ED Raids Byju’s CEO’s Home And Offices, Seizes Incriminating Documents

Byju’s has had a difficult year with layoffs, delayed financial statements, allegations in Indian Parliament over misselling courses, and valuation cuts, but things have just gotten a whole lot worse.

The Enforcement Directorate has conducted searches at the homes and offices of Byju CEO Byju Raveendran. The search was conducted under the provisions of the Foreign Exchange Management Act (FEMA), and resulted in the seizure of incriminating documents and digital data.

“ED has conducted searches at 3 premises in Bengaluru in the case of Raveendaran Byju and his company ‘Think & Learn Private Limited’ (Byju online learning platform) under the provisions of FEMA. During the search, various incriminating documents and digital data was seized,” ED announced in a tweet.

The FEMA searches revealed that Byju’s has received foreign direct
investment to the tune of approximately Rs. 2,8000 crore from 2011 to 2023, the ED said in a statement. Byju’s has also remitted Rs. 9,754 crore to various foreign jurisdictions during the same period in the name of overseas direct investment, ED said.

The company has booked around Rs. 944 crore in the name of advertisement and marketing expenses including the amount remitted to foreign jurisdiction, ED said. The company has not prepared its financial statements since the financial year 2020-21 and has not got the accounts, audited which is mandatory. Hence, the genuineness of the figures provided by the company are being cross-examined from the banks, ED added.

ED said that the investigation against the platform was initiated on the basis of various complaints received from various private persons. During the investigation conducted by the ED, several summonses were issued to Raveendaran, however, he always remained evasive and never appeared during the investigation.

A Byju’s spokesperson said that the recent visit by officials from the ED to one of their offices in Bangalore was related to a routine inquiry under FEMA. The spokesperson added that they have been completely transparent with the authorities and have provided them with all the information they have requested.

The ED raids are the latest in what has a been a challenging few quarters for the company. Byju’s layoffs seem to be a response to the company having endured a challenging few quarters. Allegations around it misselling its products to financially vulnerable parents reached India’s parliament, and the government had even stepped in to ask why the company hadn’t filed its financial results on time. Byju’s CEO was also summoned by India’s child rights body for alleged sales malpractices. Late last year, Byju’s also laid off 2,500 employees, which represented 5% of its then-workforce, and then followed it up by laying off another 1000 employees this year. Byju’s losses also zoomed to Rs. 4,588 crore in FY21 compared to Rs. 262 crore in FY20.

But raids by the ED will be a whole new challenge for the company to navigate. There have been a few red flags over Byju’s financials — the company had delayed for months in filing its financial statements last year, which led even the Indian government to comment on the issue. Byju’s has also been looking to change the terms of its loans as it has battled the funding winter. and US-based fund Blackrock had recently slashed the company’s valuation by half. But a raid by the ED isn’t the best look for India’s most valuable startup — and with “incriminating documents” being seized, Byju might have to answer some challenging questions posed by India’s financial malpractices authorities.