Shri Vile Parle Kelavani Mandal’s

Narsee Monjee College of Commerce and Economics(Autonomous)

A.Y 2021-22

Name of the Course : Financial Accounting and Auditing -Paper VII

TYBCOM
Semester V

Merger; Byju’s and Aakash Institute

Submitted by: 25th August 2021

Sr Full Names of SAP ID Div. Contact Content

No the Learners Number RollNo Number Contributed

1. Aditi Desai 45208190140 A081 9967166892 Strategic motives and Global

implications of the Merger
2. Poorna Desai 45208190145 A082 9769489381 Market position aspect of what
led to the merger
3. Reeti Desai 45208190146 A083 7506940287 Overview of the Indian
Edutech industry
4. Jessica 45208190153 A084 8850551760 What are mergers and why are
Devassy they done?
5. Bhavya 45208190161 A085 9820579937 Financial Aspect of what led
Dhelia to the merger

Teacher In Charge : Savita Desai Ma’am

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 TABLE OF CONTENTS
Plagairism Report 3
Introduction 4
What are mergers and why 4
are they done? (A084)
Real-time overview of the 5
Indian educational Sector
(A083)
Financial aspect of what led 7
to the merger (A085)
Market positional aspect of 8
what led to the merger
(A082)
Strategic Motives and Global 10
Implications of the merger
(A081)
Conclusion & Summary 12
(A083)
Bibliography 13

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PLAGIARISM REPORT

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INTRODUCTION

WHAT ARE MERGERS AND WHY ARE THEY DONE? (A084)

A merger is an arrangement that joins two existing organizations into one new
organization. There are a few different kinds of mergers and furthermore a few reasons why
organizations go ahead and complete the mergers. Mergers and acquisitions are normally
carried out to extend the company’s range, venture into new fragments, or gain portion of the
overall industry. These are done to build the esteem of the investors. Regularly, during a
consolidation, organizations have a no-shop statement to forestall buys or mergers by extra
organisations.
Types of mergers:
1. Conglomerate – This is a merger between two organizations occupied with irrelevant
business exercises. The organizations might work in various businesses or in various
geological.
2. Congeneric – A congeneric merger is otherwise called aa a Product Extension
merger. In this sort, it is a merger of at least two organizations that work in similar
market or area with covering factors, like innovation, promoting, creation cycles, and
innovative work (Research and Development).
3. Market Extension – This sort of merger happens between organizations that sell
similar items however contend in various business sectors. Organizations that take
part in a market expansion merger try to access a greater market and, consequently, a
greater customer base.
4. Horizontal Merger – A horizontal merger happens between organizations working in
a similar industry. The merger is ordinarily essential for combination between at least
two contenders offering similar items or administrations. Such mergers are normal in
enterprises with less firms, and the objective is to do a bigger business with more
prominent piece of the pie and economies of scale since rivalry among less
organizations will in general be higher.
5. Vertical Merger – At the point when two organizations that produce parts or
administrations for an item merger, the union is referred to as a vertical merger. A
vertical merger happens when two organizations working at various levels inside a
similar industry’s inventory network join their activities.

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Why do mergers happen?
 Once the merger is completed, businesses are sure to obtain more resources and the
commercial scale expands.
 The benefit of Most shareholders could be the reason two companies’ merge. The
existing shareholders of the original company acquire shares in the new company as
the merger takes place.
 Businesses may agree to merge to set foot into different markets or to diversify their
services and products, which therefore leads to the increase of their profits.
 Sometimes, mergers also occur when businesses want to acquire that would take time
to develop internally.
 In order to reduce tax liabilities, companies that generate large amounts to taxable
income may seek to merge the companies that carry forward significant tax losses.
 The merger between companies will eliminate competition between them, thereby
reducing the advertised price of products. Additional to this, lower prices will benefit
customers and ultimately increase the sales.
 Mergers tend to plan better and use their financial resources efficiently.

OVERVIEW OF THE INDIAN EDUCATIONAL SECTOR (A083)

The outbreak of Covid-19 brought an unprecedented opportunity for the educational
technology (“EdTech”) sector in India. The traditional face-to-face interaction between a
teacher and students suffered a setback and almost instantaneously, there was a paradigm
shift to the unconventional mode of online learning. This change brought the spotlight on
EdTech industry following which it received the requisite financial and policy impetus to
thrive through the financial year (FY) 2020-2021. A massive inflow of investments,
acquisitions and emergence of new start-ups in the previous fiscal bear testimony to EdTech
sector’s meteoric growth.
The nationwide lockdown from March 2020, leading to shutting down of education
institutions, propelled an urgent need for them to look for technological solutions and
upgrade their technological infrastructure to ensure continuity in education. As an immediate
measure, these institutions started relying on third-party video conferencing applications like
Zoom, Webex, Microsoft team etc. or on EdTech companies like Byju’s, Unacademy,
Vedantu etc for a seamless transitioning from offline mode to online mode of learning.

