BENGALURU: Edtech major Byju’s has taken an unsecured loan of Rs 300 crore from its subsidiary tuition chain Aakash Educational Services that it acquired for $950 million in 2021. As per regulatory filings, the unsecured loan was granted to the edtech giant at 7.5% interest rate. It is said that the loan was approved by Aakash’s board of directors in the first week of October.
Byju’s in a statement 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, the company buys media spots in bulk for all its group companies. “This is a strategy that has yielded positive results for both the group and Aakash,” the company said.
Byju’s Aakash has grown over 100% since the acquisition. The company also clarified 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,” it added.
Recently, the company raised $250 million in a fresh funding round from its existing investors including QIA (Qatar Investment Authority). Byju Raveendran, Founder and CEO of BYJU’S had said that the company is now at that sweet spot of its growth story where the unit economics and the economies of scale both are in its favour.
“Regardless of the adverse macroeconomic conditions, 2022-23 is set to be our best year in terms of revenue, growth and profitability,” he said. The edtech major also sacked 2,500 employees recently. It also announced that it is discontinuing some of its Trivandrum operations to reduce redundancy.
“We are offering the Trivandrum team an opportunity to relocate to Bengaluru,” it said. The company reported consolidated loss of Rs 4,589 crore in FY21, and its revenue from operations grew only 4% to Rs 2,280.26 crore in FY21 compared to Rs 2,189 crore in the previous year.
