The Enforcement Directorate (ED) of India recently issued show-cause notices to Think & Learn Private Limited, the parent company of BYJU’S, and its Founder and CEO, Byju Raveendran, for alleged violations of the Foreign Exchange Management Act (FEMA). These notices came after a comprehensive investigation by the ED, which found several contraventions of FEMA provisions amounting to Rs 9,362.35 crore (about USD 1.2 billion).
The ED’s investigation was prompted by multiple complaints about the foreign investments received by Think & Learn and the company’s business practices. The agency specifically noted that the company had made significant foreign remittances and investments abroad, allegedly in violation of FEMA provisions. This behavior is claimed to have resulted in a loss of revenue for the Government of India.
During the investigation, which has been ongoing since 2011, the ED conducted searches at three locations in Bengaluru linked to BYJU’S in April. These searches targeted suspected violations of foreign exchange laws and resulted in the seizure of documents related to all investments and overseas transactions of the company. The ED’s statement detailed several specific violations, including the failure to submit documents for imports against advance remittances made outside India, delayed realization of export proceeds, delayed filing of documents against the Foreign Direct Investment (FDI) received, and failure to allot shares against FDI received into the company.
Despite these allegations, BYJU’S has maintained that it has always been compliant with FEMA regulations. The company reportedly sent a letter to its investors stating its cooperative stance with the ED and its adherence to all queries. The edtech company, supported by prominent investors like the Chan-Zuckerberg Initiative, General Atlantic, Tencent, Lightspeed Ventures, and Tiger Global, claimed that it had not received any notice from the ED as of Tuesday evening, although the ED had confirmed issuing the notice.
This situation represents a significant challenge for BYJU’S, a major player in the edtech sector, which has reportedly secured nearly Rs 28,000 crore in FDI from 2011 to 2023. In the same period, the company transferred Rs 9,754 crore to different foreign jurisdictions as overseas direct investments and allocated Rs 944 crore for advertising and marketing, including funds remitted abroad.