Queries received in ED's notice are solely technical in nature: Byju's

Byju's said the notice was sent on delayed annual performance reports related to overseas direct investments of Rs 8,000 crore

Edtech giant Byju’s on Wednesday said that the reason for the show cause notice received from the Enforcement Directorate (ED) was due to a delay in filing annual performance reports (APRs) related to the ODI (overseas direct investment) investments of close to Rs 8,000 crore that arose from the delayed statutory audit (FY22). 

This comes days after the ED issued a showcause notice of Rs 9,362 crore to Think & Learn, the company behind Byju’s education platform, and its founder  Byju Raveendran for alleged violations of forex rules while attracting foreign investments from 2011 to 2023.

“We are in receipt of the notice from the ED which now definitively concludes their investigation and the same has been stated in their press release dated November 21,” said Byju’s.  The ED had reportedly charged them with contravening forex provisions, according to an order issued by the adjudicating authority of the Foreign Exchange Management Act. This is the second-biggest show cause to a unicorn, following Rs 10,600 crore notice to Flipkart in 2021 for alleged violation of forex rules.

Byju’s said that the company has however filed requisite intimation contemporaneously for all FDI (foreign direct investment) which is received in accordance with the eligibility criteria in law and not affected by the alleged non-filing of APR. The Company has also issued or allotted shares within the prescribed time against the FDI so received.

“This is being clarified to dispel any misgivings about wrongdoing in relation to receipt of FDI or allotment of shares,” said Byju’s. “The Company is advised the delayed filing of APR (particularly when returns in relation to the receipt of FDI have been filed in time) is a technical issue and the Company is confident of successfully dealing with the case.”

Based on precedent actions by the Adjudicating Authority, Byju’s anticipates that the fines, if any, will be nominal. To cite an example, the Late Submission Fee for such reporting delays that can be imposed pursuant to the RBI regulations with respect to APRs is very nominal (Rs 7500) and by no means does the notice denote a fine. 

Byju’s emphasised that the ED notice does not specify any quantum of fine but rather highlights the quantum of FDI/ODI (Rs 9,000 crore) along with the deadlines that it missed in the reference period for this quantum.

“We want to reassure you that Byju’s maintains and will continue to maintain complete adherence to all relevant FEMA regulations, as verified by comprehensive due diligence conducted by reputable law firms,” said Byju’s. “We hope this clarification helps to avoid inadvertently exaggerated reporting in the media.”