Edtech giant Byju’s has raised a collateral free loan of Rs 300 crore or $36.5 million from its wholly-owned subsidiary Aakash Educational Services Limited for its core business activities, as per the latter’s regulatory filings with the RoC.
The company recently announced that it has raised $250 million funds from its existing backers including Qatar Investment Authority (QIA).
“The Rs300 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…. 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.”..,” Byju’s told Entrackr after our story.
Of late, Byju’s is taking several cost cutting measures to ensure profitability in the coming years. The company recently laid off 2,500 additional employees as a result of redundancies and duplication of roles, experts tracking the edtech space see it as a cost cutting measure amid a challenging funding environment. According to a Morning Context report, Byju’s is likely to lay off over 12,000 staff in the next year.
Byju’s acquired Aakash in April 2021 for a cash and stock deal of nearly $1 billion.
Aakash Institute is a competitive exam preparation platform that offers NEET, IIT-JEE main and advanced, Olympiad NTSE, classroom courses along with distance learning, and several scholarship programs.
While Byju’s has not disclosed its financial numbers for FY22 yet, its scale barely grew 4% to Rs 2280 crore in FY21 from Rs 2,189 crore in the previous fiscal year (FY20). As per its annual financial statements with the Registrar of Companies (RoC), the company’s losses ballooned nearly 15X to Rs 4,564 crore in FY21 as compared to Rs 305 crore in FY20.
Update: The story has been updated with Byju’s comment.