The NEP (National Education Policy)

The announcement of the National Education Policy (NEP) by the Ministry of Human
Resource and Development in the FY 2020-2021 offered a policy impetus to the EdTech
sector. The NEP recognises the role of technology in making education more effective.
Amongst other things, the NEP envisages the establishment of an autonomous body called
the National Educational Technology Forum, which will act as a platform for free exchange
of ideas on the use of technology to enhance learning, assessment planning and
administration. Further, the calls for investment in digital infrastructure, development of

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online teaching platforms & tools, and creation of virtual labs & digital repositories under the
NEP can potentially trigger a huge public spending in India, if implemented as planned.

BJYU’S
BYJU’S is India’s largest education company and the creator of India’s most popular K-12
learning app, which offers highly adaptive, engaging, and effective learning programs for
students. Reinventing how students learn in the age of mobile devices, the BYJU’S approach
combines world-class teachers, proven pedagogical methods, innovative technology, and data
science to deliver personalized learning across grades.
BYJU’S has made a big impact
on the online learning world since
its launch in 2015. The India-
based mobile learning app,
created by Byju Raveendran—a
teacher by choice and
entrepreneur by chance—is now
used by more than 15 million
students and has 900,000 paying
subscribers. BYJU’S The
Learning App helps teach
children to absorb the culture of
learning on their own rather than
being spoon-fed, and is reinventing how students learn in the age of mobile devices. The
BYJU’S approach combines world-class teachers, proven pedagogical methods, innovative
technology, and data science to deliver personalized learning, feedback, and assessment for
students.

AAKASH EDUCATIONAL SERVICES LIMITED

Aakash Institute has been providing coaching for the toughest medical entrance
examinations in India since 1988. It has since
then emerged as a benchmark for coaching and
guidance for entrance examinations such as
NEET and JEE, JEE Advanced. Aakash Institute
have shown remarkable performance when it
comes to coaching for NEET and have excelled
at what they do by giving 1st rankers for the last
24 years. NEET is one of the toughest entrance
examinations and oversees some of the stiffest
competition. Coaching for NEET ups the chances
of students to secure good marks and eventually
a good medical college. Every year millions of
students appear for NEET, for a mere handful of

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seats in the top medical colleges in India.  As a leader in providing coaching for
NEET, Aakash’s extensive teaching methodology suits well for students of all calibres.

CORE CONTENT
FINANCIAL ASPECT OF WHAT LED TO THE MERGER (A085)

AAKASH INSTITUTE

The financial positions will help us to get a brief understanding on what led to the merger
between Aakash Educational Service Limited and Byju’s.

The above image gives us an overview of the operating revenue, total expenses, profit and net
cash from operations of Aakash Institue for financial years ending 2018, 2019 and 2020. In
order to expand itself and create an impact, the institute increased their expenses keeping in
mind their future growth. We can clearly see that even though the operating revenue has
increased but there is reduction in the profit by 17.70% for financial year 2020 in spite of a
rise by 23% in financial year 2019. This gives us a clear understanding that the company’s
aim to expand itself was coming at the cost of low profit percentage.

The decrease in the

assets turnover ratio and
return on capital
employed percentage
was a clear sign that the
institute needs to do
something to avoid
going below par and
hitting rock bottom. The
aim to expand had to be carried out but the way they planned to expand themselves had to be

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changed to avoid losses in the future. Mergers and acquisitions is a method for expansion
which is used in the contemporary world for growth. When the world was hit with the
pandemic in 2020, very few of them anticipated that this is going to stay for a long period of
time. Things are not going to resume within 2 weeks. In order to survive in the Ed-Tech
industry, acquisition of Aakash by Byju’s was an ideal option for the management.

BYJU’S

Byju’s is yet another Ed-Tech

company which provides a
promising platform to its
service users. A snippet from
the income statement of Byju’s
will help us to understand that
over the years, it has been able
to boost its income and
expand themselves PAN India.
For the financial year ending
2020, Byju’s witnessed a
revenue growth of 471%. This
was enough for them to acquire
other prominent Ed Tech
institutes/companies which
shall help them to maintain their brand image and increase their prominence.
Looking at the above scenario, it was conducive for both of them to come together and
expand themselves. This would be beneficial for both the companies and who knows what is
in store for the Ed Tech companies? Aakash used to work offline whereas Byju’s has always
promoted E-Learning before the pandemic as well. The long term effect of pandemic has
turned the traditional mode of teaching into e-learning. A company like Byju’s was already
prepared to continue its teaching without any obstacles where as it was a humongous
challenge for the other institutes/companies.

