Ministry of Corporate Affairs Clarifies Investigation into Byju’s

The Ministry of Corporate Affairs (MCA) has explained that the proceedings against edtech company Byju’s under the company law are “still ongoing,” and no final decisions can be drawn.

This statement follows media reports suggesting that a year-long probe found no evidence of financial misconduct, such as fund diversion or financial manipulation, at Byju’s.

Media Reports and Clarifications on:

“There have been recent reports claiming that Byju’s has been cleared of financial fraud in an ongoing investigation by the Ministry of Corporate Affairs (MCA),” the ministry stated, emphasizing that these investigations are still in progress and definitive statements are premature. The reports mentioned governance shortcomings that contributed to the startup’s increasing losses.

“It is categorically clarified that such reports are factually incorrect and misleading. The proceedings initiated by MCA under the Companies Act 2013 are still ongoing, and no conclusion should be drawn at this stage,” MCA added.

Last year, the ministry began inspecting Byju’s books due to various concerns, including delays in finalizing financial statements and the resignation of an auditor.

Byju’s Financial and Operational Challenges:

Byju’s, once a celebrated ed-tech startup, has faced numerous challenges recently. The return of students to physical classrooms post-pandemic and acquiring Aakash strained Byju’s finances. Over the past year, the company faced additional setbacks, including:

• The resignation of its auditor.
• Bankruptcy proceedings initiated by lenders against a holding company.
• A US lawsuit is contesting loan terms and repayment conditions.

Statement from Byju’s Founder:

Raveendran Byju, founder of Think & Learn, the company behind the brand, attributed delays in the company’s revival to certain foreign investors.

These delays included restructuring the board, postponing financial results, and resolving a liquidity crisis, which was reportedly hindered by opposition to a USD 200 million rights issue.

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