ED acts against Byju’s; Indore court fines SRK over firm’s ad: What are the two cases
Byju’s has allegedly remitted abroad over Rs 9,700 crore of the Rs 28,000 crore it received as Foreign Direct Investment (FDI) since 2011, and suspected irregularities in this are being probed.
Buju’s has said the searches are part of a “routine inquiry” and that it was cooperating with the agency.
According to the agency, the searches have been conducted at three premises in Bengaluru including the residence of company CEO Raveendran Byju and the office premises of Think & Learn Private Limited, the parent company of Byju’s.
What has the ED said?
“ED has conducted searches at 3 premises in Bengaluru in the case of Raveendaran Byju and his company ‘Think & Learn Private Limited’ (Byju online learning platform) under the provisions of FEMA. During the search, various incriminating documents and digital data was seized,” the agency said in a tweet.
“FEMA (Foreign Exchange Management Act) searches also revealed that the company has received foreign direct investment to the tune of Rs 28,000 crore (approx) during the period from 2011 to 2023. Further, the company has also remitted Rs 9,754 crore (approx) to various foreign jurisdictions during the same period in the name of overseas direct investment,” the ED said in a statement.
“The company has booked around Rs 944 crore in the name of Advertisement and Marketing expenses including the amount remitted to foreign jurisdiction. The company has not prepared its financial statements since the financial year 2020-21 and has not got the accounts audited which is mandatory. Hence, the genuineness of the figures provided by the company are being cross-examined from the banks,” the statement added.
The investigation against the platform was initiated on the basis of various complaints received from various private persons, the agency has claimed. “During the investigation conducted by the ED, several summonses were issued to the founder & CEO Raveendran Byju, however, he always remained evasive and never appeared during the investigation. Further investigation is under progress,” the ED statement said.
What has Byju’s said?
In a statement reacting to the ED raids, a spokesperson for Byju’s termed it a “routine” inquiry under FEMA. “We have been completely transparent with the authorities and have provided them with all the information they have requested. 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,” the statement said.
What other troubles has Byju’s faced?
Byju’s is one of India’s biggest startups, having attracted, over the years, big global investors such as General Atlantic, Sequoia Capital, and BlackRock.
Having entered the Indian market harbouring great expectations, the company is yet to book profits. Earlier this year, it retrenched about a 1,000 employees, barely a year after firing 2,500 workers last year.
Byju’s booked a loss of Rs 4,588 crore in 2020-21, which is 19 times more than that of the Rs 231.69 crore figure it recorded in 2019-20. Revenues during the financial year (FY) 2020-21 dropped to Rs 2,428 crore from Rs 2,511 crore in FY20. The company is yet to release a financial performance report for FY22.
And what is the Indore court case involving Shah Rukh Khan?
The District Consumer Disputes Redressal Commission in Indore in Madhya Pradesh on April 26 issued an order against a Byju staffer and actor Shah Rukh Khan for alleged “fraudulent behaviour” and “unfair trade practice” on the complaint of a woman who enrolled for coaching to become an Indian Administrative Service (IAS) officer, PTI reported.
In its order passed, the commission said Rs 1.08 lakh in fee deposited by complainant Priyanka Dixit at the time of admission in 2021 must be returned along with 12 per cent annual interest, while Rs 5,000 must be given to her as litigation cost and Rs 50,000 as compensation for financial and mental agony. The commission said the local manager of Byju’s and actor Khan must pay the amount “jointly or severally” to Dixit.
“Since the respondents (Byju’s manager and actor Shah Rukh Khan) remained absent even after notices were served in the case and no reply was submitted on their behalf, unilateral action was taken against them,” the commission said in the order. Dixit had claimed she was influenced to join Byju’s by an advertisement that featured Khan.