scorecardresearch
Friday, March 29, 2024
Support Our Journalism
HomeIndiaKarti Chidambaram says BYJU's not in ‘sound financial health’, seeks probe by...

Karti Chidambaram says BYJU’s not in ‘sound financial health’, seeks probe by ICAI

In a letter to ICAI President Debashis Mitra, Chidambaram raises concerns about BYJU’s ‘misrepresentation of facts’ & the company’s 18-month delay in filing its FY21 financials.

Follow Us :
Text Size:

New Delhi: Senior Congress leader and Lok Sabha MP Karti Chidambaram has written a letter to the Institute of Chartered Accountants of India (ICAI) alleging accounting irregularities by edtech giant BYJU’s and seeking a probe into the company’s financial statements.

The letter, dated 14 October and addressed to ICAI President Debashis Mitra, raises concerns about BYJU’s ‘misrepresentation of facts’ and the company’s 18-month delay in filing its FY21 financials.

His letter comes days after BYJU’s announced that it will cut around 2,500 jobs amid mounting losses. Chidambaram said the edtech firm was “not in sound financial health” and urged ICAI to intervene “in the interest of consumers and the company’s employees”.
In his letter, the Congress leader has listed some red flags in BYJU’s financials for FY2021.

ThePrint reached Chidambaram but he refused to comment on the matter.

‘Blatant misrepresentation of facts’

According to Chidambaram, 81 per cent of BYJU’s operating revenue for FY21 constitutes the “sale of edtech products” such as laptops, tablets and SD cards. He said this is a “blatant misrepresentation of facts” to classify hardware as edutech.

He also said that 60 per cent of the costs related to employees have been recognised as “capital expenses” rather than “operational costs”.

“If their costs were counted as a direct expense, instead of a capital expense, BYJU’s total loss for FY2021 would have gone over Rs 5,000 crore. Such irregular accounting practices fail to give a clear picture of Byju’s income, expenses and losses,” wrote Chidambaram.

According to a report in The Economic Times  last month, the company incurred massive losses of Rs 4,588 crore for FY21.

The MP also said BYJU’s recognises revenue from streaming services (online courses it sells) upfront and in full, on the commencement of a contract. But Chidambaram pointed out that the standard accounting practice is that “subscription revenue can’t be recognised upfront and has to be recognised over the period of the delivery of the service”.

Previous allegations

This isn’t the first time that BYJU’s has been in the headlines for alleged accounting malpractices. The Ministry of Corporate Affairs had earlier sent a letter to its parent company Think and Learn, demanding an explanation for a 17-month delay in filing audited accounts.

Chidambaram, too, had flagged concerns about the company in the past. In July, the MP wrote to the director of the Serious Fraud Investigation Office about missing funds in investments and delay in auditing BYJU’s financial records for FY 2020-21.


Also read: Pushy Indian parents now have a new goal for six-year-olds — coding


 

Subscribe to our channels on YouTube, Telegram & WhatsApp

Support Our Journalism

India needs fair, non-hyphenated and questioning journalism, packed with on-ground reporting. ThePrint – with exceptional reporters, columnists and editors – is doing just that.

Sustaining this needs support from wonderful readers like you.

Whether you live in India or overseas, you can take a paid subscription by clicking here.

Support Our Journalism

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Most Popular