ED Searches at Byju's Offices: Why Is the Learning App All Over the News?

As per an ED statement, the searches were conducted in connection with alleged FEMA violations by the firm.

The company reported a loss of Rs 4,588 crore for the fiscal year that ended on 31 March 2021. 

(Photo: The Quint)

Troubles mount for ed-tech company Byju's with the Enforcement Directorate (ED), on Saturday, 29 April, conducting searches at the Bengaluru residence of CEO Byju Raveendran and the firm's and offices.

As per an ED statement, the searches were conducted in connection with alleged violations of the Foreign Exchange Management Act (FEMA).

The agency said that three premises were raided, and a significant amount of incriminating documents and digital data were seized.

During the searches, it was found that Byju's Think & Learn Pvt Ltd had received foreign direct investment (FDI) worth around Rs 28,000 crore between 2011 and 2023, as per PTI.

In fact, Byju's has been in the news for a while now – and for all the wrong reasons. Over the past year, allegations against the company have ranged from ill-treatment of its employees to investors losing confidence in it.

Recently, the National Commission for Protection of Child Rights (NCPCR) had issued a summons to Byju Raveendran over allegations of indulging in malpractices to lure parents and children to buy the company's courses.

On 20 December, NCPCR chairperson Priyank Kanoongo told ANI that Byju's was "rigorously following parents, and threatening them that their (children's) future will be ruined."

So, what are the controversies that mar the ed-tech platform? Why are investors losing faith in the company? The Quint delves deeper into these questions.

Why Did NCPCR Summon Byju's?

A report by Context highlighted how Byju's is facing a range of complaints on social media platforms and consumer websites, with customers alleging that they were exploited and deceived by the company. They claim that Byju's put their savings and futures in jeopardy.

Taking cognisance of the matter, the NCPCR summoned CEO Byju Raveendran to appear before it on 23 December.

"The commission is in observance that indulging into malpractices to lure the parents or children into entering loan based agreements and then causing exploitation is against the welfare of children and in pursuance of the functions and powers under Section 13 and 14 of CPCR Act, 2005," The Hindu quoted the panel as saying.

Priyank Kanoongo, the chairperson of NCPCR, told The Quint that the panel had received complaints about Byju's last year as well against its targeting of parents from lower-income groups. The firm allegedly trapped them, saying they can pay via EMIs, while getting the amount actually sanctioned by third-party entities.

"We wrote a letter to the Ministry of Education, Serious Fraud Investigation Office and the Reserve Bank of India. The SFIO took cognizance of the matter and in December last year, the Centre issued an advisory to citizens regarding use of caution against ed-tech companies. We thought that was the end of the story," he added.

Kanoongo said that after news of the panel summoning Raveendran surfaced, the commission received more complaints about the unscrupulous sales practices of the company's salespeople.

"Someone told me that they target parents who are low-income farmers by calling them up and telling them that their child will not get ahead in life if he/she does not take tuitions. My question is: where are they getting the numbers of these parents from?" he added.

We just wanted transparency from the company, he clarified.

What Details Has the Panel Sought?

On 23 December, Raveendran will be required to furnish details of all the courses provided by Byju's for children, the structure of these courses and the fee details, the number of students currently enrolled in each course, the refund policy of the firm, the legal documents regarding the recognition of Byju's as a valid ed-tech company, and all other relevant documents regarding the claims made in the media report.

The NCPCR also warned that if Raveendran failed to comply with the order, he would be subjected to the consequences of non-attendance.

What Are Parents Saying?

Social media platforms, including Twitter, are flooded with complaints from parents of children about how they have been defrauded by the firm and how they've not been refunded despite seeking a cancellation of the course, among other things.

Deepak Tayal, a parent, narrated his ordeal to The Quint. "I had signed up for a two-year course for my daughter in September. But I decided that I didn't want to go ahead with it. Ever since then, I have been chasing the company around for a refund."

He added that he got a confirmation on his cancellation on 10 November.

"I have called Byju's about a 100 times. And every time they promise that they will get back to me within 4-8 hours, but it hasn't happened."

