Byju's takes Rs 300 crore unsecured loan from Aakash for 'principal biz'

Educational technology giant Byju’s has taken a loan of Rs 300 crore from its subsidiary Aakash Educational Services (AESL), which it acquired for nearly $1 billion last year. 

AESL, in its filing with the Ministry of Corporate Affairs, said that Think & Learn — the parent firm of Byju’s — is in need of funds for its ‘principal business activities’.

It said the board of directors of the company at its meeting on October 3, subject to the approval of the members at the general meeting, has given its approval for granting the unsecured loan to Think & Learn for an amount not exceeding Rs 300 crore.

The loan was granted at an interest rate of 7.5 per cent per annum, according to the filing.

Last year in April, Byju’s closed the deal to acquire AESL for $950 million. The stock-and-cash deal was the biggest in the education space. Byju’s had made partial payments to Aakash’s shareholders. Its payment of nearly Rs 1,500 crore to private equity firm Blackstone — as part of the AESL deal — had got deferred. However, the final tranche that Byju’s had to pay to Blackstone got completed by the end of September this year. In all, Blackstone — an investor in Aakash — was to receive $400 million.

A spokesperson for Byju’s said that the Rs 300 crore loan from AESL is in effect an advance against marketing activities and campaigns 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,” said the spokesperson, adding, “This is a strategy that has yielded really positive results for both the group and Aakash. Byju’s-Aakash has grown more than 100 per cent since the acquisition,” said the spokesperson.

The spokesperson said that the loan 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.”