Edtech major Byju’s has taken an loan of ₹300 crore from its subsidiary Aakash Educational Services, which it acquired for around $1 billion last year.
According to Aakash’s regulatory filings, Byju’s require these funds for the company’s principal business activities. This unsecured loan was granted to Byju’s at an interest rate of 7.50 per cent per annum. The loan was approved by Aakash’s board of directors on October 3 and is subject to the approval of members in general meeting.
Commenting on the development, a Byju’s spokesperson said, “The Rs 300 crore loan from Aakash Educational Services Limited is in effect an advance against the marketing activities and campaigns that Byju’s has been running for Aakash. In order to benefit from the economies of scale, Byju’s buys media spots in bulk for all its group companies. This is a strategy that has yielded really positive results for both the group and Aakash. As you might be already aware, Byju’s Aakash has grown more than 100 per cent since the acquisition. Please note that it is only for ‘principal business activities that a subsidiary and the parent company can give or receive loans. In this case, the principal business activity is marketing for the core business of Byju’s Aakash on which the group has already spent and is now being reimbursed.”
Aakash Educational Services did not comment on BusinessLine queries. Morning Context was the first to report this development.
Last week, Byju’s has announced new fundraising of $250 million from its existing investors, including Qatar’s sovereign wealth fund, Qatar Investment Authority (QIA). This was a flat round for the edtech company raised at its earlier valuation of $22 billion.
Shuts down Trivandrum office
Earlier this week, Byju’s has shutdown its Trivandrum (Kerala) office impacting 170 employees who claimed that they were forced to resign. These employees have also reached out to the State’s labour minister to get a fair compensation from Byju’s.
To this, Byju’s said in a statement that while it is discontinuing Trivandrum operations to reduce redundancy, it has offered the entire Trivandrum team an opportunity to relocate to Bengaluru.
Byju’s has also recently announced laying off 2,500 employees in its effort to achieve group-level profitability by March 2023. In June, too, Byju’s had laid off around 500 people across Whitehat Jr. and Toppr to recalibrate its business priorities and accelerate its long-term growth.
In FY 21, Byju’s reported gross revenue of ₹2,428 crore and its losses ballooned to ₹4,588 crore, almost 20 times the ₹231 crore loss it reported in FY20. The jump in losses was attributed to certain changes in the company’s revenue recognition. For FY22, the company earlier said that its gross unaudited revenue is close to ₹10,000 crore and is now projecting to do ₹15,000 crore revenue in FY23 along with better margins.