Edtech major Byju's has raised an unsecured loan of $36.45 million (Rs 300 crore) from its subsidiary, Aakash Educational Services. While reporting this development, Moneycontrol reported.
According to Aakash Educational Services' filing with the Ministry of Corporate Affairs (MCA), the loan to Byju's parent company, Think & Learn, was granted at a 7.50 per cent interest rate per annum.
"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 general meeting, has given their approval for granting unsecured loan to Think & Learn for an amount of not exceeding Rs 300 crore," the filing stated.
In an official statement, Byju's claimed that the Rs 300 crore loan from Aakash Educational Services Limited is in effect an advance against the marketing activities and campaigns that the edtech 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. Byju's Aakash has grown more than 100 per cent since the acquisition," it claimed.
The company added that this 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.
This latest move highlights that all is not well at Byju's, India's most valued start-up with a $22 billion valuation.
It reported a loss of Rs 4,588.75 crore for FY 2020-21, which is a massive rise from Rs 262 crore in the previous fiscal. The company justified this huge gap, citing rationalised growth between FY2020-21 and FY2019-20 as a result of the changes in the way it recognises its revenue.
Think & Learn has been facing intense scrutiny over its accounting practices recently. This includes an 18-month delay in filing its audited results after Deloitte's audit arm voiced concerns over several disputable matters in the company's accounts.
Things came to a head when Congress MP Karti Chidambaram wrote to the director of the Serious Fraud Investigation Office (SFIO) in July 2022. He sought clarity on the edtech's delay in furnishing financial statements for FY 2020-21 and details about its last two funding rounds.
The decacorn has also laid off several people over the past few months. In June 2022, its subsidiaries WhiteHat Jr fired 300 employees, while Toppr also terminated 300 jobs in June to accelerate growth.
Earlier this month, the company claimed it would rationalise around 5 per cent of its workforce, or 2,500 employees, to avoid redundancies and duplication of roles across product, content, media, and technology teams. It expected this move to help it achieve group-level profitability by March 2023.
At the same time, Byju's plans to augment its existing strength of 20,000 teachers by hiring 10,000 more teachers in the coming year.
On October 17, it also raised $250 million from its existing investors and claimed that it was at a "sweet spot" of its growth story where unit economics and economies of scale were in its favour.
