The Places Which Are Mine

 Introduction

 

One of my friends who is also a Chartered Accountant says that most if not all the places he refers to I respond saying that it is my place. He asks if there is any place which isn’t mine. I told him I will send on WhatsApp an exhaustive list of all the places which are mine. While giving it a thought yesterday I thought why not write an article on this and after getting it previewed by him I will publish it.

 

The Places

 

We originally hail from a place called Nimtita. It is a village in the Jangipur subdivision of  Murshidabad district.

 

Nimtita Rajbari, on the banks of the Ganges, is now a dilapidated structure, a testimony of a glorious past. It had inspired Tarashankar Bandopadhyay to write a short-story about a man who refused to change with the times. He saw the mighty river gobble up his estates, but would not give up. Satyajit Ray made one of his great films based on that story – Jalsaghar, with the legendary Chhabi Biswas in the lead role. It was shot at Nimtita Rajbari in 1957.

 

I have never been there but heard from my father that he studied in Gour Sundar Dwarakanath Institution. My grandfather who was a police officer during the British regime had to leave Nimtita and relocate with his family and settle in Shashani, a village in Malda district. I have been there along with my parents while studying in school at Darjeeling. One of my uncles lived and worked in Malda.

 

My father who was a professor in the West Bengal Education Service taught in many government colleges. That gave us an opportunity to live in many places for a few years. When he got his promotion to Assistant Professor he was transferred from Krishnanagar Government College, his first place of posting, to Victoria College, Cooch Behar just after I was born. So it came as a double delight for him. My parents remembered Cooch Behar fondly as it always brought back beautiful memories of their stay. I do not remember those memories as I was too small then. A toddler.  

 

After that my father was transferred to Hooghly Mohsin College. We lived in Chinsurah. I have beautiful memories of this place. I started my school journey here. My first school was Auxilium Convent School at Bandel. It was founded by The Salesian Sisters of Don Bosco. It is very close to The Basilica of the Holy Rosary, Bandel (Bandel Church).

 

During those days it was the only English medium school there. My mother is responsible for my education in English medium schools for which I will remain ever grateful to her.  

 

Then we go to live in the queen of the hill stations, Darjeeling. We call it Darj.

 

My father was transferred to Darjeeling Government College after a few years. I took admission in Mount Hermon School. It was an experience I am yet to forget. There are very few schools you have seen with such a huge and picturesque campus. It was the only coeducational school in Darj then. We enjoyed our stay at Darj and I studied till the middle of Class-6 there. My father was transferred to Presidency College, Kolkata. 

 

Mr. Graeme Murray (from New Zealand) our Principal had written two letters of recommendation to the respective Principals of Calcutta Boys’ School and St. Thomas’ Boys’ School, Kidderpore to help in my admission. I got admission into Calcutta Boys’ School from where I finished my schooling.

 

During my career post-qualification I have lived at Port Blair, Andaman Islands, Mumbai for a long time, Delhi, Gurgaon (now Gurugram) after which I have returned to Kolkata where I am living over the last decade.

Conclusion

 

Life is a long journey. It is made up of shorter journeys of all the people you meet, places you live in, and work at, the experiences you have both good and bad. Your journey will be good if all of this is good.   

 

The places I have lived in or emotionally connected to connect the dots from Nimtita to Kolkata. I am still travelling. Remembering all the places I have visited while doing my CA till now. The list goes on and on. Working in a Chennai (then Madras) headquartered general insurance company for the first ten years allowed me to connect deep into the south and then began my love for South Indian movies till date right from Rajinikanth to Allu Arjun.

 

One of my school friends says I am a nomad. A compliment I failed to understand till he explained. Nomad in this context is about variety and richness of exposure and I did get that, rather enviably. He says genuine nomads also are the most capable in dealing with life! Thanks a lot for this heartfelt gesture.

 

There can be no conclusions to an ongoing journey of life.

The Day I Met Him

When I was studying in Class-6 at Mount Hermon School, Darjeeling my father was transferred to Presidency College. Our Principal then was Mr. Graeme Murray. He was kind enough to write two letters of recommendation that would help in my admission at St. Thomas' Boys' School, Kidderpore or Calcutta Boys' School.

I still remember what my father had said after our visit to CBS. During the course of his conversation he had asked the Principal, Mr. Clifford Hicks, what is the school uniform. He looked at me and told him that I can come to school the way I was dressed that day. There's nothing to worry about. CBS doesn't have a school uniform.

I was blessed to be admitted to CBS. But there were more surprises in store. Coming from the only coeducational school in Darj with the best campus and being very expensive it was most surprising to note that CBS didn't have any tuition fees and the books came free.

Anyway the standard of the school, quality of teaching, the students and everything I encountered was way beyond me. When the results for the Second Term was declared Mr. Hicks had written this in my report card. Promotion is very doubtful.

I just remembered that day and wanted to share it with you.

p.s. I was promoted.

With Malice Toward None

 Introduction

I passed out from Calcutta Boys’ School (CBS) in 1975. The ISC examination was held in late-1974. The results were published in early 1975. After exactly half a century some of our batch mates, for which I would like to thank them from the bottom of my heart, have taken the effort to organise a reunion for our batch in December at Tollygunge Club.

This place is spread over 100-acres and is more than 200 years old. So, you can very well guess how good it is. A WhatsApp group has been made after tracing the mobile numbers of the students. Many are now located abroad and on different continents. At last count the number is 49. I passed out from the Humanities stream. Most of the members are from the Science stream.

I have been fortunate enough to reconnect with some of my batch mates with whom I was the closest. They say there is something divine for any good thing to happen. I strongly believe in that. I think that is the only way I have been able to find them. Here I will go back to my formative years and share some of the magic moments I have shared with my friends at CBS, those of which I still remember. There are so many you will lose count of. If any of that is left out now I promise I will continue writing my memoirs

The Memoirs

In our section I was closest to Partha Pratim Basu Chaudhury, Somnath Mukherjee and Sandip Gupta. I had taken great pains to find Partha and Somnath but with no result for such a long time. Today when I look back it was Partha about whom I did not have any trace whatsoever in spite of the best of my efforts.

