Byju’s FY21 financials are about to be scrutinized by ICAI upon Karti P Chidambaram’s request.
ICAI is to scrutinize Byju's financial statements for FY 2021 after Karti P Chidambaram, a Member of Parliament, Rajya Sabha requested.
Byju's, the Bangalore-based global educational technology (Edu-tech) company, is not an unfamiliar name in India. It’s in every nook and corner of Indian media.
It reached unicorn status in 2018 and has remained one of India's most valuable startups since then.
The edtech company has continued to dominate the market with its clever marketing strategy. It recently raised approx. $368 million.
However, the startup released its FY21 financials in September, after a whopping 18 months delay. As if that wasn’t concerning enough, it is reported that Karti P Chidambaram, a Member of Parliament, is requesting The Institute of Chartered Accountants of India (ICAI) to scrutinize Byju’s financial statements.
Chidambaram has apparently sent a letter to CA (Dr.) Debashis Mitra, ICAI President, concerning the edtech giant’s financial irregularities. According to the former, there appear to be a few red flags in Byju’s financials for FY2021. It is not transparent as to how Byju’s makes money and where it spends it.
In his letter, posted on Twitter it read, ‘nearly 81% of its operating revenue for FY2021’ constitutes of ‘Sale of edutech products.’ These products include tablets, SD cards, and laptops sales.
“For an ed-tech company is it not a blatant misrepresentation of facts, to classify the hardware as edutech?” wrote Chidambaram.
On the expenses front, he mentioned that 60% of employee-related costs have been acknowledged as capital expenses rather than operational costs.
He further claimed that if these costs in fact had been counted as a direct expenses rather than capital expenses, Byju’s total loss would’ve gone beyond Rs 5000 crores for FY 2021.
But if we look at the startup’s financials, it states that it had incurred a total loss of Rs 4,588 crores.
Considering such irregular accounting practices Chidambaram has urged ICAI to review its financial statements in the interest of Byju’s consumers and its employees.
The edtech unicorn earned Rs 2,428 crore in revenues in FY21.
But when asked about the delay in delivering the financials, the company told the media that its auditor Deloitte was not signing off on the financials. Even the Ministry of Corporate Affairs had urged Byju’s to submit.
The startup has also decided to lay off 5% of its workforce.
After considering all these factors the Lok Sabha member claimed that the company is not in a sound state of financial health.
CA (Dr.) Debashis Mitra, ICAI President has told the media that ICAI is to probe the financial results after the World Congress Of Accountants (WCOA) 2022 concludes on the 21st of November.