MARKET POSITIONAL ASPECT OF WHAT LED TO THE MERGER

(A082)

BYJUS
The below mentioned is the history of Byjus in its ed-tech sector. As we can see it was a very
strong business trying to acquire various startups in the technological world.

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 Jan '19:
Acquired US- base Osmo, a maker of
educational games foer children aged 3-
July '17:
years for $120 million.
Acquired Virtual Labs Simulator startup
Think and Learn (1) accquired TutorVista (2)
Later during the year, also acquired
WhiteHat Jr., a Indian startup for $300
million.
July '21:
April '21:
Acquired Singapore based Higher
Sept '20: Feb '21: Acquired test prep firm Aakash
education platform Great Learning at a
Eductaional Services Ltd. is an estimated
Acquired Mumbai-based Doubt clearing cost of $600 million, after-school learning
$950 million (Rs. 1200 Crore) cash-and-
LabInApp. platform Scholr app Toppr and US- based kids learning
stock deal(3). Aakash's Founders(4) and
platform Epic in a $500 million cash-and-
Blackstone Group(5)
stock deal.

Think and learn; one of the largest Ed-tech company in India. Ed-tech is a multi-million-
(1)

dollar business industry that uses computer hardware, software, and educational theory and
practice to facilitate learning.
TutorVista; A US-based educational organization that specialized in Online tutoring. The
(2)

company provided academic help by paid subscription to students in subjects such as English,
Mathematics, Statistics and Science.
Cash-and-Stock deal; a type of deal wherein all the shares of the company being acquired
(3)

are being purchased in cash by the acquirer (not per se, of course).
(4)
Founders of Aakash Institute; J C Chaudhry and his son Aakash Chaudhry.
Blackstone Group; an American alternative Investment Management company based in
(5)

New York City.

Aakash Institute
Aakash institute was a leading coaching institute that excels in medical and engineering
coaching in our country. The Institute specializes in Offline coaching. However, in the year
2011, to keep up with competition and growing involvement of technology in the education
sector the institute launched its own
mobile application. The app caters to
students from kindergarten to the 12th Net Profit of the Entities
grade and has been adding over 5 million Standalone (in INR Crore)
users a month. India has about 250
million students in the K-12 grades. The Profit of Byju's Profit of Aakash Institute
app provides lessons in math and science 200 160.18
through video animations and games. The 150
institute took a chance at being acquired
by an ed-tech biggie when online classes 100
had to become their primary method of 50 63.55
20 20.16
0
teaching. Being a huge brand in its
0
segment of students the company was -29 '18
FY '17- FY '18- '19 FY '19- '20
dominating the market well. It had its -50

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branches in various cities and a very popular coaching among the medical and engineering
students.
Byjus comes from an ed-tech sector. It does not produce any material by itself. It is just a
platform that provides various educational and learning materials. The only common theme
the two institutes had is the fact that they provide educational services. This acquisition cost
the company a billion-dollar making it one of the biggest acquisitions of the corporation till
date.
According to The Hindu, one of the reasons for this acquisition was for Byju’s to be ‘bolster
its presence in the test preparation segment in the country’.
Whereas Aakash wanted to implore more towards online teaching, with the pandemic at its
hand. Financially, it is more like they saw a good deal and took it. They wouldn’t have gone
into major losses if they continued alone. They would have had to engage more resources to
grow alone. Even being backed by Blackstone group, they took their chances and well now,
earned billions.

STRATEGIC MOTIVES AND GLOBAL IMPLICATIONS OF THE

MERGER (A081)
It has always been anticipated that the ‘Indian-equivalent of the US-based e-commerce
company Amazon’ would be formulated particularly in the EduTech industry. The Edutech
industry, specifically in a rapidly developing economy such that of India, has the most room
for abnormally excessive extension given these highly optimal conditions.
 With the largest population in the world, extistence of mass poverty and
uneducation that has so deeply ruptured the soul of our economy through ages
sowing seeds of irreversible damage and distress, education industry is endowed with
numerous oppurtunities to expoilt the massive sustainable development growth
potential in this field.
 India not only has one of the largest youth-force figures with over 580-million in the
age bracket of 5-24 and over 250 million school going students, which is more than
any other country, but it also has the largest English-speaking population that
catalyses the deliverance of globalised and qualitative educational services.
 With 100% FDI (automatic route) allowed in the educational sector, the Government
of India has curated, over the course of the last few years of technological dominance,
other countless bills such as the “National Accreditation Regulatory Authority Bill
for Higher Education” and Foreign educational institutions bill, to furnish EdTech
with the most conducive habitat for thriving.
This brings us to one of the most revolutionary deals of the year; Byju’s acquisation of
Aakash Educational Services Limited for approximately 1Billion US-Dollars, via a
strategic merger. This stock-and-cash deal has been the biggest in the education space
uptil now. It brings together two of the largest and most-trusted education brands in
India -combining Aakash’s pedagogy expertise in the test-prep segment with Byju’s

