Byju's Under Pressure as Ed-tech Giant Faces New Probe over Financial Practices

The ed-tech giant, Byju's has once again come under scrutiny for its financing and accounting practices at the company. The Indian government has started an investigation into financial statements, people familiar with the matter told Bloomberg.

The federal government has directed the regional office of the Registrar of Companies in Hyderabad to examine Byju's books. The investigation aims at determine whether the company misreported financial statements or engaged in funds diversion, they said.

They also explained the reason for the new probe, saying "there were shortcomings in the accounts of Byju's". The report stated that Byju's did not define what those failings were and the registrar's office has been asked to submit its report in an year.

This came after Byju's founder Byju Raveendran has been accused of secretly trying to use loan proceeds that were hidden by him from US lenders. As per a US court ruling, the founder is said to have used the loan funds to repurchase a software company that had been seized by an American trustee.

Read More | Byju Founder Faces Scrutiny for Allegedly Concealing Funds to Repurchase Business

The Ed-tech Struggle

Nebraska businessman William R. Hailer, in a court declaration, highlighted that the ed-tech company's founder has been trying to take back control of his struggling education technology company. He said, "I have been used as a pawn in Byju's manipulation of the law".

Currently, the company is being overseen by the courts in both India and the United States. Just to give it a context, Hailer was reportedly recruited by Raveendran with the intent to buy out US creditors.

Raveendran owes more than $1.2 billion to the creditors. The ed-tech founder’s plan was to exchange the debt he owned with the ownership of Epic! (an American education-software company). However, the plan didn’t become a success. 

Read More | Byju's Case: BCCI Likely to Seek Withdrawal of Insolvency Plea against Edtech Major

The fight between lenders and Raveendran has been going on for more than a year on several courts. In addition, the ed-tech firm is also facing insolvency in its home country. On the other hand, US lenders have repeatedly highlighted that Raveendran needs to pay the full amount to them.

However, the ed-tech founder has earlier highlighted that he might not be able to pay back the entire amount as the verified debt of the company is merely Rs 20 crore.