New Delhi, Oct 27 (SocialNews.XYZ) Edtech major BYJU's is taking an unsecured loan of Rs 300 crore from its subsidiary Aakash Educational Services, which it acquired for more than $950 million, to bolster its "principal business activities".
The company told IANS in a statement that Rs 300 crore loan from Aakash 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 company spokesperson said.
BYJU'S Aakash has grown more than 100 per cent since its acquisition last year.
"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," the company spokesperson explained.
Last month, the edtech major paid the remaining dues of nearly Rs 1,983 crore (over $245 million) to global VC firm Blackstone in the acquisition of Aakash Educational Services.
According to BYJU's financial report FY21, "as per the terms of the agreement for acquisition of Aakash Educational Services, consideration to the extent of Rs 1,983 crore was due to be paid by the company to the sellers in June, 2022. This has been deferred to September 23, 2022".
Blackstone has nearly 38 per cent stake in Aakash and BYJU's has paid nearly 75 per cent of the Aakash acquisition amount.
BYJU'S last week raised $250 million from its existing investors in a fresh round of funding, consolidating all its K10 India subsidiaries into one unit to leverage their synergies.
Aakash Education and Great Learning, respectively into test-prep and upskilling, will continue to operate as stand-alone independent units.
Source: IANS
About Gopi
Gopi Adusumilli is a Programmer. He is the editor of SocialNews.XYZ and President of AGK Fire Inc.
He enjoys designing websites, developing mobile applications and publishing news articles on current events from various authenticated news sources.
When it comes to writing he likes to write about current world politics and Indian Movies. His future plans include developing SocialNews.XYZ into a News website that has no bias or judgment towards any.
He can be reached at gopi@socialnews.xyz