SUMMARY
BYJU’S sells its services to the GCC customers through More Ideas General Trading LLC, an unrelated entity located out of Dubai
The edtech startup’s auditor said revenues of INR 260 Cr in FY22 was not recognised as “these transfers” did not meet the criteria under Ind AS with respect to the probability of collection
The startup said it assessed the credit risk on the amounts recoverable and estimated a provision for expected credit loss of INR 119.15 Cr
Beleaguered edtech major BYJU’S sold educational content worth INR 634.18 Cr to customers in the Gulf Cooperation Council (GCC) countries in the financial year 2021-22 (FY22), up from INR 497 Cr in the prior fiscal.
However, its auditor stated that it didn’t recognise revenue totalling INR 260 Cr from this total revenue. The edtech giant sells its services to the GCC customers through More Ideas General Trading LLC, an unrelated entity located out of Dubai.
“The Company has assessed the credit risk on the amounts recoverable from the aforesaid party as at March 31, 2022, and… estimated a provision for expected credit loss of INR 119.15 Cr (31 March 2021: nil),” the auditor’s notes for BYJU’S FY22 financials said..
Further, BYJU’S also paid a commission to More Ideas, which was 50% of the billed revenue and amounted to INR 300.37 Cr in FY22 for acquiring customers in the region. BYJU’S paid INR 237 Cr in commission in FY21 for revenue of INR 497 Cr.
Explaining the issue related to revenues not being recognised, the auditor said transfer of revenue from the GCC did not meet the criteria under Indian Accounting Standards (Ind AS) with respect to the probability of collection. In other words, there is some doubt about whether the revenue from the GCC can be fully realised.
“Accordingly, the revenues from these transfers will be recognised when substantially all of the consideration is received by company and to the extent such consideration received is non-refundable,” BYJU’S auditor M S K A & Associates stated.
BYJU’S said it has also filed an application with its authorised dealer banker seeking an extension of the time limit as prescribed by the Reserve Bank of India (RBI) guidelines for collection of the foreign currency amounts.
“While such approval has not been expressly received as yet, the company believes this to be a mere procedural formality, and that no material penalty or fine is expected to devolve on the company,” it added.
It is pertinent to note that amid multiple troubles, BYJU’S filed its financial statement for FY22 almost 22 months after the end of the year. Its consolidated net loss jumped 80% year-on-year (YoY) to INR 8,245.2 Cr in FY22.
Operating revenue jumped more than 120% year-on-year to INR 5,014.6 Cr in FY22.
BYJU’S auditor also flagged uncertainty about the startup’s ability to continue as a going concern due to continuing losses and troubles pertaining to payment of $1.2 Bn Term Loan B. It also highlighted multiple other violations of the sections of the Companies Act, 2013 by the edtech giant.
