matter at this stage,” the statement said. 

Earlier in the day, Bloomberg reported that the MCA did not find any evidence of any financial fraud or accounting malpractice by BYJU’S. The report, however, claimed that the investigation found weak corporate governance at BYJU’S.

Additionally, the probe reportedly also found that the startup failed to disclose full details of acquisitions with all directors and purportedly held meetings to approve such deals at a short notice.

It is pertinent to note that the corporate affairs ministry ordered a probe into BYJU’S books after it failed to file its audited financials for the financial year ending March 2022 (FY22) on time.

The latest development comes at a time when the edtech major is fighting fires on multiple fronts. 

The biggest thorn in its flesh appears to be soaring losses, which jumped 81% year-on-year (YoY) to INR 8,245.2 Cr in FY22. The company is yet to file financial statements for FY23 and FY24. Meanwhile, operating revenue rose 120% YoY to INR 5,014.6 Cr during the year under review.

Besides, it is also grappling with issues such as a looming debt crisis, about a dozen legal cases, mass layoffs, insolvency proceedings, allegations of lax corporate governance guardrails, salary delays and a public fallout with its investors. 

From being pegged at $22 Bn in 2021, the startup’s valuation plummeted by more than 99% tio $250 Mn after it raised a rights issue at the reduced valuation. The aftermath saw investors moving court seeking the ouster and founder and CEO Byju Raveendran. 

Piling on top, Dutch investor Prosus, just days ago, wrote off its entire 9.6% stake in BYJU’S. Meanwhile, US-based asset management company Baron Capital also slashed BYJU’s valuation by more than 99% to $120 Mn at the end of March 2024.

Earlier in the day, it was reported that the edtech major settled its insolvency dispute with French digital services company Teleperformance Business Services.