Deepak Tayal, a parent

Tayal had to shell out Rs 48,000 for the course. He also said that to convince him to not cancel the course, a salesman told him that his "daughter without Byju's is capable of scoring only 60 percent."

"The salesman indirectly implied that my daughter is an average student," he added.

How Has Byju's Reacted to These Developments?

A spokesperson of Byju's told The Quint, "We have received the summons and are compiling a transparent response based on facts to address the unsubstantiated complaints. We will clarify our position before the commission if required."

The firm, however, has denied using aggressive sales tactics to sell its products.

"We completely deny using 'aggressive' sales tactics. All for-profit organisations have rigorous but fair tenure-based sales targets for employees to meet – and Byju's is no exception. We do not burden our employees with irrational targets," added the spokesperson.

What Other Allegations Have Been Levelled Against the Firm?

Allegations of ill-treatment against its staff have also emerged against Byju's.

Among other things, employees have complained about an abusive and exploitative work environment and unscrupulous sales practices that involve profiling, pursuing, and pressuring potential customers from poorer backgrounds to buy its courses.

Pratik Makhija, who was employed with the firm, described the work environment at Byju's as "toxic."

"There were unrealistic targets imposed on us. I saw my managers being yelled at by their superiors. Even women employees were not spared," Makhija told The Quint.

Makhija added that he tried reaching out to people across all hierarchies in the organisation with his concerns, but claimed he was given the cold shoulder. He also alleged that Byju's inflates its figures when trying to sell its products to parents.

Makhija also alleged that he was suspended within a month of joining.

"If you are a new employee, you are at least given a warning mail about a dip in your performance, but no such thing happened in my case. Since I was raising issues about the way things were being carried out, they suspended me. They started finding faults in my work. The whole episode has affected my mental health," he added.

Raj Agarwal, a former employee of Byju's, highlighted how revenue is of prime importance to the company. He was a manager in the sales team. He, too, described the work environment as being extremely toxic.

He also accused the firm of indulging in malpractices like inflating figures, and misselling their products, among other things.

He claimed that out of 100 customers on his database, 86 had said they were not satisfied with their product.

'Revenue Generation Over Everything Else'

"The motto of the company is to generate revenues at any cost even if it means indulging in false practices and arm-twisting techniques. Around July, I was up for promotion and I was promoted. But two weeks later, they demoted me citing budgetary constraints. That was really the tipping point for me," Agarwal told The Quint.

"The work hours extend beyond nine hours every day. Refunds to customers are almost never processed as it then reflects badly on the performance of the salesperson and managers, who try to hold back on the refund," he added.

The firm, he alleged, knows how to "play psychological tricks" to sell its products.

"If you tell a parent that their average child will perform better if he/she joins Byju's courses, you have automatically touched a nerve. After all, no parent wants to compromise when it comes to education," he explained.

Loss of Faith by Creditors

Last week, news of the firm being urged to make immediate part payment of a $1.2 billion loan by a group of lenders after the ed-tech titan violated terms, including a September deadline for filing its results for the year ended March 2022, surfaced.

New reports have emerged that Byju's, which may have seen a definite erosion in its last market value at $22 billion, has failed to pay several of its vendors for months.

The reports suggest that some of the payments are due since March.

The company reported a loss of Rs 4,588 crore for the fiscal year that ended on 31 March 2021. The losses in the 2020-21 fiscal widened from Rs 231.69 crore in 2019-20, while revenue during financial year 2021 dropped to Rs 2,428 crore from Rs 2,511 crore in 2020.

Other Controversial Decisions

Last month, the firm came under fire after it announced that it would lay off 2,500 employees in a bid to make the firm more profitable.

However, days after this announcement, it said it roped in football star Lionel Messi as the first global brand ambassador. The move was widely criticised especially at a time when it had announced job cuts.

However, Divya Gokulnath, Byju's co-founder, clarified that the company's decision to sign Messi as a brand ambassador was taken as the deal was not a "typical sponsorship" but a "social partnership."

In March, it was announced that Byju's would be the official sponsor of the FIFA World Cup 2022 in Qatar.