The inspection follows an internal assessment of BYJU’S state of affairs, and the Ministry of Corporate Affairs has sought a report in six weeks
Based on the findings, the government would decide if the matter needs to be escalated to the Serious Fraud Investigation Office
The development is another addition to the troubles of the edtech unicorn, which is fighting battles on multiple fronts
In another trouble for beleaguered edtech giant BYJU’S, the Ministry of Corporate Affairs has reportedly ordered an inspection of its account books.
Sources aware of the development told Bloomberg that the ministry has sought a report in six weeks. The inspection follows an internal assessment of BYJU’S state of affairs. Based on the findings, the government would decide if the matter needs to be escalated to the Serious Fraud Investigation Office (SFIO).
There were reports last week that the ministry was looking at the possibility of involving the SFIO to investigate the matter around the resignation of Deloitte Haskins & Sells LLP and BYJU’S delayed financial reporting.
The new crisis for BYJU’S comes when it is already in severe financial trouble and facing criticism for corporate governance lapses.
“I can confirm BYJU’S has not yet received any communication from the MCA. They have previously provided appropriate explanations and clarifications to the MCA during routine inspections,” said Zulfiquar Memon, Managing Partner, MZM Legal. “Should a routine inspection take place, Byju’s will be happy to cooperate fully and provide all necessary explanations and clarifications.”
In the past few weeks, the $22 Bn startup has seen top-level managerial exits, resignation of its board members and auditor, investors slashing its valuations. It has also laid off over 5,000 employees while the company is also involved in a legal dispute with its lenders over the $1.2 Bn Term Loan B.
On Monday, it was also reported that two independent directors of its coaching arm Aakash Educational Services Ltd quit the board.
Earlier, reports emerged that a section of the startup’s investors sought the ouster of founder and CEO Byju Raveendran to make space for a new interim CEO. However, two investors of the startup told Inc42 no such development took place.
BYJU’S is yet to publish its FY22 financial results. In FY21, its net loss jumped 20X year-on-year (YoY) to INR 4,588 Cr in FY21. Last month, BYJU’S former auditor Deloitte tendered resignation citing this delay in filing its financial statements for FY22.
The company has also come under scrutiny for other reasons. In April this year, the Enforcement Directorate (ED) conducted raids at premises linked to the edtech startup, in relation to its investigation in a case of alleged violation of foreign exchange norms.
After much mud-slinging and legal battle, reports said recently that BYJU’S had brought some of its TLB lenders to the negotiation table. On the other hand, the company is reportedly in discussion with new investors as it aims to raise a $1 Bn fundraising round.