Partha was and still is a very good singer. Both of us are diehard fans of Manna De. This brought us closer in our adolescence. He used to live at Nalin Sarkar Street in the northern part of this metropolis in the Hati Bagan area. The place is famous for the Durga Puja. I have been to his place several times. Those days I used to tell him to become a singer when he grows up. But boys will be boys.

Though he has continued singing he finished his splendid innings at National Bank of Agricultural and Rural Development (NABARD) in 2019. He divides his time now between Kolkata and Shantiniketan. I tease him and say that at Shantiniketan is your bagan badi. Bongs (Bengalis) will understand the latent humour. When do I hop in?  I hope we will now be able to make up for the lost time. It has been the longest wait. He hasn’t aged at all. I tried but couldn’t find a single crease on his face.  I don’t know how. I keep my fingers crossed. Botox lingers at the back of my mind. You can check yourselves. I have given below a pic to prove this, taken when he had come to my place last Sunday.     

Shantiniketan reminds me of Abir Ghosh, a very good friend of mine. He has settled there. I have spoken to him over the phone and hope to meet him sometime. His cousin (I have known him as his brother but that hardly makes any difference) and another good friend, Ashesh Ghosh gave me his number. I would like to thank him for that. Ashesh has settled in Mumbai and continues his business legacy.   

I shared a very good relationship with Somnath and his family. Emotional connect would be the right word. He lived at Mahendra Sarkar Street very close to our place and closer to CBS as well as Calcutta Girls’ School (CGS). I used to regularly visit his place. Both of us are lovers of good music. He had a good collection of records. I used to bring those 45 rpm records. I don’t remember the names of all but Har Mana Har is one of the many records I brought. The songs from this Uttam Kumar-Suchitra Sen movie still linger in my mind and occasionally refresh my mood even now.

Sandip had told me a long time back that Somnath works in the Reserve Bank of India (RBI) at Kolkata. Then he was working. I thought about going to the RBI building, it’s huge, and searching every nook and corner. But is it humanly possible? Asking from the chaprasi to the Governor, where is Somnath? Time passed by so badly and there has never been a moment when I did not remember him.

He now shares his time between Kolkata and Pune. Still a very soft-spoken person as he was. His appearance hasn’t changed one bit.

First when we connected over WhatsApp on 14^th February, Partha told me my nickname. I was really taken aback. What a memory he has. We met on 18^th February at Mud Café. It is located on Rashbehari Avenue. It is the house of legendary Rabindra Sangeet singer Debabrata Biswas.

We mean the three of us. Somnath included. Lovely place. Partha’s choice. He really has a good taste of the finer things in life. Gave me a lot of gyan on cyber security on Facebook where I am taking my baby steps. As an afterthought the main reason for the long disconnects is not being on Facebook so long.

Mission Jayanta

Both Partha and Somnath came to my place last Sunday i.e. on 10^th March. Our mission was to trace Jayanta Sengupta, another batch mate. Before the mission, the background checks. Jayanta was a very smart boy in school. He used to drive a Yezdi bike. Partha remembered in those days his was the only bike in the CBS car park. Very stylish. Many including me were mesmerised. One day he decided to drop me home. No problem. I still live at the same place on C I T Road, hardly a kilometer from CBS. After a furlong he showed just how smart he was with a bike. He drove the bike to the right and then to the left and again to the right. I had my heart in my throat. I begged forgiveness and ultimately he stopped. There are some memories which never leave you.   

There was no clue about him except that Partha knew his house. I too remembered that he stayed near Chhaya Cinema. Being a movie buff, movie theatres were the landmarks for me then. Saturdays were the days I used to go. If it was a Western movie, it had to be Tiger. The 12-30 p.m. show. For Hindi movies there were a lot more. The road connecting to Chhaya Cinema from CBS was smooth. A single bus ride.

Like Felu Da, Partha led us on this mission which I call Mission Jayanta. We reached a couple of furlongs behind Maniktala mode on Acharya Prafulla Chandra Road, more popular as Circular Road. After getting down from Partha’s car he told his driver to park ahead on the left. Partha’s landmark was Jayanta’s house which has a gadi baranda.  

We searched every nook and corner of the surroundings, but couldn't find a gadi baranda or anyone who knows him. We ultimately came to know from a shopkeeper that he is known by his nickname. There’s no Jayanta around. After a lot of effort and thanks to Partha’s patience we ultimately found the house. Climbing the long and winding staircases and reaching each floor was an experience we never had. First floor. No Jayanta. Second floor. Same result. We lost all hope. Last came the third floor. Somnath feebly rang the bell. No response. I told him to knock firmly a number of times. The door opens and at last I see a face staring down. I was at the landing. Partha is much lower. Somnath seemed a bit nervous. But I recognised the face. It’s him. I asked Jayanta? And yes came the answer.  

Jayanta looks the same as he was. It felt really good to meet him and onboard him in our reunion. We had a great adda session. It feels like time never stops sometimes.

Then we went to China Town, a place very close to Partha’s earlier residence, the NABARD quarters. Beijing was our destination. Beautiful place. Good food. A long session of adda and after dropping me home they left.

I have remained connected with Sandip throughout right from the days he used to live in a beautiful and spacious flat at Jodhpur Park. We had endless hours of adda. He has been interested in rock from our school days. He was a very good student. After coming back to Kolkata after 20 years in 2014 and even in between during my homecoming we met at his office. It was closer to my house.

I have a family connection with Supratik Biswas. Both our dads were colleagues. In fact, my father started working first as a Professor at Krishnanagar Government College in 1952 where Supratik’s father worked. He was a senior. After coming to Kolkata in 1968 from Darjeeling my father worked at Presidency College. They connected once again. Then Supratik’s father was a very senior Professor at Sanskrit College bang opposite Presidency College.

Next in the same way I have been associated with Supratik as a colleague. I worked for United India Insurance Co. Ltd. for 10 years till 1994 where Supratik also worked though we were not at the same place. Sarajit Chaudhury, another batch mate also worked at the same company and we used to meet often. I still remember in 1985 we had gone to Jaipur to conduct an internal audit of one Divisional Office and all the Branches. Surprise, surprise. I banged head on with Sarajit at the hotel we were staying at. How come you are here was all I could ask him. We enjoyed our stay a lot.

