The Enforcement Directorate (ED) said yesterday that it had issued a foreign exchange violation show-cause notice of more than INR 9,300 crore (INR 93 billion or USD 1.09 billion) against education technology (aka edtech) major BYJU’s and its CEO and co-founder Byju Raveendran.
In a post on the social network X at 7.55pm yesterday, the official ED account said: “Adjudicating Authority issues show cause notices to M/s. Think & Learn Private Limited and Byju Raveendran for violation involving an amount of Rs. 9362.35 Crore under FEMA, 1999.”
This followed a BYJU’s post on X at 1.45pm yesterday, when the edtech company said that it “unequivocally” denied any FEMA violations.
The central probe agency mentioned multiple grounds for charging the company and its chief promoter. After final adjudication, the ED has powers to penalise FEMA violators up to three times the value of the amount mentioned in the show-cause notice.
The agency said that statements of Raveendran and BYJU’s chief financial officer were recorded after it carried out searches in this case at three premises, including at Raveendran’s Bengaluru residence in April. It said that the action was undertaken after complaints were received regarding the foreign investment received by Think & Learn Private Limited and the “business conduct” of the company.
The company, in the complaint, was stated to have made significant foreign remittances outside India and investments abroad that were allegedly in contravention of provisions of FEMA, 1999 and caused loss of revenue to the government of India, the ED said.
On conclusion of the investigation, the ED said, it was found that Think & Learn Private Limited and Raveendran had “contravened” the provisions of FEMA by failing to submit documents of imports against advance remittances made outside India; by failing to realise proceeds of exports made outside India; by delayed filing of documents against the Foreign Direct Investment (FDI) received into the company; by failing to file documents against the remittances made by the company outside India; and by failing to allot shares against FDI received into the company.
After the April searches, the ED had said that “the company (Think & Learn Pvt. Ltd.) has not prepared its financial statements since 2020-21 fiscal and has not got the accounts audited, which is mandatory”. The searches found that the company received FDI to the tune of about INR 28,000 crore during 2011-2023.
“The company also remitted about INR 9,754 crore to various foreign jurisdictions during the same period in the name of overseas direct investment,” the agency had said. The company booked around INR 944 crore in the name of advertisement and marketing expenses, including the amount remitted to foreign jurisdiction, the ED alleged.
The Bengaluru-based company provides early learning, middle school education and test preparation, among others, and Byju Raveendran co-founded the e-learning company with his wife Divya Gokulnath. The company earlier this month reported narrowing of operational losses in core business to INR 2,253 crore for the 2021-22 fiscal.