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BYJU’S-owned Aakash Educational Services Limited (AESL) has witnessed a sharp rise in its profits for FY 2021-22 compared to the previous fiscal year, driven by healthy growth in operating revenue, despite a surge in expenses.

This development comes amid BYJU’S‘ escalating challenges—highlighted by BlackRock’s recent 95% markdown of its stake in the edtech firm.

The Delhi-based test-prep firm reported a profit of Rs 79.5 crore in FY22, up 82.2% from Rs 43.6 crore recorded in the earlier fiscal year. Meanwhile, its operating revenue surged 44.6%, touching Rs 1,421.3 crore in FY22 compared to Rs 982.7 crore in FY21, according to its standalone financial statements.

The firm, with a history spanning over three and a half decades, generated a majority of its operating revenue from its coaching service, witnessing a 48.5% growth to reach Rs 1,282.3 crore in FY22, while an additional Rs 138.9 crore was generated through franchising.

Aakash’s network of centres provides preparation services for students gearing up for medical and engineering entrance examinations, school board exams, and competitive tests such as NTSE and Olympiad. With a nationwide presence, it boasts over 315 centres and currently serves more than 400,000 enrolled students.

The company’s total revenue in FY22, which includes interest income from financial assets, revenue from manpower services, and COVID-19 rent concessions totalling Rs 43 crore, surged 39.4% to Rs 1,464.3 crore.

While the company saw an increase in revenue, its expenses surged as well, rising 34.5% to Rs 1,331.7 crore in FY22, compared to the reported Rs 990.3 crore in FY21.

The predominant contributor to Aakash’s costs was employee benefit expense, including salaries, wages, contributions to provident and other funds, as well as staff welfare expenses, constituting over 54.3% of its total expenses. This specific expense grew 35.3% to Rs 722.8 crore in FY22, compared to Rs 534.1 crore in FY21.

Furthermore, its spending on advertising and promotional expenses amounted to Rs 133.9 crore in FY22, a 30.5% increase from Rs 102.6 crore in the preceding year.

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Edtech’s roller-coaster year: The BYJU’S conundrum and industry realities

Aakash’s FY22 results were disclosed nearly a month after the annual general meeting of Think and Learn Pvt Ltd, the parent company of BYJU’S, where the financial statements for FY22 were officially approved.

In January 2021, BYJU’S acquired AESL for a substantial $1 billion, closing the world’s largest edtech acquisition by a venture capital-backed company. Consequently, FY2021-22 marked the inaugural year for Aakash under the umbrella of BYJU’S.

Although Aakash has not yet reported its FY23 financials, in March last year, the company claimed that it concluded the financial year with Rs 3,000 crore in revenue, representing a threefold increase in both revenue and profits since its acquisition by BYJU’S.

The firm competes with traditional brick-and-mortar educational institutes such as ALLEN Career Institute and the Sri Chaitanya Group of Institutions.

Last year, Sushma Bopanna, CEO and Academic Director of Sri Chaitanya Educational Institutions, and Founder-Director of Infinity Learn, told YourStory that the group’s topline in FY23 was Rs 5,500 crore—up 20% from the previous financial year. ALLEN logged Rs 2,277 crore in operating revenue in FY23.

While Aakash’s FY22 figures present a positive outlook for the test-prep company, the situation is different for its parent entity, BYJU’S, which grapples with numerous challenges, including litigation concerning the $1.2-billion term loan B, issues with the Enforcement Directorate, a liquidity crunch, and uncertainties regarding its core business and acquisitions.

Last June, BYJU’S provided an update on the initiation of the initial public offering for Aakash, one of its significant acquisitions, with plans to launch it by mid-2024.

Meanwhile, media reports have suggested the potential return of Aakash Chaudhry, Co-promoter and Co-founder of AESL, as the chief executive officer, likely to be connected to the finalisation of a stock-swap agreement with Think and Learn Pvt Ltd, as part of AESL’s acquisition. 

In November, Ranjan Pai, Chairman of Manipal Education and Medical Group, purchased Rs 1,400 crore debt in Aakash to assist BYJU’S in settling a Rs 2,000 crore ($250 million) debt from US-based lender Davidson Kempner Capital Management, which the edtech firm secured in May last year by using its Aakash shareholding as collateral.

Last year, BYJU’S selectively shared some of its FY22 core business numbers. However, the edtech company has officially not disclosed the net loss from its core business, as well as consolidated revenue and profit/loss figures for FY22.