Lawmaker Karti P Chidambaram asks fraud regulator to investigate BYJU’s finances

NEW DELHI: Karti P. Chidambaram, Member of Parliament, on Thursday said he has written to the India’s fraud regulator to launch a thorough investigation into the finances of edtech giant Byju’s.

“I have written to the Serious Fraud Investigation Office (SFIO) to look into the financing of Byju’s. It’s imperative that a thorough investigation is launched,” he tweeted.

In a letter attached to the tweet, Chidambaram pointed at a number of news reports to highlight “grave allegations” against the company concerning its finances. The SFIO’s urgent attention should be brought to three key issues, he noted.

Chidambaram cited the $800 million funding round raised by the edtech decacorn in March this year from Byju’s founder and CEO Byju Raveendran with participation from Sumeru Ventures, Vitruvian Partners and BlackRock. Chidambaram referred to a news report saying that the Series F preference shares worth ₹571 crore were allotted to Vitruvian Partners. However, there has been no such filing in the case of Sumeru Ventures or Blackrock since the funding announcement in March. “This raises a question of the missing ₹2,500 crore in the company’s funding,” he stated.

The second issue he pointed out was related to the ₹1,200 crore funding from Oxshott Capital Partners in October last year. “Nine months on and Byju’s has confirmed that it has not yet received this funding from the investor,” he said.

The third issue was related to Byju’s non-filing of its cost audit report for fiscal 2020-21. “As per a news report from July 2, 2022, Byju’s has not yet gotten its financial statements for FY2020-21 audited from its auditor Deloitte, and will take more time to file the Cost Audit Report to the Ministry. This is in clear violations of Rules 6 (5)of the Companies (Cost Records and Audit) Rules, 2014,” he said.

Byju’s and Chidambaram did not respond to request for additional comments.

Byju’s has been under fire these past months over its delay in filing audited financials as well as over its March funding round. Besides, the company’s subsidiaries have had to lay off staff in the past weeks amid a funding crunch.

Earlier this month, a spokesperson clarifying on the March funding round had told VCCircle that Byju’s was yet to receive $250 million from Sumeru Ventures and Oxshott Capital Partners.

Part of this sum was rolled over from an investment announcement made in September 2021 (as part of the company’s $340 million June 2021 round featuring investors such as UBS Group, Abu Dhabi’s sovereign wealth fund ADQ) that Oxshott would be joining the company’s cap table. That unrealised investment was part of the $800 million funding round announced by the company in March this year, the spokesperson clarified. Oxshott is yet to pay and so is Sumeru Ventures, which was part of the March 2022 round.

Meanwhile, Byju’s had proposed to acquire American edtech company 2U for $2.4 billion in the largest acquisition in this space, which was also highlighted by Chidambaram.