Edutech firm Byju’s has underscored its unwavering commitment to adhering to all relevant regulations under the Foreign Exchange Management Act (Fema), following the issuance of show cause notices by the Enforcement Directorate (ED). The company’s statement, released late Wednesday, addresses queries raised in relation to the delayed filing of annual performance reports (APRs) and sheds light on the technical nature of the inquiries.
The show cause notices, received by Byju’s parent company, Think & Learn Pvt Ltd, and its Chief Executive Officer, Byju Raveendran, were initially contested by the company, which claimed to have not received any such communication. However, the latest statement from Byju’s confirms the receipt of the notices and aims to clarify the intricacies surrounding the alleged Fema violations.
The queries from the Enforcement Directorate primarily revolve around the delayed statutory audit of the financial year ending March 2022, impacting APRs associated with a compliant overseas direct investment totaling approximately Rs 8,000 crore. Byju’s emphasizes that these issues are technical in nature and cites the late submission fee for reporting delays under RBI regulations as an example, stating it is nominal (Rs 7,500), and the notice from the ED should not be construed as a fine.
The Enforcement Directorate had previously announced the initiation of investigations based on complaints related to foreign investments received by Byju’s and the company’s business conduct. Alleged contraventions of Fema, 1999 were cited, including significant foreign remittances outside India and investments abroad that purportedly caused a loss of revenue to the Indian government.
The investigation led to searches at Byju’s premises and Raveendran’s residence on April 27-28, resulting in the seizure of documents related to all investments received by the company and those connected to overseas investments. The Fema violations highlighted by the ED include the company’s alleged failure to realize proceeds of exports, failure to file documents against remittances made abroad, delayed filing of documents related to foreign direct investment, and failure to allot shares against the foreign direct investment received.
Byju’s, known for its strategic overseas acquisitions, including Great Learning, Osmo, and Epic over the past three years, remains confident in its compliance with Fema regulations. The company has engaged in expanding its global footprint, contributing to the financing of the acquisition of Aakash through a subsidiary established in Singapore. All these transactions fall within the regulatory purview of Fema.
Earlier this month, Byju’s released its delayed audited financial results for the year ending March 2022, reporting a significant 2.3-fold increase in revenue to Rs 3,569 crore in its core business. The financials also revealed a reduction in the operating loss of the core business from Rs 2,406 crore to Rs 2,253 crore.
As the investigations unfold, Byju’s remains steadfast in its commitment to regulatory compliance, highlighting the technical nature of the queries and expressing confidence that any potential fines will be nominal, based on precedent actions by the adjudicating authority. The company’s impact on the edtech landscape and its continued expansion through strategic acquisitions further underscore its significance in the evolving educational technology sector.
