ED searches Byju’s premises: How the ed-tech firm has remained in the eye of the storm

The troubles for the ed-tech platform Byju’s seem to have no end in sight. Now, the firm is under the Enforcement Directorate (ED) scanner, which on Saturday (29 April) conducted searches on its premises in Bengaluru in connection with alleged foreign exchange violations. As per the agency, the searches were carried out at three premises, including the residence of company founder and chief executive officer (CEO) Raveendran Byju and the office of Think & Learn Private Limited, the parent company that runs the ed-tech platform. This is not the first time that Byju’s has been embroiled in a row. Let’s take a closer look at the edtech platform’s recent and past controversies. Byju’s ED woes According to the central probe agency, Byju’s allegedly remitted abroad over Rs 9,700 crore of the Rs 28,000 crore received by Think and Learn Private Limited as Foreign Direct Investment (FDI) since 2011. The ED is probing suspected violations. “FEMA (Foreign Exchange Management Act) searches also revealed that the company has received foreign direct investment to the tune of Rs 28,000 crore (approx) during the period from 2011 to 2023. Further, the company has also remitted Rs 9,754 crore (approx) to various foreign jurisdictions during the same period in the name of overseas direct investment,” the ED said in a statement. “The company has booked around Rs 944 crore in the name of advertisement and marketing expenses including the amount remitted to foreign jurisdiction. The company has not prepared its financial statements since financial year 2020-21 and has not got the accounts audited which is mandatory. Hence, the genuineness of the figures provided by the company are being cross-examined from the banks,” the agency added.

ED has conducted searches at 3 premises in Bengaluru in the case of Raveendaran Byju and his company ‘Think & Learn Private Limited’ (Byju online learning platform) under the provisions of FEMA. During the search, various incriminating documents and digital data was seized.

— ED (@dir_ed) April 29, 2023

The ED also claimed it has recovered “various incriminating documents and digital data” during the searches. Byju’s legal spokesperson called the ED visit a “routine inquiry under FEMA”. “We will continue to work closely with the authorities to ensure that they have all the information they need, and we are confident that this matter will be resolved in a timely and satisfactory manner,” the spokesperson was quoted as saying by Reuters. NCPCR summon and more Last December, India’s child rights commission summoned Raveendran following allegations that the company indulges in malpractices to sell its courses to parents and children. According to The National, National Commission for Protection of Child Rights (NCPCR) said that Byju’s was purchasing phone databases from third parties and threatening parents that their children’s future will be ruined if they did not subscribe to their courses. “We came to know about Byju’s buying phone numbers of children and their parents, rigorously following them and threatening them that their future will be ruined,” NCPCR chairman Priyank Kanoongo said at the time. “They’re targeting first-generation learners,” he said. Speaking to The Quint, Kanoongo had said the panel had received complaints previously in 2021 about Byju’s targeting parents from lower-income groups. “Someone told me that they target parents who are low-income farmers by calling them up and telling them that their child will not get ahead in life if he/she does not take tuitions. My question is: where are they getting the numbers of these parents from?” he asked. Many parents took to social media last year alleging that they were deceived by the firm and were not refunded despite applying for cancellation of the course, noted The Quint.  However, Byju’s had denied using ‘aggressive’ sales tactics to sell its services. In November 2022, the Institute of Chartered Accountants of India (ICAI) said it was probing certain “issues” with the ed-tech firm’s financial disclosures. Byju’s steep losses Byju’s recorded huge losses of Rs 4,588 crore in financial year 2021 on consolidated revenues of Rs 2,428 crore. This came to light after the start-up released audited results in September 2022 after nearly 18 months of delay. According to Economic Times (ET), this was a plunge of 48 per cent from the company’s projected revenue. [caption id=“attachment_12525192” align=“alignnone” width=“640”] Byju’s has courted controversy several times in the recent past. AFP File Photo[/caption] In a lengthy LinkedIn post, the company’s Byju’s co-founder & director Divya Gokulnath rejected media reports on the delay in publishing FY 21 financials. “It’s easy to forget in the flood of negative headlines that we are 18 months post FY21, and that Byju’s has grown more than four times in this span. Or that our ‘widening losses’ in FY21 have been cut to half in FY22,” she said. Notably, the Ministry of Corporate Affairs had also asked Byju’s to explain the reason behind the delay in releasing its financials for the fiscal year ending 31 March 2021. Mass layoffs The ed-tech firm sacked 1,000 employees in January this year continuing its major cost cutting exercise. It had earlier announced mass layoffs in October last year, when it let go 2,500 people, or 5 per cent of its 50,000-strong workforce. Later in an apology the same month, Raveendran acknowledged in an internal e-mail that the layoff process was “not as smooth” as the firm hoped. Justifying the move, he said the company took the decision “to protect the health of the larger organisation and pay heed to the constraints imposed by external macroeconomic conditions”, reported ET. As per Reuters, Byju’s move to announce football star Lionel Messi as a brand ambassador, shortly after firing 2,500 workers had received flak on social media from former workers as well as industry experts. ‘Toxic’ environment Several former and current employees of the ed-tech firm have come forward with accusations of a “toxic” work environment. Employees told Context last year about alleged incidents of physical and verbal abuse and prolonged working hours. The workers also opened up about the alleged pressure on them to make sales using any means available. Around 26 workers said they were regularly expected to work at least 12-hour shifts six days a week. [caption id=“attachment_12525222” align=“alignnone” width=“640”] Several employees have opened up about the work culture at Byju’s. Firstpost (Representational Image)[/caption] Pratik Makhija, a former Byju’s salesman, said: “You feel like you’re in a bubble or trapped at the bottom of a well, with no way to climb out and enjoy the outside world. There is no work-life balance. Zero”. “We are treated like slaves. At what cost are they making their revenue, their valuation? By crushing us,” Reuters quoted him as saying. Makhija also alleged that the company did not train employees on how to make sales, however expected them to close deals through any means. “It doesn’t matter how you do it - do unethical things, promise fake things, make false commitments, mislead, misguide,” he told Context. “Do whatever you have to do to make a sale. We want revenue at the end of the day - that’s their message to us.” Denying these accusations, Byju’s said it did not set “irrational targets” for its workers. “Managers are encouraged to look at the quality rather than quantity of work,” the company spokesperson said. “In the last two years, we have doubled down on fostering an environment where employees feel physically and emotionally healthy, safe, and supported.”