ED notice to Byju’s on Rs 9,000 crore Fema violation

The Enforcement Directorate (ED) on Tuesday issued showcause notices to troubled edtech startup Byju’s and its founder and group CEO Byju Raveendran over alleged violation of the provisions of the Foreign Exchange Management Act (Fema) amounting to over Rs 9,362 crore.

The ED, which had initiated investigation against the startup earlier this year, has accused Think & Learn Pvt Ltd (Byju’s parent company) and its promoter of making significant foreign remittances and investments abroad that were allegedly in violation of the provisions of Fema, resulting in loss of revenue to the government.

“On conclusion of the investigation, it was found that Think & Learn Pvt Ltd and Byju Raveendran have contravened the provisions of Fema by failing to submit documents of imports against advance remittances made outside India,” the ED said.

The agency has accused Raveendran of not accounting for proceeds of exports made outside India and delayed filing of documents against the foreign direct investment (FDI) received into the company. Failing to file documents against the remittances made by the company outside India and not allotting shares against FDI received into the company have been cited as violations of the Fema provision.

In April, the ED had conducted searches and seizure at three premises in Bengaluru belonging to Byju’s in the same case. It had then said that the startup received FDI to the tune of Rs 28,000 crore through 2011-23 and had remitted nearly Rs 9,754 crore during this period to various foreign jurisdictions in the name of overseas direct investment. The company, it had said, booked Rs 944 crore in the name of advertisement and marketing expenses, including the amount remitted to foreign jurisdictions.

Earlier in the day, Raveendran, in a letter to the firm’s shareholders claimed that the company has always been fully compliant with Fema regulations and that the firm continues to operate in full adherence to regulatory framework.

In his attempt to assuage the concerns of shareholders, Raveendran cited instances from a due diligence process conducted by a law firm that found no Fema violations at Byju’s. “We are attaching an email from... one of India’s most trusted law firms, which highlights the results of a comprehensive due diligence conducted on Byju’s. The email confirms that the due diligence found no Fema violations at Byju’s,” Raveendran said in the letter, which was reviewed by TOI.