Think and Learn Pvt. Ltd, which runs edtech unicorn Byju’s, has raised Rs 300 crore via a collateral-free loan from its wholly-owned subsidiary Aakash Educational Services at a time when the company is restructuring its operations to attain group-level profitability by March 2023.
Byju’s said in a statement that the Rs 300 crore loan from Aakash Educational Services is in effect an advance against the marketing activities and campaigns the edtech unicorn 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…..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 company said in its statement.
However, Byju’s didn’t clarify why the company took a loan, instead of receiving a direct payment for facilitating the ‘marketing activities and campaigns’ for the offline coaching centre chain.
Byju’s acquired Aakash in a cash-and-stock deal for close to $1 billion in April last year. The deal stands as one of the biggest acquisitions by the company so far.
Online news portal The Morning Context reported the development first.
Byju’s received the unsecured loan from Aakash a few weeks after it announced raising $250 million in a rights issue from its existing investors, including Qatar Investment Authority (QIA).
The loan from the subsidiary also comes at a time when Byju’s is streamlining its operations, shifting its focus from on-ground sales to inside sales to have more efficient and effective consumer-centric lead conversions.
The firm is taking several measures, including laying off 2500 employees or 5% of its workforce as part of cost-cutting measures. The layoffs are planned across the sales, content, media, and technology divisions.
Other plans include integrating the companies it acquired over the past three years, reworking its sales machinery and hiring a total of 10,000 more teachers in the coming year.
Byju’s has already completed the integration Toppr, Meritnation, TutorVista, Scholar and HashLearn into its core K-10 business. Aakash and Great Learning will continue to function as separate organizations.
The Tiger Global-backed company is also retargeting its marketing budget towards its overseas markets
The company had said that the cost reductions will improve unit economics and provide the groundwork for its initial public offering (IPO).