By Inc42 Media
An investigation by the Ministry of Corporate Affairs found that weak corporate governance and compliance failures, coupled with the change in funding environment were the primary reasons behind the ballooning losses at Byju’s
The Byju Raveendran-led startup failed to disclose full details of acquisitions with all directors and held meetings to approve such deals at a short notice
Once the poster child of the Indian startup ecosystem, BYJU’s has been reeling from a series of challenges, including looming debt crisis, impending mass layoffs, delayed salaries, a cash crunch and a bevy of legal and insolvency cases filed by its investors and vendors
The Ministry of Corporate Affairs that investigated BYJU’S
for potential corporate governance lapses could not find any evidence to prove that the edtech major committed financial fraud or accounting malpractice.
The year-long probe by the government into BYJU’s books revealed that the edtech major fell short on compliance issues but found no proof of wrongdoing such as siphoning of funds or manipulation of financial accounts, Bloomberg reported, citing sources.
The investigation found that weak corporate governance and compliance failures, coupled with the change in funding environment were the primary reasons behind the ballooning losses at BYJU’S.
Furthermore, the ministry also acknowledged that the Byju Raveendran-led startup failed to disclose full details of acquisitions with all directors and held meetings to approve such deals at a short notice.
However, the probe did not offer clarity on whether Raveendran is to blame for the government lapses personally, or if he is qualified to run the company.
The development comes a year after the corporate affairs ministry ordered an inspection into BYJU’S books after it failed to file its audited financials for the financial year ending March 2022 (FY22).
The findings are expected to bring some respite to BYJU’s that has been reeling from a series of challenges, including looming debt crisis, impending mass layoffs, delayed salaries, a cash crunch and a bevy of legal and insolvency cases filed by its investors and vendors.
Once the poster child of the Indian startup ecosystem, BYJU’s was valued at $22 Bn at its peak in 2021. However, earlier this month, US-based asset management company Baron Capital cut BYJU’s valuation by more than 99% to $120 Mn as of March 31, 2024.
Recently, Netherlands-based Prosus, which holds a 9.6% stake in BYJU’S, wrote off its entire investment in the Bengaluru-based edtech startup.
The edtech giant’s net loss widened by 81% to INR 8,245.2 Cr in FY22 from INR 4,564.3 Cr in FY21. Operating revenue rose over 120% year-on-year to INR 5,014.6 Cr during the year under review.