Lok Sabha member Karti Chidambaram has asked chartered accountants' apex body Institute of Chartered Accountants of India (ICAI) to review the financials of the edtech startup.
In a letter to ICAI President Debashis Mitra, the Parliamentarian said there are various red flags in the company's financials for 2020-21 period, PTI reported.
On the expenses front, the letter said that 60% of the costs related to employees have been recognised as capital expenses rather than as operational costs.
"If these 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," said the letter dated October 14.
Citing various media reports, the Lok Sabha member said the company is not in a sound state of financial health and urged the ICAI to review its financial statements in the interest of consumers and employees.
After a delay of over 18 months, Byju's released its audited results in September. The firm's revenue from operations for the financial year ended March 2021 has been readjusted to Rs 2,280 crore even as the company incurred massive losses of Rs 4,588 crore, up from just Rs 262 crore in the previous fiscal.
Byju Raveendran, founder & CEO of Byju’s, had been briefing the company’s shareholders about the discrepancies, attributing it to business model changes due to the Covid-19 pandemic.
Earlier, the ministry of corporate affairs (MCA) had sent a communication to Byju’s asking it to explain why the financial accounts for FY21 were not submitted till now.
"While the audit delay was there, the narrative of fraud was wrong... there was no misreporting as you suggest… I have been on calls with many investors and nobody is concerned as they do not care about FY21 numbers but are looking at FY22 and FY23 numbers…," Raveendran had said then.
Notably, the edtech firm recently announced that it would cut – or “rationalise” – about 5% of its 50,000-strong workforce across departments such as product, content, media and technology in a phased manner.
This would translate to about 2,500 people losing their job. The final number may be different, but it would still be one of the largest layoffs by a major startup.
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