Enforcement Directorate issues over Rs 9,300 crore foreign exchange violation notice to BYJU’s
The Enforcement Directorate has taken action against edtech giant BYJU’s and its CEO and co-founder Raveendran Bjyu issuing a show cause notice of more than Rs 9,300 crore for violation of foreign exchange laws. The agency has accused the company and its chief promoter of failing to submit documents of imports against advance remittances made outside India, and failing to realize proceeds of exports made outside India delayed filing of documents against the Foreign Direct Investment (FDI) received into the company, among other charges.
In a statement, the agency said that a show cause notice has been issued to BYJU’s registered company, Think & Learn Private Limited, and Raveendran with respect to the contraventions of the provisions of the Foreign Exchange Management Act (FEMA) amounting to Rs 9,362.35 crore.
The ED has the power to penalize violators of FEMA up to three times the value of the amount mentioned in the show cause notice. The agency recorded the statements of Raveendran and BYJU’s chief financial officer after conducting searches at three premises, including Raveendran’s house, in Bengaluru in April.
The action was taken in response to complaints received regarding the foreign investment received Think & Learn Private Limited and the business conduct of the company. It was alleged that the company made significant foreign remittances outside India and investments abroad, which allegedly contravened provisions of FEMA, 1999 and caused loss of revenue to the government of India.
Following the investigation, the ED found that Think & Learn Private Limited and Raveendran violated the provisions of FEMA failing to submit documents of imports against advance remittances made outside India, failing to realize proceeds of exports made outside India, delayed filing of documents against the Foreign Direct Investment (FDI) received into the company, failing to file documents against the remittances made the company outside India, and failing to allot shares against FDI received into the company.
The company was also found to have not prepared financial statements since the 2020-21 fiscal year and failed to get the accounts audited, which is mandatory. The company received foreign direct investment (FDI) of about Rs 28,000 crore between 2011 and 2023 and remitted about Rs 9,754 crore to various foreign jurisdictions during the same period in the name of overseas direct investment.
The ED alleged that the company booked around Rs 944 crore in the name of advertisement and marketing expenses, including the amount remitted to foreign jurisdictions. BYJU’s, based in Bengaluru, provides early learning, middle school education, and test preparation. The company co-founded Raveendran Bjyu and his wife Divya Gokulnath recently reported a narrowing of operational losses in its core business to Rs 2,253 crore for the 2021-22 fiscal year.