Mumbai: The Securities and Exchange Board of India (SEBI), the regulator of securities and the commodity market, has taken cognizance of the Enforcement Directorate’s investigation into the alleged violation of the Foreign Exchange Management Act (FEMA) by BYJU’S.
This is likely to impact the beleaguered edutech platform’s fundraising plans and the initial public offering (IPO) of its subsidiary, Aakash Educational Services. BYJU is currently in the process of raising $700 million from international investors and planning a Rs 8,000-crore IPO for Aakash Educational Services, which it had acquired for US $1 billion in 2021.
The ED’s scrutiny of the Rs 28,000 crore foreign direct investment (FDI) and overseas direct investment of Rs 9,754 crore, made between 2011 and 2023, had raised concerns about the authenticity of the figures provided by the company. The agency also questioned the Rs 944 crore advertisement and marketing expenses, including funds remitted to foreign jurisdictions. The last financial statements released by the company were for FY 2020-’21, submitted after an 18-month delay.
BYJU’S had announced that it had raised about Rs 6,300 crore from Sumeru Ventures, Vitruvian Partners and BlackRock last March, with founder and CEO Byju Raveendran also participating in the funding round, making a personal investment of US$ 400 million.
About foreign investments in BYJU'S
New York-based Oxshott invested Rs 1,200 crore as part of a Series F round, at Rs 285,072 per share, last September. Other investors included Edelweiss (Rs 344.9 crore), IIFL (Rs 110 crore), Verition Multi-Strategy Master Fund (Rs 147 crore) and XN Exponent Holdings (Rs 150 crore).
The ED has alleged that company’s founder and CEO Byju Raveendran failed to appear during the investigation despite multiple summons.
On Saturday, Byju Raveendran wrote to his employees, explaining the company’s position. He said that scrutiny was brought upon them because of the extensive foreign funding they had received and the number of overseas acquisitions they had made.
“We have made a number of overseas acquisitions, investing an amount of approx. Rs. 9,000 crore over the years, as part of our growth strategy,” he said in an email. “I also want to highlight that BYJU’S has brought more FDI to India than any other Indian startup (Rs. 28,000 crores), and as a result, we have been able to create job opportunities for more than 55,000 talented professionals. This makes us India’s largest employer among startups,” Raveendran wrote to his employees.
BYJU’S has also been in the news for laying off employees and disgruntled parents have complained about the poor quality of learning material and sales pitches by agents.
The edutech major also lost a case, when a Bengaluru man dragged the company to consumer court for providing low-quality tablets and study material to his son and daughter when they had been promised Samsung tablets worth Rs 25,000; further, the company backed out of its promise to convert the tuition fee of Rs 99,000 into EMIs. When the company did not pay heed to his demand of cancelling his subscription and demands for a refund, he filed a case and not only won a refund of the Rs 99,000 in fees and a compensation of Rs 30,000.
