Indian government launches new probe into BYJU'S financial misconduct
What's the story
The Indian government has launched an investigation into the financial and accounting practices of BYJU'S, the beleaguered online tutoring firm. The move comes after a previous inspection flagged corporate governance lapses in the company. BYJU'S financial records will be examined by the Registrar of Companies's regional office in Hyderabad to see if there were any misrepresentations or possible fund diversions.
Investigation details
Probe initiated due to alleged shortcomings in BYJU'S accounts
The new investigation was initiated over alleged failings in BYJU'S accounts, sources familiar with the matter said. However, specific details of the alleged failings have not been revealed. The Registrar of Companies's office has been given a one-year deadline to submit its report on the matter. This development further complicates the challenges already being faced by BYJU'S.
Ongoing challenges
BYJU'S legal battles and insolvency proceedings
BYJU'S, once India's most valuable start-up, is facing legal battles at home and abroad. The Supreme Court of India recently overturned a bankruptcy tribunal's decision allowing BYJU'S to settle debts with a major creditor. The ruling has pushed the online tutoring firm back into insolvency proceedings. The company is now making its case in a lower court as an insolvency resolution professional oversees its operations.
Past findings
Previous inspection revealed governance lapses at BYJU'S
A previous year-long inspection by the Ministry of Corporate Affairs had also flagged corporate governance lapses at BYJU'S. However, no evidence of wrongdoing was found during that investigation. The current investigation into alleged financial and accounting irregularities is a separate probe initiated after these initial revelations.
Financial impact
BYJU'S valuation drops to 0, backers write off investments
BYJU Raveendran, the founder of BYJU'S, has claimed that his once-$22 billion start-up is now worth nothing. The steep decline in valuation has prompted some of BYJU'S top investors such as Prosus NV to write off their investments in the company. The ongoing investigation into the firm's financial and accounting practices could further affect its financial standing and investor confidence.