ED to tap lenders for info in Byju’s probe; Pine Labs pauses IPO plan for now

By Kevin Colleran On May 1, 2023

The Enforcement Directorate (ED), days after searching premises linked to Byju’s for alleged Foreign Exchange Management Act (FEMA) compliance issues, is planning to approach its lenders to seek more details on the edtech major’s funding and loan transactions. This and more in today’s ETtech Morning Dispatch.

Also in this letter:
■ Govt may release first draft of Digital India Act soon
■ Homegrown dating apps swipe right on Indian market
■ Demand for tech talent is growing at non-tech companies: report

ED to seek details on Byju’s funding and loan transactions from lenders, banks

Days after searching premises linked to Byju’s in its probe linked to FEMA compliance, the ED now plans to seek more details on the edtech major’s funding and loan transactions from its lenders and banks, sources told us.

What’s driving the news: India’s most valued privately-held startup Byju’s is under the lens for FEMA compliance between 2011 and now, but the company or its chief executive Byju Raveendran hasn’t been available to clarify ED’s concerns, sources added.

Tell me more: Raveendran had sought permission seeking exemption from appearances due to certain family emergencies, people aware of the matter told us. Byju’s has been asked to join the investigation four to five times over the past two years, sources indicated.

The ED, India’s federal financial probe agency, conducted searches on premises linked to the edtech firm between Thursday and Friday and recorded a statement from Byju’s CFO Ajay Goel. However, it is learnt from sources that he was not able to clarify details on multiple transactions sought from him. Goel joined the company earlier this month from Vedanta.

CEO speaks: “Byju’s has taken all efforts to fully comply with all applicable foreign exchange laws and all our cross-border transactions have been duly vetted by both its professional advisors/counsel and advisors/counsel of the investment funds and other sophisticated counterparties,” Raveendran told his employees in a late email on Saturday after the news broke about ED searches.

What’s more: Byju’s is believed to have justified the ED’s queries on its ad and marketing spend, claiming that the brand endorsement payments for global events would need to be paid internationally. While ED is also probing money being routed through Cayman-based entities, Byju’s has briefed the agency saying most investors have Cayman Island-based accounts and it’s fairly normal to have several such accounts in geographies like Cayman Island, Mauritius and others.

Also read | Byju’s under fire: our top stories covering controversies surrounding the edtech major

Deferring Pine Labs IPO, says CEO Amrish Rau

Digital payments major Pine Labs joins the growing list of new-age technology companies deferring their initial public offerings (IPO) due to the turbulence in the technology world.

What’s the matter? In an exclusive chat with ETtech, Pine Labs chief executive Amrish Rau said the unicorn, backed by Sequoia Capital and Mastercard, will await a better market before going public. Rau said there is patient capital backing the startup and investors are clear that a company like Pine Labs should not go out (to list) in a storm.

IPO ready: The payments major may have parked its IPO plans for now but it is looking to clock profits after tax by the end of the ongoing fiscal. The company ended FY23 with net revenue of Rs 1,600 crore and positive EBITDA (earnings before interest, taxes, depreciation, and amortisation), Rau said. However, with global macro headwinds, the company may not be able to sustain the same revenue growth in FY24.

Expansion coming: Rau, who took over the company in 2020, said they will take their gift card issuing service, its payments instalment stack, and services around QR code payments immediately to the US and European geographies, as global markets continue to be large profit pools. It may also look at acquisitions to grow or enter newer geographies, and add to its product offerings.

Pine Labs on acquisition spree_Graphic_ETTECH

Govt may release first draft of Digital India Act by July end

The first draft of the new Digital India Act (DIA), which will replace the 23-year-old Information Technology Act of 2000 in its entirety, is likely to be released by late July or early August, sources told ETtech.

What are the details? Pre-draft consultations will start in the first week of May in which lawyers, public policy consultants and other experts will submit their views on the act. The IT ministry will then invite government and private legal experts for final suggestions before it is released for public consultation, an official told ET.

What does the act entail? The new act may introduce a framework with provisions related to data storage, online gaming, cyberbullying, doxing and other cybercrimes. It may also introduce working guidelines to classify and regulate various online portals including e-commerce websites and AI-enabled platforms.

ET reported earlier this month that the IT ministry may look to include provisions to curb the influence of Big Tech in the DIA. Sources also told us that these regulations may look to restrain big tech companies from achieving, or misusing, market dominance.

Homegrown dating apps swipe right on Indian market

Homegrown dating apps have embraced the Indian market. New entrants are eyeing different audiences and looking to cater to niche users to go beyond Tinder, Bumble, OkCupid and the like. These are Indian apps designed with domestic cultural nuances in mind, reflecting a desi twist to dating apps.

Breaking language barriers: Among these homegrown apps is Kolkata-based Flutrr which allows for real-time, in-chat and in-app translation of 12 Indian languages. The app lets users text in their native language and translates it to the preferred language of their match, thus reducing the barrier.

Addressing bias: There is a stigma associated with seeking connections online, and an app called Rekindle is addressing this bias. It caters to divorced, separated or widowed people looking for companionship. The app is most popular in Mumbai, Delhi and Kolkata and has close to 8,000 users, almost 40% of them paid users.

Incumbents double down: Established Indian apps such as Aisle, Woo, TrulyMadly and QuackQuack are also working overtime to tap the Indian market. Aisle launched its first vernacular dating app called Arike in Kerala in February 2021 and has launched three others since then — Anbe, Neetho and Neene — for the other southern states. Aisle also launched ‘Jalebi’, an app specifically targeting the Gen Z crowd.

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Tech talent in demand at non-tech companies: report

Startups pullback from campus_Hiring_Jobs_vacancy_employment_recruitment_THUMB IMAGE_ET TECH1

The overnight shift to a digital mode of operation triggered the need for more technology talent across non-tech industries. This breakthrough has resulted in a tremendous rise in tech hiring, says a TeamLease report.

Steep hike in recruitment: There has been a significant surge in non-tech industries hiring tech talent with over 100,000 active job openings in the past few months. This has led to the movement of tech personnel from the niche industries into non-tech industries, coupled with a string of layoffs across leading companies.

Tech skills for non-tech companies: Among the most sought-after tech skills, non-tech companies are shopping for skills like SQL, PHP, Excel, Scrum, Tableau, SAP, Azure, AWS etc. Each non-tech sector has a different set of tech skills it looks to pick from.

Growing salaries: Tech salaries in non-tech sectors are estimated to grow by 15% by FY24, according to the report. The incremental growth in salary in non-tech industries is higher than in technology-centric companies.