Also in this letter:
■ ED conducting searches at some Paytm, PayU premises: report
■ Vedanta to set up iPhone manufacturing unit in Maharashtra
■ Google loses EU antitrust appeal, fined €4.12 billion
Byju’s adjusts revenue for FY21 to Rs 2,280 crore, losses swell to Rs 4,588 crore
Think & Learn Pvt Ltd, the parent company of edtech brand Byju’s, said its revenue from operations for the financial year ending March 2021 (FY21) has been readjusted to Rs 2,280 crore, even as it incurred massive losses of Rs 4,588 crore, up from just Rs 262 crore in the previous fiscal.
This is a significant drop of around 40% from what the company had previously projected (roughly Rs 4,400 crore).
Catch up quick: We first reported about the difference in the unaudited revenue and what the auditor, Deloitte, finally signed off on September 12. We reported that over the past week, founder and CEO Byju Raveendran had been briefing the company’s shareholders about the discrepancies, attributing them to business model changes necessitated by the pandemic.
Driving the news: Raveendran told us in an interview on Wednesday that there was significant growth in revenue compared to FY20 but because of revenue recognition changes, this is being pushed to the next financial year. “There is no revenue loss which is being called out in the audit report, ” he insisted. On account of that, there will be more growth in FY22,” he claimed.
Auditor’s changes: Deloitte said Byju’s revenue from streaming services (the online courses it sells), which was previously recognised fully on commencement of contract, has been adjusted to be recognised rateably over the period of the contract.
Also, the interest paid to loan partners on behalf of customers with respect to loans granted directly to customers have been reclassified from finance cost and adjusted against revenues, since these are payments to customers.
These two changes have had a huge knock on the online tutoring platform’s revenue, also resulting in the big losses registered by the company. Raveendran said the Rs 4,588 crore losses suffered by the firm were equally divided between Byju’s and Whitehat Jr, which it acquired in 2020.
ED conducting searches at some Paytm, PayU premises: report
The Enforcement Directorate (ED) is conducting searches at several premises of fintech companies Paytm and PayU in connection with a case pertaining to unscrupulous Chinese loan apps.
Sources told ANI the searches were taking place in Mumbai, Delhi, Gurugram, Lucknow and Kolkata. The ED is yet to comment on the matter.
Round two: On September 3, the agency conducted similar searches at the premises of online payments gateways including Razorpay Pvt Ltd, Cashfree Payments, and Paytm Payment Services Ltd.
The case is based on 18 FIRs registered by Cyber Crime Police Station, Bengaluru City, against numerous persons for allegedly extorting money from and harassing people who had taken small loans through mobile apps, including many of Chinese origin.
“During enquiries, it emerged that these entities are operated by Chinese persons… by using forged documents of Indians and making them dummy directors of those entities, they are generating proceeds of crime,” the ED had said.
The agency added that these entities were conducting their business through various merchant IDs and accounts held with payment gateways and banks.
Response: A Razorpay spokesperson had said after the September 3 searches, “Some of our merchants were being investigated by law enforcement about a year and a half back. As part of the ongoing investigation, the authorities requested additional information to help with the investigation. We have fully cooperated and shared KYC and other details. The authorities were satisfied by our due diligence process.”
Vedanta to set up iPhone manufacturing unit in Maharashtra
In a significant boost to electronics manufacturing in India, Anil Agarwal-led Vedanta will set up a hub to manufacture Apple iPhones and television equipment in Maharashtra, Reuters reported, citing an interview Agarwal gave to CNBC-TV18.
This comes a day after the Vedanta Group and Gujarat state government signed a memorandum of understanding (MoU), under which the company will invest more than Rs 1.54 lakh crore in the state to set up a semiconductor and display fabrication unit.
iPhone wars: The race to manufacture iPhones in India is heating up, with the Tata Group also in talks with Taiwanese electronics giant Wistron to set up a joint venture. The move is likely to make India a hub for electronics manufacturing as it tries to lure global giants away from China.
Apple is looking to diversify its production away from China as Covid lockdowns have disrupted supply chains in the world’s second-largest economy.
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Google loses EU antitrust appeal, fined €4.12 billion
Google on Wednesday suffered its second antitrust setback in less than a year as Europe’s top court agreed with EU antitrust regulators that it had abused its dominance. The court, however, trimmed the fine by 5% because of a disagreement on one point.
Catch up quick: The European Commission, in its 2018 decision, said Google used Android to cement its dominance in general internet search via payments to large manufacturers and mobile network operators and restrictions.
Response: “We [Google] are disappointed that the court did not annul the decision in full. Android has created more choice for everyone, not less, and supports thousands of successful businesses in Europe and around the world,” the company said in an emailed response to Reuters.
There’s more: Google has also been fined 69.2 billion won ($50 million) in South Korea for not clearly informing service users and obtaining prior consent when collecting and analysing behavioural information to infer their interests or use them for customised advertisements.
And a US court has allowed a larger antitrust case against Google to proceed. The petitioners allege the tech giant monopolised the ad-tech market and suppressed competition by its access to data.
Twitter employees concerned about China agent, whistleblower tells US Senate
The FBI informed Twitter Inc of at least one Chinese agent working at the company, US Senator Chuck Grassley said during a Senate hearing on Tuesday where a whistleblower testified, raising new concerns about foreign meddling at the influential social media platform.
Peiter “Mudge” Zatko, a famed hacker who served as Twitter’s head of security until he was fired in January, said some Twitter employees were concerned the Chinese government would be able to collect data on the company’s users.
Senate hearing: Zatko’s testimony before the Senate Judiciary Committee revealed Twitter’s security issues could be far more serious than previously thought. He alleged for the first time that the company was informed of agents of the Chinese government working at the social media firm.
“This was a big internal conundrum,” Zatko said, adding the company was reluctant to turn away from China, the fastest-growing overseas market for ad revenue. “In a nutshell, if we were already in bed, it would be problematic if we lost that revenue stream,” he said.
Call for action: Many senators used the testimony to support legislation they had introduced to rein in the market power of Big Tech, with a few calling for immediate direct action against Twitter.
Today’s ETtech Top 5 newsletter was curated by Zaheer Merchant in Mumbai and Gaurab Dasgupta in New Delhi. Graphics and illustrations by Rahul Awasthi.