Ed-tech firm Byju’s has been cleared of financial fraud by an investigation by the Indian government. However, the investigation found lapses in the corporate governance of the ed-tech start-up. This is as per a report by Bloomberg.
In its year-long probe, the Ministry of Corporate Affairs reportedly did not find any evidence of wrongdoing that included manipulation or siphoning of funds.
Ed-tech firm Byju’s has been cleared of financial fraud by an investigation by the Indian government. However, the investigation found lapses in the corporate governance of the ed-tech start-up. This is as per a report by Bloomberg.
The Ministry of Corporate Affairs did not find any evidence of wrongdoing that includes manipulation or siphoning of funds in its year-long probe, as per the report. However, governance shortcomings were reportedly found in the probe, which led to the mounting losses that the start-up had to bear. Due to its cash crunch, the start-up couldn’t pay salaries to its employees. In May, it was reported that the edtech company might be paying April salaries to its employees. Last year, the troubled edtech firm’s founder had to even pledge his house to pay salaries to its employees.
Similarly, a report by Inc42 says that the fixed pay for new sales hires has been slashed by the edtech firm by 90 per cent. While the overall compensation that is offered to the sales staff is Rs 4 lakh per annum, only Rs 1.15 lakh per annum is fixed pay.
Along with temporarily ending the probability of a new scrutiny by the government on the edtech platform on issues that have already been investigated, it also gives a sense of relief to founder Byju Raveendran. Ravendran has been accused by its investors of mismanagement, and they even wanted his removal from the company board. Due to the ongoing issues, shareholders, including Prosus, PeakXV, and formerly Sequoia Capital India, left the company board.
Prosus also reduced the valuation of the edtech firm. To add to it, Prosus wrote off its 9.6 per cent stake in Byju’s and mentioned a significant decrease in the value for equity investors as the reason behind the same. The technology investment firm said in a statement, “A fair value loss of $493 million was recognized in other comprehensive income in the current year.”