Byju’s denies receiving ED notice amid ₹9,000 cr FEMA violation row

The cash-strapped ed-tech major Byju’s seems to have caught up in another row amid reports about the Enforcement Directorate (ED) issuing a show-cause notice to the company under FEMA (Foreign Exchange Management Act, 1999) violations worth over ₹9,000 crore.

The Byju Raveendran-led company, however, has junked reports, saying no such communication has been received from the government agency.

“BYJU’S unequivocally denies media reports that insinuate it has received a notice from the Enforcement Department. The company has not received any such communication from the Enforcement Department,” says Byju’s via its official X handle.

The ED has also not come out with an official statement on this yet. The current reports have emerged following the searches by the agency at Byju's premises in Bengaluru in April this year. The searches at that time were conducted at the house and offices of Byju's founder Byju Raveendaran under the provisions of the FEMA.

Raveendran at that time had said that the information requested by and furnished to the ED officers in connection with the FDI raised, overseas investments made, and cross-border transactions relating to marketing and branding activities by Byju's had already been submitted by the company's authorised representatives.

The current development comes amid financial troubles at the ed-tech major, which was once dubbed as one of the foremost online education providers globally. This has led to firings at the company, along with auditors quitting over delays in revealing financial results, and uncertainty over its financials.

In July 2023, Byju's auditor and three directors representing investors also submitted their resignations over the long delay in filing of financial results for FY22. Byju's then appointed BDO (MSKA & Associates) as its new auditor for the next five years.

In September 2023, Byju's conducted restructuring to reduce costs and ensure better cash flow, which impacted 3,000-3,500 jobs. A year before in October, the company announced trimming of 2,500 job roles or 5% of its 50,000 workforce, saying it aims to achieve profitability by March 2023.

In terms of financials, the company's revenue surged 2.3 times in FY22, while its EBITDA (earnings before interest, taxes, depreciation, and amortisation-based) loss of the core business declined to ₹2,253 crore in FY22. In FY21, Byju's loss on a standalone basis, which includes its K-12 vertical, stood at ₹2,702.14 crore compared to a net profit of ₹7.39 crore during FY20.

Notably, Byju's, once valued at $22 billion, had gone on an acquisition spree over the past few years, investing about ₹9,000 crore over the years as part of its growth strategy. The edtech firm spent $2.5 billion on acquisitions that included Aakash Educational Services, U.S.-based Epic, kids' coding platform Tynker, professional education firm Great Learning and exam prep platform Toppr.