EdTech giant BYJU’S has borrowed Rs 300 crore in an unsecured loan from its affiliated tuition network, Aakash Educational Services. BYJU’S had acquired the tuition chain in 2021 for $950 million, states a report by The New Indian Express. As per the regulatory records, this unsecured loan was taken at 7.50% interest. The loan was reportedly authorised during the first week of October by Aakash’s Board of Directors. The company has recently let go of 2,500 workers in order to reduce redundancy.
A statement by BYJU’S states, “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.”
Since the acquisition, BYJU’S Aakash has seen a 100% growth.To yield positive results for all the group companies, it purchases media spots in bulk. This is in order to take advantage of economies of scale, states the report. The company said, “This is a strategy that has yielded really positive results for both the group and Aakash.” The company further clarified that a parent company and its subsidiary can give or lend money for principal business purposes.
The company added, “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.”
According to Byju Raveendran, Founder and CEO of BYJU’S, the business is currently in a phase in its growth cycle where both unit economics and economies of scale are in its favour. He further added, “Regardless of the adverse macroeconomic conditions, 2022-23 is set to be our best year in terms of revenue, growth and profitability.” The business recently also raised $250 million from its current investors, including QIA (Qatar Investment Authority).
The company recently announced the closure of several of its Trivandrum operations about which they said, “We are offering the Trivandrum team an opportunity to relocate to Bengaluru.” The company reported a combined loss of Rs 4,589 crore in FT21 with a bare minimum increase in operating income.
Courtesy : Edex