Govt report finds no financial fraud but corporate governance lapses at Byju's

New Delhi: Embattled edtech firm Byju’s did not siphon off funds or manipulated accounts, a year-long investigation by the government has found.

However, the company did go through lapses in its corporate governance structure, the government added.

The probe by the Ministry of Corporate Affairs (MCA) concluded allegations regarding the manipulation of accounts and siphoning of funds against Byju’s “to be unsustainable” and as such are not recommended to be referred to the Serious Fraud Investigation Office (SFIO), according to people aware of the matter.

The MCA inspection was conducted after complaints were filed by the National Commission for Protection of Child Rights (NCPCR) and the Registrar of Companies (ROC).

These complaints revolved around accusations that Byju’s arm twists its customers for continuing with its products or services, and doesn’t issue refunds to those requesting it, among others.

According to people close to the matter, the report, yet to be made public, found that it is possible that the promoters and directors of Byju's could have been more transparent with their actions.

However, the MCA report observed that most of the corporate governance issues which were alleged by the directors were in relation to “transparency and independence”.

It was also observed that the Nominee Directors had resigned during the year 2023-24, citing “corporate governance issues, including lack of deliberations with them on the important financial and business policies”.

The report also concluded that Bujy’s has been taking all steps to resolve complaints and grievances pursuant to which many complaints stand resolved and the remaining are under the resolution process.

As of January 31, Byju’s paid customer base had 7.5 million students.

Of the 4,390 complaints made to the edtech company, 2,856 have been resolved and the pending complaints formed 0.02 per cent of the total paid customer base.

There is also "no issue with the change in the accounting policy for revenue recognition," the report found.

The company used Rs 9,025 crore from 2014 to 2022 for M&A and these acquisitions returned an income of Rs 4,287 crore.

Byju’s is currently involved in multiple cases in courts as well as in the National Company Law Tribunal (NCLT).

The edtech company is trying to raise $200 million in a rights issue but has been restrained from utilising any funds by the NCLT.

Byju's is also exploring out-of-court settlements with some of its creditors.

Once valued at $22 billion, the edtech company is now worth zero.

Global investment giant Prosus wrote off the value of its shareholding in Byju's, recording a loss of $493 million in its annual report for FY24.