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Amid rising concerns of a governmental investigation into Byju's recent branch closure, Think & Learn Pvt., the parent company of Byju's, has taken an unsecured loan from its wholly owned subsidiary Aakash Educational Services.
What is this about an investigation? Recently, Byju's closed its office in Thiruvananthapuram and forced all its employees to resign. Considering Byju's massive losses reported recently, this could be considered an attempt to trim down on expenses, restructure and turn profitable.
However, all the employees from the office were reportedly told to resign or get fired. All the employees approached the Labour Minister of Kerala, V Sivankutty, with their grievances. In turn, the minister promised a serious inspection into the matter.
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The matter got media attention as Byju's announced that it was giving employees a chance to transfer to the Bengaluru office. Moreover, the company also said that they would offer a generous exit package should they choose to leave. However, the government will continue with the probe nonetheless.
The loan taken by Byju's from its subsidiary Aakash Educational Services is an unsecured loan that attracts an interest rate of 7.5% p.a. Aakash Educational Services has stated in a filing that Byju's needed funds for 'principal business activities' and the loan was approved by its Board of Directors.
However, a spokesperson from Byju's has said that the 'principal business activity' is the marketing service provided to Aakash by Byju's and that the loan was an advance/reimbursement.
“The Rs 300 crore loan from Aakash Educational Services 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 Byju's spokesperson told MoneyControl.
Byju's had announced a few months ago that it was postponing its plans to go public due to persisting unfavorable macroeconomic conditions.
Article by Aman Agarwal.
This news piece is brought to you in association with Jobaaj.com.
