NEW DELHI: Indian authorities have launched a new investigation into the financial and accounting practices of Byju’s, marking a significant escalation in the scrutiny of the embattled edtech giant.
This follows an earlier inspection by the Ministry of Corporate Affairs (MCA), which flagged corporate governance lapses but did not find concrete evidence of misconduct.
New probe
The federal government has directed the Registrar of Companies (RoC) in Hyderabad to examine Byju’s financial records to determine whether the company misrepresented its financial statements or engaged in fund diversion, according to sources familiar with the matter. The RoC has a year to complete its inquiry and submit its findings.
While specific details of the alleged financial discrepancies remain unclear, the move reflects growing concerns over Byju’s governance and financial transparency. Emails to the MCA and the court-appointed insolvency resolution professional overseeing Byju’s operations went unanswered.
Mounting challenges
Byju’s, once celebrated as India’s most valuable startup with a valuation of $22 billion, is now battling insolvency proceedings both in India and the United States. Recent legal setbacks have compounded its troubles; last month, India’s Supreme Court nullified a bankruptcy tribunal ruling that would have allowed the company to negotiate debt settlements with key creditors. This decision returned Byju’s to the insolvency resolution process.
The company is now under the control of an insolvency resolution professional, and founder Byju Raveendran has conceded that the startup’s valuation has plummeted to zero. Major investors, including Prosus NV, have written off their stakes, signaling a lack of confidence in the company’s revival prospects.
What next?
The investigation comes amid a broader reckoning for Byju’s, which has faced mounting criticism for its aggressive acquisition strategy, opaque financial practices, and an inability to address investor concerns.
The findings of the ongoing probe could have far-reaching implications for the company, its stakeholders, and the broader startup ecosystem in India.
Byju’s representatives have not issued a statement regarding the latest probe, leaving unanswered questions about the firm’s future and the potential fallout of the investigation.
