The Enforcement Directorate (ED) conducted searches at three BYJU’s or ‘Think & Learn Private Limited’ facilities in Bengaluru on April 29 under the terms of the Foreign Exchange Management Act (FEMA), according to a news release from the ED. The ED further stated that they discovered “various incriminating documents and digital data” from the business’s premises and that the company received approximately Rs 28,000 crore in foreign direct investment (FDI) between 2011 and 2023. Here’s a rundown of the claims and significant issues presented by ED.

The Charges Against BYJU 

1. Raveendran Byju has already been called but did not appear before ED.

The ED claimed that Raveendran Byju had previously been summoned in connection with accusations lodged by private actors, but that the company founder remained “evasive and never appeared” before the ED. The ED has not provided any additional information on the nature of the complaints.

2. BYJU’s sent around Rs.9754 Crore to various overseas countries.

During the same time period, the company remitted approximately Rs.9754 Crore (approx.) to various foreign jurisdictions in the name of overseas direct investment. This raises concerns regarding the nature and source of these investments.

3. BYJU’s advertisement and marketing expenses totaled around Rs. 944 crore.

BYJU’s advertising and marketing expenses, including amounts transmitted to foreign jurisdictions, totaled approximately Rs. 944 crore. This sum is being investigated by the ED as part of its investigation into possible financial irregularities.

4. Since the fiscal year 2020-21, BYJU’s has not prepared financial statements.

Since the fiscal year 2020-21, the company has not prepared its financial statements, nor has it had its accounts audited, which is a legal requirement. As a result, “the authenticity of the figures provided by the company is being cross-examined by the banks.” After an 18-month delay, BYJU’s released their FY21 statements in September 2022, according to Inc42. It is yet to file its financial reports for the fiscal year that concluded on March 31, 2022.

Why Does This Matter?

The ED raid reveals a severe concern with India’s ed-tech giant’s financial procedures, especially at a time when the ed-tech sector is experiencing tremendous development due to the pandemic-induced shift to online learning. BYJU’s $16.5 billion valuation is backed by high-profile investors like Sequoia Capital, the Chan Zuckerberg Initiative, and Tencent, among others.

Financial irregularities charges might harm the company’s brand and future investments, not to mention the trust of millions of students who rely on its services. The ED’s investigation is ongoing, and more information is expected to be released in the coming days. 

What is BYJU’s?

It is a Bengaluru-based ed-tech Company that offers online learning tools for children in grades 1 through 12, as well as test preparation materials for competitive exams like JEE, NEET, and CAT.

What exactly are the claims against BYJU’s?

The Enforcement Directorate (ED) has claimed financial violations relating to FDI and remittances to foreign jurisdictions. Raveendran Byju, the company’s founder, has also been summoned in the past with respect to complaints filed by private actors, but he remained “evasive and never appeared” before the ED.