Enforcement Directorate’s Notice to Byju Raveendran
The Enforcement Directorate (ED) has recently issued a new look-out notice against Byju Raveendran, the founder of the edutech company Byju’s, as part of an investigation into alleged violations of the Foreign Exchange Management Act (FEMA), involving a substantial amount of ₹9,362.35 crore.
Show Cause Notices
In November of last year, the FEMA Adjudicating Authority had sent show cause notices to Think & Learn Private Limited, the parent company of Byju’s, and Mr. Raveendran, based on complaints filed by the ED. This inquiry stems from allegations regarding foreign investment, significant foreign remittances, and overseas investments made by the company in violation of the Act, resulting in financial loss to the government.
Search and Evidence Collection by ED
The ED had conducted searches in April 2023 at the Bengaluru premises of Think and Learn Private Limited and Mr. Raveendran’s residence to gather evidence. Statements from Mr. Raveendran and the company’s Chief Financial Officer were recorded during this process.
Alleged Violations to Byju
According to the ED, the company and Mr. Raveendran failed to provide documentation for imports against advance remittances made abroad, did not realize proceeds from exports made overseas, delayed filing necessary documents for Foreign Direct Investment (FDI) received by the company, neglected to file documents for remittances made overseas, and did not allocate shares against FDI received.
Financial Irregularities
Previously, the ED had claimed that the company had received approximately ₹28,000 crore in FDI from 2011 to 2023 and had remitted around ₹9,754 crore to various foreign jurisdictions during the same period under the guise of overseas direct investment.
The ED further alleged that the company had recorded around ₹944 crore as advertising and marketing expenses, including amounts sent abroad, but had not prepared financial statements since the 2020-21 financial year nor had the accounts audited, which is mandatory. As a result, the authenticity of the figures provided by the company is under scrutiny from banks.
Comments 1