Then there is Tathagata Chakraborty, more popular as TC. A staunch Mohun Bagan supporter like me. Stylish. Played good football. There was something unique about his voice. You can call it his USP. You may forget him but you will never forget his voice.  

I still remember I had gone to see a match at the Mohun Bagan ground. 60 paise was the rate of tickets. Surprise, surprise. I see TC standing ahead in the same queue. After seeing me he was stylishly indicating with both his hands near his stomach and upwards to come near him. Break the queue. Honestly speaking I don’t remember whether I obeyed his command.

I have kept in touch with Sumit Das who has now settled in Toronto, Canada.

I have reconnected with Samit Talukdar, another good friend of mine. Despite being an East Bengal supporter.  He lives very close to our firm. I would like to meet him and have a long adda session very soon.

Another friend with whom I have reconnected is Anindya De. He used to stay bang opposite our building. I was very close to him and his family during our school days. He relocated to Salt Lake later after which we lost connection for a long time.

Before concluding I would like to once again thank the untiring efforts taken by our batch mates to make the Mission Impossible happen. It is due to them that we are going to meet each other a thing we never dared to dream.   

To be continued

 

A Daddy's Boy

I would like to share with you why I studied in an English medium school. To know this you have to turn the clock back to the time when my father was a Professor at Hooghly Mohsin College. We lived in Chinsurah. 

He studied in a village called Nimtita in Murshidabad district. The place was made famous by the legendary Satyajit Ray when he shot his fourth film Jalsaghar there at Nimtita Rajbadi. 

My father stood tenth in the Matriculation examination and stood first in the district. Naturally with this background he wanted to admit me to Chinsurah Duff School. The best Bengali medium school there.

But surprise surprise. My mother didn't want this to happen. She hailed from Nagpur where she had studied at Providence Girls' High School a renowned English medium school. 

My mother had said her son will study in an English medium school. There was a truce. And peace and happiness came back. 

I was admitted to Auxilium Convent School at Bandel. Founded by the Salesian Sisters in 1951. Then it was the only English medium school in that area. I used to travel there by the school bus. Now it is a girls' school. But then boys studied in the primary section till Classes-4. 

There's another background to my admission at Auxilium Convent School. Earlier to my admission we used to live in the older part of Chinsurah closer to the Hooghly river. One of my daily rituals was to wake up and see from our first floor flat students of Auxilium Convent coming from Naihati which is bang on the opposite side of the river and going to school. In case I was sleeping then I used to be waken up so that I don't miss them. 

With this at the back of my mind we shifted to a better house and started living on the ground floor. On the first floor lived a family where the son studied at Auxilium Convent in a higher class. We became very good friends though he used to beat me a lot. 

I have fond memories of my first school. But after a couple of years my father was transferred to Darjeeling and I got admitted to Mount Hermon School. The boy on the first floor also took admission there and stayed at the hostel and completed his schooling from there. 

 I will leave that for another day. 

Life's Lessons - What We Have Learnt from Mr. Hicks

I am what I am is for this institution (read - Calcutta Boys' School/ CBS). These were my first words when I met the Principal of CBS sometime back. 

I am what I am is for Mr. Clifford Hicks. The respected Principal of CBS, when I studied there, who has made CBS what it is. 

There are a lot of memories of CBS during my formative years. I want to share one such today. 

I was studying in Class-10 then if my memory serves me right. The teacher who was supposed to conduct the class had not come till then. Our classroom was just above the office overlooking the ground. The students sitting close to the window found out that a few girls had come to the office and were waiting outside just beneath the window. To have a good view they went to the window to see telling the others to watch the exit lest they get discovered. But boys will always be boys. Gradually one by one many went to the window. The place became so overcrowded after some time, with some toppling over others, there wasn't anyone left to keep an eye on the exit. 

After the show was over and enjoying every moment of it when we started coming back to our seats we found to our horror that the teacher has come to class. And was sitting in his chair. 

The matter was reported by him to Mr. Hicks. The period was just before lunch. Mr. Hicks decided to teach us a lesson to remember for a lifetime. 

He asked all of us to kneel down in front of the classrooms of middle school, that is the junior section (read - Classes-5 to 8) during the entire lunch time for all to see. There is a big room the boundaries of which comprised those classrooms. 

Even after almost close to fifty years I haven't forgotten the lesson I learnt that day. I would like to thank Mr. Hicks for doing what he did that day. A thing I still remember.

The Fall of Byju’s and Byju Raveendran

#suprioghatak #byjus #byjuraveendran #corporate governance #mca

The Fall of Byju’s and Byju Raveendran

We have seen that Byju’s and its CEO and founder Byju Raveendran are occupying centre stage for all the wrong reasons. A lot of water has flowed down the drain since the edtech major occupied top drawer ranking globally among its leading competitors. 

Introduction

Established in 2011, Byju’s introduced its learning app in 2015. The edtech company achieved unicorn status (a valuation of $1 B) with 15 M subscribers by 2018, gathering huge attention.

With the Covid-19 pandemic, Byju’s experienced considerable growth as students increasingly accepted online learning as the new normal during lockdowns. However, in 2021, the company incurred a loss of $327 M. Byju’s also witnessed huge layoffs in 2022 and 2023.

During May 2023, Byju’s faced a lawsuit filed by its lenders in a US court. The lenders claimed that Byju’s had missed payments and broken the loan agreement’s clauses, which prohibited material delays in the publication of financial results. The company was also accused by the lenders of misappropriating money through its US-based subsidiary, Alpha. Byju’s, however, refuted these accusations made against it.

On June 22, 2023, Deloitte tendered their resignation as statutory auditors of Byju’s to the Board of Directors, effective immediately. Despite the appointment of BDO as their new auditors, skepticism persists regarding the future of Byju’s.

Inspection of Byju’s ordered by Government amid financial and corporate governance concerns

The inspection of Think & Learn Pvt. Ltd., which operates under the brand Byju’s, will be carried out by the Ministry of Corporate Affairs (MCA).

