BYJU'S borrows Rs 300Cr from Aakash Educational Services
India’s most valued startuphas raised an unsecured loan of Rs 300 crore ($36.45 million) from its wholly-owned subsidiary Aakash Educational Services for "principal business activities", Moneycontrol reported.
“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,” the official filings by Aakash said.
According to the filings, the loan was granted at an interest rate of 7.50% per annum, the report added.
"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. 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 BYJU'S spokesperson told YourStory.
"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," he added.
BYJU'S acquired Aakash in April 2021 for a cash and stock deal of close to $950 million, in what was one of the biggest acquisitions in India in the education space.
The latest development comes at a time when BYJU’S has been focussing on cost-cutting to survive the funding winter.
Earlier this month, BYJU’S said it will be laying off 2,500 employees, which makes for about 5% of its workforce, across product, content, media, and technology teams in a cost-cutting initiative as the company’s losses widen.
BYJU’S, which was last valued at $22 billion, reported widened losses of Rs 4,564.38 crore in FY21, 14X more than the loss reported in FY20 which stood at Rs 305.5 crore.
The startup also raised $250 million in a fresh funding round from its existing investors, including QIA (Qatar Investment Authority) this month.
(The copy has been updated to include a response from the company.)
Edited by Affirunisa Kankudti