Karti P. Chidambaram wrote a letter to the Serious Fraud Investigation Office (SFIO) requesting an investigation into the finances of BYJU’s.
On Thursday, Congressman Karti P. Chidambaram announced that he had written a letter to the Serious Fraud Investigation Office (SFIO) requesting that they look into the financial affairs of the edtech major company BYJU’s, which was most recently valued at over $22 billion.
Chidambaram demanded an investigation into BYJU’s for failing to file its 2020–21 (FY21) financial reports by the previously declared deadline of July 15 because the company had not yet received $250 million (about Rs 2,500 crore) capital from its most recent funding round in March.
On March 17, BYJU’s disclosed that Sumeru Ventures, Vitruvian Partners, and BlackRock had contributed $800 million (Rs 6,401 crore) to the company. The company’s founder and CEO, Byju Raveendran, invested $400 million (Rs 3,200 crore) of his own money in this fundraising effort.
Company’s funding in question
According to a report, Byju’s filings with the Union Ministry of Corporate Affairs reveal that 16,031 Series F preference shares were granted to Vitruvian Partners on March 29, 2022, for a total price of Rs 571 crore. Since the announcement made by the company on March 17, there has been no such filing in the case of Sumeru Ventures or BlackRock. The letter written by the Congress MP nudged that this leads one to wonder about the missing 2,500 crore rupees in the company’s funding.
According to reports, the New York-based firm Oxshott made an investment in BYJU’s worth 1,200 crore rupees in the month of October 2021.
“Nine months on and BYJU’s has confirmed that it has not yet received this funding from the investor, Oxshott Capital Partners has till date only made one investment in BYJU’s,” read the letter addressed to the director of SFIO.
Oxshott invested Rs 1,200 crore as part of the Series F round at Rs 285,072 per share, which was yet to arrive.
A business official had informed IANS that the round wasn’t being led by Oxshott. In actuality, they were among the last investors to join that round. 2,400 crore rupees of the total 3,600 crore rupees have already been received.
According to Chidambaram, it will take longer for BYJU to submit the cost audit report to the Ministry and its financial accounts for FY 2020–21 have not yet been reviewed by Deloitte, its auditor. He explained that this is in breach of Rule 6(5) of the Companies (Cost Records and Audit) Rules from 2014. It is important to examine the company’s finances at a time when BYJU’s wants to grow its business and buy the Nasdaq-listed company 2U for $2.4 billion, while also laying off workers to reduce costs.
Byju’s was yet to react to Chidambaram’s letter to the SFIO.
Acquisitions by Byju’s
Last year, the unicorn edtech company acquired at least 10 companies for a total transaction value of around $2.5 billion. According to the company, there were several acquisitions completed in FY21, and each of these acquisitions had a unique accounting method and year.
The $1 billion acquisition of Aakash Educational Services is proceeding as planned, according to the business, and is anticipated to be finished by the end of August. BYJUs also intends to use the SPAC route to submit an IPO in the US.
This month, the Ministry of Consumer Affairs criticised BYJU and the companies in its group for aggressively mis-selling the courses they offered to parents. The Centre issued a warning to edtech companies earlier this month about unfair trade practices.