In the recent past, Byju’s has been battling with multiple negative issues, including most importantly misselling courses, the delay in submitting financial statements, resignation of its statutory auditor in June 2023 and its corporate governance practices.

G. V. Ravishankar of Peak XV Partners (Sequoia Capital India), Russel Dreisenstock of Prosus, and Vivian Wu of Chan Zuckerberg Initiative also resigned from Byju’s board.

Earlier MCA asked the Regional Director at Hyderabad to conduct an inspection of Byju’s, registered in Bengaluru. Further courses of action will be decided after receiving the inspection report.

Think & Learn Pvt. Ltd. was incorporated on 30^th November 2011. The last Annual General Meeting of the company was held on 19^th September 2022.

Byju’s may face a probe as MCA (Ministry of Corporate Affairs) wants to involve SFIO (Serious Fraud Reporting Office) for the resignation of Deloitte and Delayed Financials.

MCA has checked out the legalities and procedures involved in referring the matter to SFIO.

MCA wants to engage SFIO to investigate the resignation of its auditor, Deloitte, and the delayed financial reporting by its parent company, Think & Learn Private Limited.

Deloitte was appointed statutory auditor for a five-year tenure till March 2025 (2024-25). Following the exit of Deloitte, Byju's appointed BDO (MSKA & Associates – a member firm of BDO International in India) as its statutory auditors for the year commencing from 2021-22 for the next five years.

SFIO, a multi-disciplinary organisation under MCA, includes in its hierarchy experts in accountancy, forensic auditing, banking, law, information technology, investigation, company law, capital markets, and taxation domains.

In June 2023, Deloitte Haskins & Sells officially resigned as Byju’s and Aakash Educational Services Limited (Aakash Institute) (AESL) ’s statutory auditors, resulting from the delay in the company filing its 2021-22 financial statements. They were scheduled to be presented to shareholders during an annual general meeting within September 2022.

The government's regulatory response to the compliance failures was influenced by the absence of any mention of non-cooperation by the management, financial irregularities, or fraud in Deloitte's resignation letter to the company's board.

Moreover, Deloitte thanked the management and staff of Think & Learn Private Limited for the cooperation extended to them during their tenure as auditors of the company.

SFIO has to investigate Byju’s affairs in several situations. These include when the Registrar or inspector under section 208 of the Companies Act, 2013 submits a report, when a company passes a special resolution indicating the necessity of an investigation, when it is deemed to be in the public interest, or when a department of the Central Government or a State Government requests an investigation.

This comes a few days after Byju’s proposed the establishment of a Board Advisory Committee (BAC) to guide the CEO, regarding Board composition and the governance structure of the company, during an extraordinary general meeting (EGM).

During the EGM, Byju’s CFO Ajay Goel reiterated the ongoing engagement with newly-appointed auditors BDO for the audit process. The company aims to meet the previously communicated timelines, with the 2021-22 audit targeted for the end of September 2023, and the 2022-23 audit expected to finish by the end of December 2023.

The crisis at Byju’s forces top India VC Firm Blume Ventures to revise strategy

The corporate governance blunders at Byju’s are sending outrage through India’s developing startup economy.

Blume Ventures, a big venture capital firm managing $625 M in assets is becoming more cautious in its investment strategy, alarmed by crises in a homegrown startup and ed-tech leader Byju’s.

It is cutting back on thoughtless investments as it wants portfolio companies to shift focus to profitability, co-founder Karthik Reddy said in an interview. A third of its portfolio, including e-commerce and mobility firms, has turned shaky over the past year.

Byju’s, once India’s most valuable upstart is in turmoil after missing a deadline on financial statements, skipping payments on a $1.2 B loan and losing its auditor and some of its board members.

The chaos at Byju's has forced the entire ecosystem to think about what could be wrong in every portfolio company? Blume Ventures backs Byju’s rival Unacademy, and a number of startups including delivery firm Dunzo and gadget marketplace Cashify. You get these questions from your investors as well.

Byju’s was valued at $22 B in late 2022. In June 2023, one of its main investors, Prosus NV, slashed the value of its stake in a move that pegged Byju’s total valuation at about $5.1 B.

The missteps in governance resulted from a venture capital boom that lasted through 2021. Funding has dried up since as slowing economies, rising interest rates and higher levels of inflation prompted venture investors to pull back.

Indian startups raised $5.4 B in the first half of 2023, a decline of more than 70% from the same period in 2022. Already in 2022, funding dropped to about $27 B from $43 B in 2021.

There is very little early-stage investing happening right now. Blume, based in Mumbai, typically provides seed funding to upstarts.

That cautiousness dovetails with several small startups shutting down amid the funding winter. Investors have become more prudent and firms such as Blume are wary of writing a cheque for just another e-commerce, marketplace or influencer marketing idea.

Fallen Star Byju Raveendran Is No Longer A Billionaire

Three years after he joined the billionaires’ club in 2020, Indian edtech entrepreneur Byju Raveendran is out of that elite ranking for a series of blunders.

Prosus, formerly Naspers, had written down its 9.6% stake in Byju’s to $493 M (as on 31^st March 31, 2023). The write off values Byju’s at $5.1 B, a steep 77% discount to last year’s peak valuation of $22 B.

Consequently, Raveendran’s 18% stake is now valued at under $1 B, but after accounting for the loans he took last year to invest in Byju’s, his personal net worth is estimated at $475 M.

That is a far cry from his net worth of $1.8 B in 2020, when he debuted on Forbes’ World Billionaires list and his firm was valued at $10 B. In two years, his fortune had doubled to $3.6 B — until things began to be destroyed.

Byju’s parent, Think & Learn, founded by Raveendran, a former math tutor, went on a fundraising rampage in 2020-21, raising nearly $4.2 B from a countless number of investors including UBS and Abu Dhabi’s sovereign fund.

It used a major part of that money to fund a buying binge across India, Asia and the U.S. that included the $950 M acquisition of Indian test-prep provider Aakash Educational Services Limited (Aakash Institute) and $600 M for Singapore’s Great Learning, a higher education and professional training firm.

