On Wednesday, the Ministry of Corporate Affairs (MCA) clarified that the proceedings initiated against edtech company Byju’s under the companies law are “still ongoing,” and a final conclusion cannot be drawn at this stage.
This statement followed media reports suggesting that a year-long probe by the ministry found no evidence of financial misconduct, such as fund diversion or financial manipulation, at Byju’s.
“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 statement read, adding that the investigation is still ongoing, and definitive statements on the matter are premature.
The reports indicated that the investigation did reveal 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 final conclusion should be drawn in this matter at this stage,” the 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, once a celebrated edtech startup, reached great heights before encountering several challenges. The return of students to physical classrooms after the pandemic and the acquisition of Aakash strained Byju’s finances. Over the past year, the company faced additional setbacks: its auditor resigned, lenders initiated bankruptcy proceedings against a holding company, and a US lawsuit contested loan terms and repayment conditions.
Raveendran Byju, founder of Think & Learn, the company behind the Byju’s 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, reportedly hindered by opposition to a USD 200 million rights issue.
