Byju’s-linked properties raided by India’s financial watchdog (update)

Photo credit: Byju’s

India’s Directorate of Enforcement (ED) conducted a search and seizure action at three Bengaluru properties linked to edtech giant Byju’s and its founder and CEO Byju Reveendran on April 29. The agency said the raid was carried out based on provisions of the Foreign Exchange Management Act (FEMA).

ED, which is responsible for investigating money laundering offenses and violations against the country’s foreign exchange laws, said that “various incriminating documents and digital data” were seized at two Byju’s offices and Reveendran’s residence.

According to ED, Byju’s received foreign direct investment of approximately 280 billion rupees (about US$3.4 billion) from 2011 to 2023.

The edtech firm also remitted around 97.5 billion rupees (US$1.2 billion) to various foreign jurisdictions during the same period in the name of overseas direct investment, ED added. This amount includes about 9.4 billion rupees (US$115 million) registered as advertisement and marketing expenses.

However, the authorities haven’t concluded whether these financial transactions violated India’s foreign exchange laws.

A spokesperson from Byju’s legal team refers to the incident as “a routine inquiry under FEMA.”

“We have nothing but the utmost confidence in the integrity of our operations, and we are committed to upholding the highest standards of compliance and ethics. We will continue to work closely with the authorities to ensure that they have all the information they need, and we are confident that this matter will be resolved in a timely and satisfactory manner,” Byju’s said in a statement.

ED also noted that Byju’s hasn’t prepared its financial statements since financial year ended March 2021 and didn’t have its accounts audited. These figures will be “cross-examined” from the banks, the agency said.

In an email to employees, founder and CEO Reveendran said that the edtech giant invested about US$1.1 billion in overseas acquisitions over the years. However, he reassured that all of Byju’s cross-border transactions were duly vetted by its advisors, advisors of the investment funds and other “sophisticated” parties.

“As we are funded by 70+ impact investors who have satisfactory done due diligence on our operations, including all FEMA compliance, we are confident that the authorities will also come to the same conclusion,” he wrote.

See also: The $22b question on Byju’s valuation

Recently, the Indian agency warned ecommerce player Flipkart for alleged violations under the foreign exchange laws that could result in a US$1.35 billion fine. The case is still being investigated.

Byju’s has been looking to raise US$650 million to US$700 million at its current valuation of US$22 billion. It is also eyeing profitability by the June quarter.