The sheer pace of growth took its toll. Byju’s grew too quickly, without proper checks and balances. Byju’s did not have a CFO (Chief Financial Officer) from December 2021 to April 2023 though it had Vice Presidents of Finance for its different divisions. But still it is yet to file its financial results for the year ended March 31, 2022.

Results were last published in September 2022 for the fiscal year ended March 31, 2021 — after a 12-month delay. Byju’s reported a loss of Rs. 45.6 B ($573 M) — up from Rs. 3.1 B the previous year. Revenue fell 3% to Rs. 24.3 B in the same period.

Raveendran pacified investors by participating in Byju’s funding round in March 2022, investing $400 M at the $22 B valuation. The funding rounds that were announced with much flamboyance did not materialise in funding as investors such as Sumeru Ventures and Vitruvian Partners backed out.

Raveendran said “I’m going all in” during the Forbes Global CEO conference in September 2022.

I've been doing this for 15 years, and the aim is to do this for another 30 years. The world needs 10 more companies like ours. If you do good, you’ll end up doing well.

That did not cut much ice. BlackRock slashed Byju’s valuation to $11.5 B in October 2022 and further to $8.4 B in May 2023. Prosus, a leading investor in edtech globally that had funded Byju’s to the tune of $536 M since 2018, was less generous.

In September 2022, Prosus, which has a dozen edtech investments, including San Francisco-based up-skilling platform Udemy and New York-based social learning community Brainly, marked down the value of its investment in Byju’s to $578M, valuing the firm at $6 B.

Prosus noted in its 2022 annual report that in September 2022, the group lost significant influence in Byju’s over the financial and operating policies of the entity.

Byju’s shook from one crisis to another, the most recent of which was the resignation of its statutory auditor Deloitte in June 2023 over the inordinate delays in preparing financial accounts. Three board members also quit.

Now, Byju’s is in the process of reconstituting the board by bringing in a few independent directors. It is also looking to set up a board of advisors who can guide the founders. At a recent executive board meeting with shareholders Raveendran admitted to making mistakes but asserted that he is focused on course correction.

Byju’s also announced in June 2023 that it is planning an IPO for Aakash Educational Services Limited by mid-2024.

Only time will say what will happen after this. Until then we have to wait.

To be continued

  

KPMG India in a Million Dollar Settlement with PCAOB without any Fallout in India

 #suprioghatak #suchetadalal #kpmg #pcaob #pwc #deloitte #icai #nfra #sebi #ey

KPMG India in a Million Dollar Settlement with PCAOB without any Fallout in India

Inspired by Sucheta Dalal

Introduction - Since I have started writing a couple of decades back the one person who has influenced me the most and still does is Sucheta Dalal. I have written about what KPMG has done in the article PCAOB Sanctions KPMG Firms and Audit Professionals. It has been published on LinkedIn and on Compliance Calendar blog on 12th December.

After that she has written on the same subject. There are some very important things she has touched upon which needs to be emphasised and discussed with our community defined as CAs and CA students.

The PCAOB (The Public Company Accounting Oversight Board) regulates the audits of public companies and SEC-registered brokers and dealers in the US in order to protect investors in the public interest in preparation of informative, accurate, and independent audit reports.

KPMG India settled before the PCAOB on 6 December 2022. But surprise surprise. There is no coverage in India.

PCAOB condemned KPMG Assurance and Consulting Services LLP (KPMG India) and the engagement partner (EP) Sagar P Lakhani for quality control failures, supervisory failures and documentation failures while working with a public company in 2017.

It led to a monetary penalty of $1 M on KPMG India and $75,000 on Mr Lakhani, who has been suspended from associating with a registered public accounting firm for one year and requires KPMG India to undertake and certify the completion of certain improvements to its system of quality control systems.

This is the second time such sanction has happened which relates to an Indian listed entity. The last time was when Satyam Computers collapsed. In May 2011, PCAOB settled an investigation imposing a penalty of $1.5 M plus $6 M by the Securities Exchange Commission (SEC) of the US on five firms of PricewaterhouseCoopers International (PWC) in India. The five PWC entities who participated in the settlement were: Price Waterhouse and Price Waterhouse & Co in Bengaluru, Lovelock & Lewes, Price Waterhouse and Price Waterhouse & Co, Kolkata.

Then, PCAOB’s order correctly said that the reliability of global capital markets depends on auditors fulfilling their obligation to investors to perform robust audits, resulting in well-founded audit reports.

That is why it is surprising that the latest order against KPMG has had no impact in India, and there's nothing in India’s market regulator or audit regulators – The Institute of Chartered Accountants of India (ICAI) or National Financial Reporting Authority (NFRA).

We had expected follow-up on the KPMG India matter. And there are several good reasons for this. First, since it is a settlement, the order does not identify the listed company in which these lapses occurred in 2017. All it says is that the issuer is into wholesale and retail banking and treasury services, headquartered in Mumbai.

The detailed order documents how eAudIT, a proprietary software of KPMG, was misused— they were aware of it but did not stop the misuse. Did the sign-off on blank documents only happen with the bank referred to in the PCAOB order? Was Mr Lakhani the only engagement partner who did this, or was he just unfortunate to be caught?

ICAI, NFRA and the Securities & Exchange Board of India (SEBI) ought to investigate how extensive the practice was and what impact it had on the final audit reports.

Sucheta Dalal emailed KPMG India’s communications department for comments on the PCAOB order. Her article will be updated if they respond. The PCAOB order says that KPMG India has disciplined some personnel and has established and implemented changes to its quality control policies and procedures.

Who Is the Unnamed Bank?

PCAOB’s order details the impact of these lapses on the accounts of the bank, whose identity means a lot to Indian investors and regulators. Since KPMG India and Mr Lakhani are together paying $1,075,000 the lapses are so serious to demand further investigation and Indian investors have the right to know the bitter truth .

The central character is the Mumbai-based private bank with US listing. Sucheta Dalal reached out to some senior people with KPMG links, but they chose to remain silent.

But we are not surprised. Our profession has got away with very relaxed oversight over decades by ICAI. When NFRA chose to act tough we tried to take away the new regulator through the Ministry of Corporate Affairs (MCA) in September 2021.

