The Indian government has launched a formal investigation into the financing and accounting practices of Byju’s, the once-high-flying online tutoring firm now embroiled in financial difficulties, Bloomberg reports.
The probe follows a previous inspection that uncovered corporate governance shortcomings.
Sources familiar with the matter, speaking on condition of anonymity due to the sensitive nature of the investigation, revealed that the federal government has instructed the Hyderabad regional office of the Registrar of Companies to scrutinize Byju’s financial records. The investigation aims to determine whether the company misrepresented its financial statements and whether any funds were improperly diverted.
While sources confirmed the existence of accounting irregularities within Byju’s, specifics regarding the nature of these failings remain undisclosed. The Registrar of Companies has been given a one-year timeframe to complete its report.
Byju’s, once hailed as India’s most valuable startup with a peak valuation of $22 billion, is currently battling for survival in both Indian and US courts. A recent setback saw India’s Supreme Court overturn a bankruptcy tribunal ruling that allowed Byju’s to settle debts with a key creditor, pushing the company deeper into insolvency proceedings. The company is now appealing the decision in a lower court, with control currently vested in an insolvency resolution professional.
This new investigation marks an escalation from a previous year-long inspection by the Ministry of Corporate Affairs, which, while revealing corporate governance lapses, did not uncover evidence of illegal activity, according to a June report by Bloomberg News. Byju Raveendran, the company’s founder, has publicly acknowledged the drastic devaluation of his once-massive startup, claiming its current worth is zero. Several significant investors, including Prosus NV, have already written off their investments in the struggling company.
