Enforcement Directorate Alleges ₹9,362 Crore FEMA Violation by Edtech Giant Byju’s and Founder Byju Raveendran

• ByStartupStory     |    November 22, 2023

In a significant development, the Enforcement Directorate (ED) has taken action against edtech giant Think & Learn Private Limited and its founder, Byju Raveendran, alleging a violation of ₹9,362.35 crore under the Foreign Exchange Management Act (FEMA), 1999.

The ED, acting as the Adjudicating Authority, has issued show cause notices to Think & Learn Private Limited and Byju Raveendran. The agency’s announcement follows earlier denials by Byju’s regarding any such notice. Byju’s released a statement stating, “The company has not received any such communication from the Enforcement Directorate.”

This development comes after the ED conducted searches in April this year at two business premises and one residential location, including that of Byju’s registered company, Think & Learn Pvt. Ltd. These searches were carried out under the provisions of FEMA, and the ED claimed to have seized incriminating documents and digital data during the operation.

The ED alleges that Byju’s has not prepared its financial statements since the fiscal year 2020-21 and has failed to get its accounts audited, which is a mandatory requirement.

The probe initiated by the ED is based on complaints received from private individuals. The agency claims that Raveendran, the founder of the edtech platform, was issued several summons but remained evasive and never appeared.

During the searches, the ED discovered that Byju’s received foreign direct investment (FDI) amounting to approximately ₹28,000 crore from 2011 to 2023. Additionally, the company is said to have remitted about ₹9,754 crore to various foreign jurisdictions in the name of overseas direct investment.

According to the ED, Byju’s reportedly booked around ₹944 crore under the category of advertisement and marketing expenses, including the amount remitted to foreign jurisdictions.

In response to the allegations, Byju’s had reported a narrowing of operational losses in its core business to ₹2,253 crore for the fiscal year 2021-22.

As the ED’s investigation unfolds, the edtech giant and its founder are now faced with the challenge of addressing these serious allegations of FEMA violations, further shaping the narrative around one of India’s leading edtech platforms.

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