Let's explore what had happened. In January 2020, when NFRA issued its first set of show-cause notices to auditors of IL&FS Financial Services (IFIN), the two chartered accountants (CAs) rushed to the Delhi High Court with a writ petition, instead of responding to the new regulator. Deloitte Haskins and Sells and BSR & Associates (KPMG India) were the two auditors.

Senior CAs wrote how the profession and industry leaders were upset at NFRA’s action since the firm was superior to most others in the field and suggested that only individual partners should be held responsible and the audit firm let off as debarring a firm causes a lot of disruption.

This view is ironic, as compromise and conspiracy are usually institutionalised as the rewards and incentives of partners are tied to the business generated by them. While partners guilty of professional misconduct who permit the fabrication of accounts must be penalised, sparing the firm will allow large audit firms to make scapegoats out of partners who get caught.

Fortunately, NFRA wasn’t intimidated by the commotion created by the accounting industry. In July 2020, NFRA issued three orders against the engagement partners for IFIN. CA Rukshan Daruvala of Deloitte Haskins and Sells LLP was debarred for five years and slapped a Rs 5 lakh penalty; CA Shrenik Baid was also debarred for five years but was penalised Rs 15 lakh, while CA Udayan Sen, CEO, Deloitte India, was penalised Rs 25 lakh and debarred for seven years.

The findings in all cases were similar—professional misconduct, collusive behaviour in going along with management in agreeing to misstatements/omissions leading to fraud on the users of the financial statements.

NFRA also indicted SRBC & Co, of the Ernst & Young (EY) group for deficiencies in auditing Infrastructure Leasing & Financial Services (IL&FS) for FY 17-18.

All this is good but it is too little, too late. Three other orders were passed since then. Alll in 2022. CA Gulshan Jagdish Jham was debarred for a year and slapped with a penalty of Rs 1 lakh for professional misconduct, failure to report material misstatements, and exercise due diligence in the audit of Prabhu Steel Industries Ltd.

CA Som Prakash Aggarwal (of S Prakash Aggarwal & Co) was debarred for three years and slapped with a penalty of Rs 3 lakh as EP of Vikas WSP Ltd. He was also asked to undertake training on accounting and audit standards and submit proof thereof within 180 days.

CA Rajiv Bengali (of Subramaniam Bengali & Associates) was barred for five years and a penalty of Rs 5 lakh. As EP for Trilogic Digital Media, he was charged with false reporting in the independent auditor's report, failure to comply with auditing standards, etc.

Given the number of forensic audits ordered by SEBI and the falsification of accounts or diversion of funds brought out during the bankruptcy resolution process of corporate defaulters, regulatory action seems too little, too slow.

V Ranganathan, former director and partner at Ernst & Young LLP, says that public banks have written off more than Rs10 T in the last five years and the average recovery has been so poor it is a reflection of the audit at the banks’ and the borrowers’ end.

It is high time the government takes this issue seriously and strengthens the system and makes it robust to monitor the audit firms and create a distinct legal framework for swift and fair trials.

Some favour the US-style settlement process adopted by PCAOB and KPMG India to our slow and agonising process. But we have seen how the settlement provision has been vitiated by arbitrary settlement amounts at SEBI. Often, the penalties are trivial, and there is no information on the wrongdoing or its impact that will help or warn investors.

Last but not the least, there seems to be no shame in ‘settling’ wrongdoing, which defeats its very purpose. Sucheta Dalal's sources told her a whole bunch of ‘consultants’ have set up shop, offering to negotiate quick and low settlements with the regulator.

Even in the KPMG India case, the PCAOB order is not satisfactory as it does not name the bank involved. If PCAOB’s claimed objective is to protect investors and further the public interest in the preparation of informative, accurate, and independent audit reports, the settlement order tells us nothing about whether or not the bank’s audit was compromised and to what extent. How does that protect investors?

Compromised, conniving or negligent auditors are a big worry for any lender or investment professional. Apart from a few good orders from NFRA, some in our profession, especially after the IL&FS debacle, have tried to separate audit and non-audit business. Others are sticking to the claim that there is no conflict of interest.

In Sucheta Dalal's view, it is too early to introduce a ‘settlement’ system in India. It would be far better to strengthen NFRA and give it more teeth and manpower to effect a serious clean-up first.

To be continued

Why Deloitte has not Signed Byju's Financials for 2020-21 Even After 15 Months

 #suprioghatak #byjus #deloitte #revenuerecogntion #accountingstandards 

Deloitte has not signed Byju's financial statements for 2020-21. They have not submitted the financial reports for 2021-22 also.

While Byju's dismissed concerns, if it fails the acid test, it could horrify the entire $3.5 B Indian edtech industry, seasoned investors, upcoming founders included.

What is the problem with Byju’s finances? Are they inaccurate?

Byju’s is late in filing. Next, its books may reveal several discrepancies. Let's have a look.

Accounting issues, troublesome lending arrangements and a constant need for cash are playing simultaneously.  

The reported numbers seem to be distorted for more reasons than one. Bundling hardware like memory cards and tablets in its revenue calculations may have been done to inflate them. They accounted for 63% of its revenue in 2020 with an annual increase of 55%.

Byju’s and its controversial subsidiary WhiteHat Jr draw loans to keep prices affordable and offer a 100% default guarantee to lending partners. This risky practice is disliked.

Byju's says securitization and First Loss Deposit Guarantee (FLDG) are accepted industry practices. If not for FLDG, the majority of consumer parents would not be able to raise personal loans from banks and financial institutions at affordable rates.

Byju’s says that the late filings are not a cause for concern.

Valued at a colossal $22 B, Byju’s has raised over $6 B in its 12-year existence. It has expanded to new countries including the UK, Australia, Brazil, Indonesia, and Mexico. Revenues are not even $1 B. Ideally, the revenue multiples in the edtech space, 19x for larger companies, should be at least $1 B.

It has been on an acquisition splurge since the pandemic, embracing not just e-learning companies but professional skilling and augmented reality start-ups. It is eyeing a public market debut at a massive $48 B valuation soon.

