Karti Chidambaram Seeks SFIO Probe In BYJU’S Finances

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From missing funding to massive layoffs, Chidambaram cited “grave allegations” against BYJU’S and said a look into its finances is pertinent

BYJU’S is yet to submit its financial statements for FY21, but claims to have been profitable in FY19 and FY20

SFIO is an organisation under the Ministry of Corporate Affairs that helps uncover white-collar crimes

Karti P Chidambaram, a Member of Parliament from Sivaganga constituency, has written to the Special Fraud Investigation Office (SFIO) for a probe into the finances of edtech giant BYJU’S.

In a letter to the SFIO, which Chidambaram shared on Twitter, the MP said that various news reports have highlighted “grave allegations” against the edtech startup.

He said that of the $800 Mn fundraise announced by the startup in March 2022 with participation from CEO and cofounder Byju Raveendran, Sumeru Ventures, Vitruvian Partners and BlackRock, BYJU’S has issued Series F preference shares to Vitruvian Partners, according to its filings.

However, there is no such filing for Sumeru Ventures or BlackRock. “This raises a question of the missing INR 2,500 Cr in the company’s funding,” the MP alleged.

Besides, he also said that after nine months of BYJU’S announcement of INR 1,200 Cr investment by Oxshott Capital Partners, the startup has not yet received any funding from the investor. 

He also pointed out, citing a report, that BYJU’S has not yet gotten its financial statements for FY21 audited and will take more time to file the Cost Audit Report to the Ministry. “This is in clear violation of Rule 6(5) of the Companies (Cost Records and Audit) Rules, 2014,” he wrote.

Chidambaram added that it is pertinent to review the company’s finances, especially when the edtech giant is looking for another acquisition in the form of Nasdaq-listed company 2U at a valuation of $2.4 Bn despite resorting to cost-cutting measures such as mass layoffs.

Meanwhile, BYJU’S declined to comment on the development.

The SFIO is a sub-organisation under the Ministry of Corporate Affairs. It houses experts from accountancy, forensic auditing, law, IT, investigation, company law, capital market and taxation to help the ministry detect white-collar frauds.

It is not the first time that the All India Congress Committee (AICC) member has criticised an Indian startup. Earlier, he condoned Zomato and other gig economy platforms for their quick commerce business models and for putting ‘undue pressure on delivery personnel’.

The Congress MP’s remark on the edtech giant is another hole in BYJU’S boat, drawing the government’s attention. BYJU’S, alongside other edtech companies, has previously been under the scanner for mis-selling online learning courses.

BYJU’S, India’s most valued startup, made nine acquisitions worth over $2.5 Bn in 2021-2022. The edtech unicorn is currently valued at $23 Bn. It reported a net profit of INR 51 Cr and revenue of INR 2,434 in FY20.

The 10-year-old startup is also looking for a domestic initial public offering in the next 18 months. According to Inc42 sources, the company is eyeing a valuation of $40 Bn – $45 Bn – a 2X jump from its current valuation. However, some reports suggest that the edtech company will take a SPAC route for a US-based IPO to raise $4 Bn.

BYJU’S and its subsidiaries have laid off over 1,500 employees so far in 2022.

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