The Enforcement Directorate (ED) on Tuesday confirmed that it issued a show-cause notice to Byju's, alleging Foreign Exchange Management Act (FEMA) violations amounting to ₹9,000 crore. CNBC-TV18 has reported about this earlier.

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Adjudicating Authority issues show cause notices to M/s. Think & Learn Private Limited and Byju Raveendran for violation involving an amount of Rs. 9362.35 Crore under FEMA, 1999

— ED (@dir_ed) November 21, 2023"ED had initiated investigation on the basis of various complaints regarding the foreign investment received by the company viz. M/s Think and Learn Private Limited and the business conduct of the company. The company was also stated to have made significant foreign remittances outside India and investments abroad which were allegedly in contravention of provisions of FEMA, 1999 and caused loss of revenue to the Government of India," the central agency said in a statement.

The notice extends to Byju Raveendran, founder of Byju's, and Think and Learn Pvt Ltd. The ED's action follows an investigation into potential FEMA contraventions by the prominent edtech company.

Meanwhile, Byju's had denied the report. The company has said in a statement, "BYJU’S unequivocally denies media reports that insinuate it has received a notice from the Enforcement Department. The company has not received any such communication from the Enforcement Department.”

In April this year the ED had searched three premises of Edtech major BYJU's CEO Byju Raveendran in Bengaluru and seized "incriminating" documents and digital data as part of a foreign exchange violation probe.

CNBC-TV18 had reported earlier in April that BYJU’s is working to to raise $250 to $500 million in funding at a flat valuation of $22 billion, amid pressure to put a lid on rising costs, turn profitable and repay its $1.2 billion term loan.

The funding that was to be closed in April is still not finalised and BYJU’s has not responded on a new timeline or answered CNBC-TV18’s questions on the size and timing of this funding.

CNBC-TV18 also learnt from company sources that the round would not be a “down round”. indicating that valuations will hold even though there are significant headwinds facing the company and the sector.

The company boasts a marquee roster of over 70 investors. From the Chan- Zuckerberg Initiative to Sequoia Capital India, General Atlantic, BOND, Silverlake, Blackrock, Verlinvest, Naspers, Tencent, CPPIB, Tiger Global, Qatar Investment Authority and Lightspeed Ventures amongst others. These investors have pumped almost $6 billion into BYJU’S.

Remember, according to multiple reports BYJU’S was seeking to refinance its $1.2 billion loan at a higher rate, a development linked to the delays in publishing FY21 and FY22 results, which led lenders to recall the loans. The company refused to comment on the loan claiming, “The $1.2 billion loan matures in 2026 and we have a healthy cash flow to be able to meet all our interest obligations in a timely manner.”

The firm which has about a billion dollars in cash, claims it will turn net cash positive with this round, a source told CNBC-TV18.

(Edited by : Ajay Vaishnav)

First Published:Nov 21, 2023 1:36 PM IST