Aakash Educational Services was acquired by Think and Learn Pvt, Byju’s parent company, in April 2021 for a cash and stock deal worth $950 million
New Delhi, NFAPost: Byju’s parent company, Think & Learn, has reportedly taken an unsecured loan of Rs 300 crore from Aakash Educational Services. According to a report by Moneycontrol, the loan has been taken for “principal business activities”. It has been granted at an interest rate of 7.5 per cent.
Aakash is a wholly-owned subsidiary of the group. It was acquired in April 2021 for a cash and stock deal worth $950 million.
“Think & Learn is in the requirement of funds for its principal business activities. Hence at the request of Think & Learn, the Board of Directors of the company in their meeting held on October 3, subject to the approval of members in the general meeting, has given their approval for granting an unsecured loan to Think & Learn for an amount of not exceeding Rs 300 crore,” Aakash’s filing with the ministry of corporate affairs said.
In response, a spokesperson of Byju’s told MC that since the acquisition, Aakash has grown by 100 per cent. The amount is being taken for marketing for the core business of Aakash.
“The Rs 300 crore loan from Aakash Educational Services 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,” the spokesperson was quoted as saying in the MC report.
“As you might be already aware, Byju’s Aakash has grown more than 100 per cent since the acquisition. Please note 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,” they added.
The development comes when Byju’s seeks to reduce costs and improve its operating revenue. The company announced that they aim to achieve profitability by 2023. Earlier, the edtech company announced that they would lay off 2,500 people in the next six months.
