Ahead of big investors' meet and amid ED lookout, Byju's CEO Byju Raveendran in Dubai?
Amidst an ongoing investigation by the Enforcement Directorate (ED) into Byju's, the founder and CEO, Byju Raveendran, is reportedly in Dubai. He will miss the big investors' meeting today, which is slated to discuss a change in leadership
FollowAs the Enforcement Directorate (ED) intensifies its investigation into Byju's, the prominent ed-tech firm's founder and CEO Byju Raveendran is believed to have left the country and arrived in Dubai. This revelation comes amidst an ongoing probe under the Foreign Exchange Management Act (FEMA) against the company. Raveendran's absence is expected to impact the extraordinary general meeting (EGM) of investors slated for Friday, where a consortium of shareholders, led by global tech investor Prosus, aims to instate a new board and oust Raveendran.
Once regarded as one of India's most lucrative startups, Byju's has encountered a profound downturn, with its valuation plummeting approximately 90% over the past year. Despite initially thriving on the surge in demand for online education during the COVID-19 pandemic, the company now faces a series of crises. Key investors have withdrawn their support, Deloitte resigned as the auditor, and legal disputes with US lenders over a $1.2 billion loan have further exacerbated the turmoil.
Prior to the EGM, Byju's asserted that a ruling by the Karnataka High Court deemed any decisions made at the meeting "invalid" until the next hearing, labelling the move as a "smokescreen" designed to disrupt the company's management and control. Despite this legal intervention, the meeting is set to proceed, with a clear objective to advocate for Raveendran's removal as CEO. Byju's contends that investors, including General Atlantic and the Chan Zuckerberg Initiative, violated shareholder agreements by calling for the meeting.
ED's Lookout Notice Against Byju
The ED's lookout circular (LOC) against Raveendran was initially issued over a year ago as part of its ongoing investigation. Renewed earlier this month, the LOC stipulates that the ED should be informed if Raveendran leaves the country. According to agency sources, Raveendran is currently outside India.
The financial crimes probe agency alleges that Think and Learn Pvt Ltd, the entity operating Byju's, violated India’s foreign exchange laws, resulting in significant losses to the exchequer totalling approximately Rs 9,362 crore. The agency's statement in November 2023 highlighted various violations of FEMA provisions by Think and Learn Private Limited and Byju Raveendran, prompting show-cause notices to be issued.
The ED's investigation, spurred by multiple complaints regarding foreign investments received by Byju's and its business conduct, unearthed substantial foreign direct investments totalling around Rs 28,000 crore from 2011 to 2023. Additionally, the company reportedly remitted Rs 9,754 crore to various foreign jurisdictions during the same period under the guise of overseas direct investment.