The delay is not a red flag, it said. These numerous acquisitions are being examined thoroughly and the lack of audit bandwidth for the company has scaled up rapidly. Within a few days we can actually see that report.

Byju's made at least 10 acquisitions for a cumulative transaction value of around $2.5 B in 2021.

It has completed the consolidation of businesses and will be filing its pending financial results in June.

This response comes after The Ken reported that Byju's has not filed its financial statements for 2020-21 and 2021-22 as auditor Deloitte is hesitant to put its signature due to problems in refunds, loan guarantees and unusual revenue recognition practices.

Byju's says that they follow the highest standards in all business practices from student success to governance and accounting standards. These practices have been in operation for the last six years, have been audited by Deloitte, and records are submitted to all relevant authorities over these years.

Attributing the delay to a series of acquisitions made by Byju's in 2020 and 2021, they reiterate that multiple acquisitions were made in 2020-21 and each had a different accounting style and year. They have completed the consolidation of businesses and will be filing their financial results this month.

How Byju's records its revenue from sales of hardware (memory cards, tablets etc.) and software (apps and online classes) could have caused a discrepancy in the edtech firm’s financial statements.

Loan guarantees are the second issue highlighted. Byju's offers a 100 percent default guarantee to some lending partners that make loans to its customers. Such guarantees are called First Loss Default Guarantees (FLDG). If the customer fails to repay, Byju’s foots the bill, out of its own books or by raising cash from private investors.

It said that working with lenders that help consumers finance a course lies at the heart of what allows Byju’s to book revenues in advance.

So far, Byju's has raised over $6 B in funding, with the founder Byju Raveendran pumping $400 M in its leading the latest $800 M funding round at a valuation of $22 B in March 2022.

The refund guarantees offered by Byju's and its subsidiaries could create pain points if the actual refunds far exceed the budgeted amount.

Byju's is looking to go for an IPO in the US through the SPAC route. Hence, Deloitte could be taking a cautious stand.

Now the Indian edtech space is reeling under the bad weather of the funding winter, causing at least two start-ups to shut operations - Udayy and Lido Learning.

Edtech unicorns Vedantu and Unacademy have laid off over 600 employees each. At least 800 employees have resigned at Byju's owned White Hat Jr. The total edtech layoffs have crossed 3,500 over the last two months.

Conclusion

With these practices, Byju Ravindran's own standing as a founder is at stake as recently founders like Ankiti Bose and Ashneer Grover were shown the door for false revenue reporting and accounting.

A few million dollar questions remain to be answered

Why has Deloitte signed the previous financial statements and held off this time?

Why have the investors been investing so much money in a start-up like Byju's?

Please read Part-2 and Part-3 

About Author

CA Suprio Ghatak

Qualification: The Institute Of Chartered Accountants Of India

Company: J K V S & CO, Chartered Accountants

Location: Kolkata

About Author :

I am a Partner at J K V S & CO. I look after Recruitment, Training and Development. I am working here since May 2017.I also look into all ICAI related matters of the firm.

PwC UK ordered to pay fine of £ 5M over audits of London-listed construction groups

#pwc #pwcuk #frc #penalties #auditfailure #regulatoryaction #bigfour

PwC UK ordered to pay fine of £ 5M over audits of London-listed construction groups

Financial Reporting Council (FRC), the UK regulator has ordered penalties to be paid by PwC UK for their failures on accounts of Kier and Galliford Try. PwC’s work was not of the required standard.

PwC UK has been fined twice in a day by Financial Reporting Council (FRC) over audit failures of the two London-listed construction groups.

It was ordered to pay £5 M after Financial Reporting Council (FRC) found problems in both the audits. The companies have been hit by accounting errors in the recent past.

Financial Reporting Council (FRC) found severe problems with PwC’s audit of long-term contracts in these two companies, including recognition of revenue and costs on large contracts at Galliford Try.

The fines are the latest regulatory action over audits in the construction and outsourcing sectors, where accounting treatment of multiyear contracts and validity of assumptions made by company management in preparing the accounts are key issues.

Meticulous audit of long-term contract accounting is very important in construction companies, where many contracts are spread over a number of years. That’s what Claudia Mortimore, Financial Reporting Council (FRC) deputy executive council said.

Auditors must ensure they obtain sufficient appropriate audit evidence to support accounting of the contracts as well as apply sufficient professional scepticism. This is indispensable to allow investors to have confidence in the financial statements.

PwC UK was ordered to pay £ 3M for failing to meet the regulatory requirements in its audit of Galliford Try’s accounts for 2018 and 2019. The penalty was reduced from £ 5.5M in recognition of its co-operation. 

Financial Reporting Council (FRC) said PwC had not done enough to challenge declarations made by Galliford Try’s management, which was found in 2020 to have overstated its assets by £ 94.3M.

A further penalty of almost £ 2M was ordered, reduced from £ 3.35M, for its audit of Kier’s accounts for the year ended June 2017, when it failed to find errors in the company’s income and cash flow statements.

In both the companies - Galliford Try and Kier, PwC had not shown suitable professional scepticism and failed to gather sufficient audit evidence in its audits.

PwC UK agreed to pay more than £ 756,000 to cover the cost of the two FRC investigations.

Jonathan Hook, the partner who led the audits of both companies, was given two fines totalling more than £ 135,000. He retired from PwC UK in 2021. Both Hook and PwC UK were given severe admonishment by FRC.

PwC UK  had invested a lot in improving audit quality, including long-term contracts, since the audits of Kier and Galliford Try.

Financial Reporting Council (FRC) instructed PwC UK to review its audits of listed companies, where long-term contracts are widespread and to report to FRC on the results. PwC received the best score out of the Big Four accounting firms in FRC’s most recent quality inspections.

Financial Reporting Council (FRC) investigations into PwC UK’s audits of Kier and Galliford Try are the latest regulatory actions against auditors of UK-listed contractors.

Deloitte was ordered in April 2022 to pay a fine and costs of more than £ 2M for audit failures at Mitie, while Grant Thornton LLP (US) was fined £ 700,000 in November 2021 for problems with its review of the accounts of Interserve, which became insolvent in 2019 and entered the legal process.

