Byju under renewed scrutiny: Government launches fresh investigation into finances

The government has launched a fresh investigation into the financial and accounting practices of troubled edtech giant Byju. According to Bloomberg, the new investigation follows a previous investigation by the Ministry of Corporate Affairs, which highlighted deficiencies in corporate governance at the company, according to sources familiar with the matter.

NEW INVESTIGATION DETAILS

The regional office of the Registrar of Companies in Hyderabad was asked to examine Byju’s financial records. The investigation aims to determine whether the company misrepresented its financial statements or whether funds were improperly diverted.

Sources cited in the report confirmed that irregularities in Byju’s accounts triggered the investigation. Specific details about the shortages were not disclosed. The registrar has one year to complete the review and submit findings.

The latest investigation follows an investigation by the Ministry of Corporate Affairs a year ago. While this investigation identified corporate governance issues at Byju’s, it did not uncover conclusive evidence of financial irregularities.

BYJU’S LEGAL AND FINANCIAL STRUGGLES

Byju’s, once India’s most valuable startup with a valuation of $22 billion, is currently mired in financial turmoil and legal challenges. The company is embroiled in bankruptcy proceedings in both India and the United States.

In October, the Supreme Court of India overturned a bankruptcy court decision that allowed Byju to settle its debts to a major creditor. This decision caused the company to return to bankruptcy, with control of its operations transferred to a bankruptcy resolution professional.

Byju’s rapid decline hit its investors hard. Leading backers, including Prosus NV, wiped out their investments. The company’s founder, Byju Raveendran, recently acknowledged the firm’s decline, stating that its valuation had fallen to zero.

There was no comment from India’s Ministry of Corporate Affairs and the insolvency resolution expert who oversees Byju. The company itself has not issued any public statement regarding the new investigation.

Byju’s was once celebrated as a success story in India’s booming edtech sector. But the company has faced many challenges, from debt repayment problems to allegations of mismanagement.