Corporate File

‘We will integrate more at balance sheet and tech level’

Sangeetha Chengappa | Updated on May 09, 2021

JC Chaudhry, CMD, and Aakash Chaudhry, MD, Aakash Educational Services

Test-prep service Aakash on post-merger synergies

Last month, Byju’s acquired Aakash Educational Services Ltd (AESL), a 33-year-old leader in test-prep services, for $940 million in a cash-and-stock deal. BusinessLine spoke with the father-son duo at the helm of the company, Chief Managing Director JC Chaudhry and Managing Director Aakash Chaudhry, to know how the synergies between the two companies will impact its topline and branding strategy. Excerpts:

At what point did you decide that Byju’s would be a good match for AESL?

JC Chaudhry: When I met Raveendran [Byju’s co-founder Byju Raveendran] first, I told him this is my baby and I have three points to discuss: Students always come first; whatever commitment we make at the time of admission, we have to fulfil; and there will be no compromise on discipline. Byju, being a teacher himself, was aligned with the philosophy of Aakash. Together with them we are looking forward to creating the biggest omni-channel offering in the test-preparation sector. We intend to leverage their hold in technology with our teaching capabilities.

How long will the integration take, and have you hired an external consultant to help with it?

Aakash: A billion-dollar integration is definitely not easy. From all definitions, it will be one of the largest integrations in the education sector. We have put together a sharp team of integrators — picked the best people from our team, whose entire KRA [key result area] is to ensure that the academics, products, technology, sales and operations, and everything else gets fully integrated. While they are looking at integration of overlapping roles and markets, we also want to maintain Aakash as a standalone entity which will continue to run in an independent manner. Fortunately for us, we are in very complementary markets and are able to keep our identities separate and integrate more at a balance sheet level and tech level where synergies could be extracted. We are doing the integration in-house because nobody understands this business the way we do. An integration this size will take at least 12-15 months.

Will you remain Aakash or co-brand your offering with Byju’s?

Aakash: The company will be branded Aakash. We will bring in an element that says “supported or powered by Byju’s” or say that it is an enterprise that belongs to Byju’s. But, for the consumers out there, the brand would continue to be Aakash and the brand promise of ‘student first’ would be the same.

By leveraging synergies with Byju’s, will your revenue double this fiscal?

Aakash: We closed FY 2020 at ₹1,240 crore and our discussion with Byju’s started basis the revenues that we had grossed in FY 2020. We are yet to close our FY21 financials. We have been making significant profits since inception and will be closing FY21 also in profit. For five years till FY 2020, we clocked 25 per cent CAGR in revenue, and EBITDA of around 29 per cent. We do feel that with Byju’s coming in, there would be a lot of synergies, first of all on the technology side — being able to offer a lot more products and being able to increase our reach with the new products. We are expecting far higher growth of our revenue along with Byju’s. For instance, we are present in over 200 locations whereas Byju’s team is currently present in more than 2,000 locations. We definitely see our CAGR growing at 30-40 per cent, with some initial high-growth years.

Published on May 09, 2021

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