Financial Reporting Council (FRC) is also investigating KPMG UK for signing off the accounts of outsourcer Carillion before it went into liquidation, and mid-tier (read medium sized) firm BDO UK LLP over its auditing of NMCN, a London-listed construction company that went into liquidation in October 2021.

Financial Reporting Council (FRC) in January 2022 was probing PwC’s work at defence contractor Babcock, which has also disclosed accounting errors in recent years.

Financial Reporting Council (FRC) is also reviewing PwC UK's audits in other sectors, with investigations under way into its audits of BT, Eddie Stobart Logistics, collapsed minibond company London Capital and Finance and Wyelands Bank, owned by steel tycoon Sanjeev Gupta. 

To be continued

KPMG fined £3.4M over Big Failures in the 2010 Rolls-Royce audit in UK

#kpmg #frc #rollsroyce #bigfour #noncompliance #criminalinvestigation 

KPMG fined £3.4M over Big Failures in the 2010 Rolls-Royce audit in UK 

The Financial Reporting Council (FRC), independent regulator in the UK and Ireland, responsible for regulating auditors, accountants and actuaries, and setting the UK's Corporate Governance and Stewardship Codes, says KPMG’s audit of Rolls-Royce PLC, major British manufacturer of aircraft engines, marine propulsion systems, and power-generation systems, failed to report payments to Indian intermediaries. 

KPMG will pay a fine of £3.4M to FRC after accepting failures in its audit of Rolls-Royce, Britain’s most prominent aerospace and defence manufacturer, that paid a £500M settlement after bribery allegations. 

KPMG received a severe rap over the knuckles from FRC, and will have to assign an independent review into the efficacy of its policies.

KPMG has been fined £3.4M by FRC for serious failures in its audit of Rolls-Royce’s 2010 accounts, five years after the engine-maker reached a settlement with authorities over corruption allegations. 

It is the fourth significant fine KPMG has paid this year.

Anthony Sykes, the KPMG partner who led the audit, will also pay a £112,500 fine and received a severe rap over his knuckles ahead of his retirement from KPMG in September. The fines for KPMG and Sykes were reduced from £4.5M and £150,000 respectively as they cooperated with FRC. KPMG will also pay FRC’s costs for the investigation.

The series of scandals of the Big Four continue and this is the latest. All have been fined millions of pounds for audits that had significant inadequacies.

Poor quality audits have been blamed from collapsed construction firm Carillion – for which KPMG was this month fined £14M – to retailer BHS, for which PwC was fined £6.5M. KPMG has also been fined this year in the alcohol distributor Conviviality and Revolution Bars.

Rolls-Royce agreed to pay £671M in penalties in 2017 after prolonged investigations into bribes it paid for export contracts, including £500M in UK and other payments in US and Brazil. The charges in the deferred prosecution agreement included false accounting and conspiracy to corrupt.

FRC says, bribery and malpractice through intermediaries and advisers in the defence field were prominent at the time of audit, and KPMG should have known it as it was auditing another defence company which paid a large fine to settle a criminal investigation.

FRC said KPMG had failed to deal properly with Rolls-Royce which was not complying with legal requirements in relation to payments of agents in India.

The serious failures highlighted by the FRC related to two payments – £3.3M and £1.9M – made to Indian intermediaries.

KPMG was aware in July 2010, but did not include them in the audit report. Sykes also instructed a manager to remove a paragraph referring to them from minutes.

FRC says that KPMG failed to exercise professional scepticism and did not obtain sufficient audit evidence and document this on the Rolls-Royce audit file. Its quality control was substandard.

Claudia Mortimore, the deputy executive counsel to the FRC, highlighted the need for accountants to question their clients’ assertions. 

“It is essential that auditors are alive to the risks of companies’ non-compliance with laws and regulations, and conduct work in this area with care and sufficient professional scepticism,” she said. “This is particularly so when the audited entity is in a sector where such risks are known to be prevalent.”

To be continued

The Dark Side of the Indian Capital Market - Inspired by Sucheta Dalal

After reading Sucheta Dalal's article I feel like having viewed a good crime thriller in a lavish multiplex. It's a fact and not a story where the guilty always escape undetected and every time his employer (read - brokerage firm) goes all the way to protect him. And what does the regulator Securities and Exchange Board of India (SEBI) do? Nothing.

Since 2016, SEBI has issued multiple circulars to strengthen compliance and reporting requirements for brokers. In 2018, rules were framed to prevent unauthorised trading by stockbrokers and set up an early warning system. Yet, we have 32 broker failures over 2.5 years at the National Stock Exchange (NSE) and an unending list of unreported stories. Two have been discussed by the author.

Brokers have used the lock-down period to loot people with well-laid traps backed by the semblance of all regulatory compliances. They ensured technical compliance with all SEBI regulations pertaining to margin and ledger statements, emails and SMS messages.

A brokerage firm is not even a bank; yet, it has the audacity to wrest the extraordinary power to illegally freeze the demat accounts of family members and lock up their lifetime investments. All because the grievance redressal in India is poor and as good as non-existent and our courts and regulators have failed to ever award punitive damages to victims.

In another case the broker after violating SEBI’s guidelines began a criminal cover-up to avoid the loss of nearly Rs 7 cr that the firm would need to write off. The firm was mopping up huge brokerage income from these trades. More importantly, SEBI has no concept of a family account; the broker’s action was illegal and as good as highway robbery. The broker had no consent to even use the son’s shares as collateral for the loan to their mother or liquidate them to recoup losses.

To cut a long story short, the brokerage firm, instead of sacking the guilty employee, defended his action. In all, the broker got the 82-year-old mother to execute over 2,000 derivatives trades worth a mind-boggling Rs 340 cr between April 2020 and March 2021, leading to a loss of Rs 2 cr. The story shows that the employee’s actions were fully backed by the organisation which defended fraud, forgery and theft.

What happens next? The broker can continue to fight and seek arbitration. Since the amount is large, it will be examined by NSE and escalated to SEBI. On paper, the regulator has the power to search, seize, interrogate, raid and punish the broker. Will it act? So far, in the past 20 years, no SEBI chairman has woken up on behalf of investors.

To be continued