Edtech unicorn Byju’s has taken a loan worth ₹300 crore from its subsidiary Aakash Educational Services. The development comes a day after the country’s most valued edtech firm closed down its Technopark Thiruvananthapuram office, causing a furore with its employees approaching Kerala labour minister to intervene alleging forced resignations by the edtech firm.
Lately, the edtech unicorn has been grappling with financial constraints amidst the funding winter. Multiple reports, while quoting the regulatory filing by Aakash Educational Services with the Ministry of Corporate Affairs, said that the company has granted an unsecured loan worth ₹300 crore at an interest rate of 7.5% to Think & Learn, the parent company of Byju’s. Byju’s board of directors approved the loan on October 3 and is subject to approval of its members.
A Byju's spokesperson told Fortune India that the loan is for the marketing activities and campaigns for Aakash Institute. The spokesperson says, "The ₹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."
"As you might be already aware, Byju's Aakash has grown more than 100% 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," the spokesperson adds.
The Bengaluru-headquartered edtech unicorn had acquired Aakash Institute in April last year for a cash and stock deal worth ₹1,983 crore.
Byju’s Shuts Trivandrum Office
Earlier this week, the beleaguered employees of Byju’s Thiruvananthapuram office approached V Sivankutty, the labour minister of Kerala, urging him to intervene in Byju’s alleged mass termination at Technopark in Thiruvananthapuram.
A Facebook post shared by Parthidhwani Technopark, an employee body of Technopark stated, “Byju's Think & Learn Private Limited working in Carnival building, Technopark is planning to stop its operations from Trivandrum without any prior notice to employees. More than 170 employees are working in their centre at Technopark. The company management is enforcing employees for forceful resignation. Prathidhwani received complaints from more than 150 employees. Prathidhwani requested Honorable Labour minister Sri V Sivankutty to intervene and help the employees to come to an amicable and dignified settlement with the organization and a revised Exit policy with at least the following compensatory benefits.”
These compensatory benefits include payment of salary for October 2022 on the 1st of November 2022, one-time settlement of salary for the upcoming three-months from November 2022 to January 31st, 2023, all earned leaves' encashment and full settlement of variable pay (as applicable to each employee).
Earlier this month, the edtech firm said that it is planning to sack as many as 2,500 employees as a cost-cutting measure in order to achieve profitability by 2023.
“To avoid redundancies and duplication of roles, around 5% of Byju's workforce is expected to be rationalised across product, content, media, and technology teams in a phased manner,” Byju’s had said in a statement.
Byju’s financial loss
After delaying its financial results announcement by a month, the edtech unicorn reported a standalone loss of ₹2,702.14 crore during FY21 as compared to a net profit of ₹7.39 crore during FY20. Byju's revenue from operations also dropped to ₹1,378.51 crore, down from ₹1,918.25 crore during a year before.
The edtech company's total standalone income, including other income, stood at ₹1,551.64 crore vs ₹2,242.05 crore during FY20.
Earlier this month, the Tiger Global-backed edtech unicorn raised $250 million from its existing investors. Byju Raveendran, founder and CEO had said, “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.”
