Byju’s, world’s most valuable edtech startup, is all set to take an unsecured loan of ₹300 crore from its subsidiary Aakash Educational Services for ‘principal business activities.’
In its latest filing with ministry of corporate affairs, Aakash Educational Services said that it is granting an unsecured loan of ₹300 crore to Think & Learn, which operates Byju’s, which is subject to approval.
“The board of directors of the company, in their meeting held on October 3, subject to the approval of members in general meeting, has given their approval for granting unsecured loan to Think & Learn for an amount not exceeding ₹300 crore,” the filing noted.
The loan attracts an interest of 7.50 per cent per annum, it further added
Byju’s had acquired Aakash Educational Services for a cash and stock deal of almost $950 million in April 2021.
However, Byju’s said that the loan is in effect an advance against the marketing activities and campaigns that it has been running for Aakash.
“The ₹300 crore loan from Aakash Educational Services Ltd 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 groups and Aakash,” Byju’s said.
“BYJU’s Aakash has grown more than 100% since its acquisition. Please note that it is only for ‘principal business activities’ that as a subsidiary and the parent company can give or receive loans. In this case, the business activity is marketing for the core business on which the group has already spend t and is being reimbursed,” it further added.
Earlier this month, Byju’s said that it has raised $250 million in a rights issue from its existing investors at a $22 billion valuation.
Byju’s earlier this month said that it would lay off 2,500 employees in an attempt to become profitable by March 2023. The layoff would be 5% of Byju’s total workforce which is around 50,000 employees.
Byju’s net loss widened to ₹4588.75 crore for the fiscal year ending 31 March, 2021 from a comprehensive loss of ₹231.69 crore it incurred in for fiscal year ended 31 March,2020.