Founder and Chief Executive Officer Byju Raveendran on Tuesday told shareholders that the edtech company is in compliance with Foreign Exchange Management Act (FEMA) guidelines amid allegations of forex violations.
“We want to assure you that BYJU’S has always been fully compliant with FEMA regulations,” Raveendran said in a note to shareholders. YourStory has seen a copy of the note.
BYJU’S chief added that “one of India’s largest” law firms had conducted due diligence on it, and “found no FEMA violations” at the edtech company.
The note to BYJU’S shareholders follows reports stating that the Enforcement Directorate (ED) has allegedly found FEMA violations amounting to Rs 9,000 crore by the troubled edtech company.
Earlier today, the Bengaluru-based company had issued a statement denying reports on FEMA violations.
The ED has been examining BYJU’S’ compliance with the FEMA since 2011. In April, the ED conducted searches at three Bengaluru locations associated with BYJU’S, focusing on alleged violations of foreign exchange laws. The searches at Think & Learn Private Limited, the parent company of BYJU’S, resulted in the seizure of “various incriminating documents and digital data,” the ED had then said.
The edtech company reportedly secured almost Rs 28,000 crore in foreign direct investment from 2011 to 2023, the agency said. Additionally, it was noted that the edtech firm transferred Rs 9,754 crore to different foreign jurisdictions in the form of overseas direct investments over the same period.
In the note to shareholders, Raveendran said, “BYJU’S has maintained a cooperative stance with the ED throughout their inquiries. We have satisfactorily answered all their queries, both verbally and on record.”
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BYJU’S challenges
The development comes at a time when the company is fighting various challenges, including a liquidity crunch.
Most recently, Ranjan Pai–the Chairman of Manipal Education and Medical Group—bought Rs 1,400 crore debt in BYJU’S test preparation unit Aakash Educational Services Limited to help the troubled edtech firm pay off a loan taken from US-based lender Davidson Kempner Capital Management.
Meanwhile, BYJU’S is considering selling two of its holdings, Epic and Great Learning, to generate a minimum of $800 million to settle a $1.2-billion term loan B owed to its lenders.
Over the past few months, several high-ranking executives have exited the company. Furthermore, BYJU’S has been downsizing its workforce, both globally and domestically, as part of its efforts to steer towards profitability. In the past year, it has executed multiple rounds of layoffs as part of its cost-cutting initiatives.
Earlier this month, BYJU’S released specific financial figures related to its core business as part of the audited financial results for the fiscal year 2021-22 (FY22).
In FY22, the core business earned a total income of Rs 3,569 crore, up from Rs 1,552 crore in the previous year, and the EBITDA loss decreased to Rs 2,253 crore from Rs 2,406 crore in the previous financial year, according to a company statement.
The company did not divulge the net loss from its core business. It also did not disclose its consolidated revenue and profit/loss numbers for FY22.
Edited by Kanishk Singh
