BYJU's borrows \u20b9300 crore from Aakash for 'principal business activities'
BYJUs news: Edtech major BYJU's is taking an unsecured loan of Rs 300 crore from its subsidiary Aakash Educational Services, which it acquired for more than 0 million, to bolster its "principal business activities".
The company told in a statement that Rs 300 crore loan from Aakash 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," a company spokesperson said.
BYJU'S Aakash has grown more than 100 per cent since its acquisition last year.
"The loan 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," the company spokesperson explained.
Last month, the edtech major paid the remaining dues of nearly Rs 1,983 crore (over 5 million) to global VC firm Blackstone in the acquisition of Aakash Educational Services.
According to BYJU's financial report FY21, "as per the terms of the agreement for acquisition of Aakash Educational Services, consideration to the extent of Rs 1,983 crore was due to be paid by the company to the sellers in June, 2022. This has been deferred to September 23, 2022".
Blackstone has nearly 38 per cent stake in Aakash and BYJU's has paid nearly 75 per cent of the Aakash acquisition amount.
Aakash Education and Great Learning, respectively into test-prep and upskilling, will continue to operate as stand-alone independent units.
Last week, Edtech major BYJU'S has raised USD 250 million (about Rs 2,000 crore) from its existing investors, including Qatar Investment Authority, in a fresh funding round, the company said on October 17 (Monday).
The funding round follows BYJU'S recent announcement to become profitable by March 2023.
"BYJU'S raises USD 250 million in a fresh funding round. Existing investors, including QIA, (were) part of this round," the company said in a statement.
BYJU'S founder and CEO Byju Raveendran 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.
"This means the capital that we now invest in our business will result in profitable growth and create sustainable social impact. Regardless of the adverse macroeconomic conditions, 2022-23 is set to be our best year in terms of revenue, growth and profitability. Continued support from our esteemed investors re-affirms the impact created by us so far, and validates our path to profitability," Raveendran said.
The company last week announced its path to profitability whereby it will consolidate all its K10 India subsidiaries into one unit to leverage their synergies.
Meanwhile, the company also plans to hire 10,000 academic staff across the globe, which will comprise about half of the hiring in India.
(With agencies inputs)
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