The Ministry of Corporate Affairs on Wednesday clarified that proceedings initiated against edtech player Byju’s under the companies law are “still ongoing” and a final conclusion cannot be drawn in the matter at this stage.
This came after media reports had suggested that a year-long probe by the ministry found no evidence of financial misconduct like 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),” it said, adding that the investigations is on and definitive statements on the matter are premature.
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The reports said that the investigation did discover governance shortcomings that were reportedly contributing 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 on going and no final conclusion should be drawn in this matter at this stage,” MCA added in the statement.
Last year, the ministry began an inspection of Byju’s books due to various concerns, including delays in finalising financial statements and the resignation of an auditor.
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Byju’s, once a celebrated edtech startup, soared to 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.
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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, which were reportedly hindered by opposition to a USD 200 million rights issue.