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content and tech capabilities. After the integration, Byju’s will make further
investments to accelerate Aakash’s growth.
The financial advisor for Byju’s on this transaction was EY while for AESL it was
exclusived advised by Phoenix Advisors.
To effectively analyze it’s decisions and executive methodology we take a look at some of
it’s past and ongoing prime transactions,
In January 2019, It acquired a US-based Osmo, for $120 million,a maker of educational
games for children aged 3–8 years. Followed by an Indian startup WhiteHat Jr for $300
million. September 2020 marked the acquisation of virtual labs simulation startup LabInApp.
Mumbai-based doubt clearing platform Scholr was taken over in the February of 2021. In
July 2021, a $500-million cash-and-stock deal roped in the US-based kids learning platform
Epic which was a potrayal of foray into the overseas market, from where it anticipates an
annual revenue of $300 million. The last prey to it’s capitalist claws was the Singapore based
higher education platform Great Learning at a cost of $600 million and an after-school
learning app Toppr.
This merciless acquisation spree of Byju’s calls for a greater understanding of their strategic
motives and key aspirations.
In in a nutshell, Aakash Institute, an offline-based coaching class flourishing with over a
hundred centres all across India took a great hit during the onset of the Coronavirus pandemic
in 2020. The period simultaneously inaugerated the glorious era for the Edutech industry
through complete switch unto online learning, skyrocketing demands for Byju’s products and
platforms. Sequencially, the profits which flowed from offline to onlince education industries
indirectly attracted investments from these gaints who could save them from the brink of
bankruptcy. This shifting of educational ecosystem has had everlasting, long-term
implications on the overall conductance of the educational industry.
KEY ASPIRATIONS AND GLOBAL IMPLICATIONS

 Revolutionary complete co-integration of the Technology and the Education sector

with holistic learning made possible through greater emphasis on graphical, visual
animational and videographic teaching
 Permanent changes
in offline teaching
where it will
incorporate the role of
gadgets and techology
even in an Offline
environment.
Reliance on specially
designed softwares
like MsTeams, Google
functions etc for
efficient and effective
learning

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  The New Normal-Hybrid Model; A shift in the prime deliverance method of
education from offline to a hybrid model that would integrate the benefits of online
and offline learning both, while weeding out the shortcomings of either.
 Convenience and flexibility; 10 times easier accessibility and convenience of learning
whatever we want, from wherever we want and at whatever time is convenient for us
along with the availability of offline coaching
 EduTech-Money-making business? The increasingly lucrative nature of the EduTech
attracts investors aiming solely at money-making, incentising making of models and
policies not particularly benefial for the welfare of the society but for monetary
benefits.
 Huge jump towards quality education; The whole interactive form of learning will
boost curiosity and encourage students to focus better on cognitive and
understanding-based learning.
 Growth and Employment issues for faculty; Teaching faculty may face great
competition and recession owing to the facility of recording, sharing and learning
from filmed videos. Top professors will peservere while the averages may have to
improve their game. There may be a wide division between teaching & doubt-solving
faculty.
 National economic Growth; EdTech industry in India is estimated to grow over 70%
in the next decade, multiplying not only it’s share in GDP but also generating double
the employment right now for digitally-skilled aspirants.
 Technological dominance over offline teaching and high dependence;
 Byju’s scalability
 Better classification and Pricing
CONCLUSION AND SUMMARY (A083)
The market size for EdTech in India is projected to reach USD 3.2 billion by 2022.and USD
10.4 billion by 2025. Definitely, the digitisation of education coupled with policy impetus
through the NEP has fast-tracked the growth of EdTech in India in the last fiscal year.
Currently, this growth is largely concentrated around the EdTech giants like Byju’s and
Unacademy who have led the fundraising as well as consolidation. The growth efforts are
carried out mainly through expansion (by way of product offerings to customers) or through
consolidation (by way of acquisition of EdTech startups).

Today, the edtech industry has largely two arms: test prep and skill development. Byju’s
buying of Mumbai-based edtech startup WhiteHat Jr for $300 million last year was a deal in
the latter category. But test prep is a bigger market. So not just Byju’s, but Aakash
Educational Services was also looking to expand into newer markets, while the former
wanted a share of the test prep space.

Byju’s challenge is of a different nature. Byju’s, on the virtue of its stupendous funding,
requires growth and scale. But the same growth and scale cannot be found solely in the
edtech domain. So, it is in a curious position and it open to explore it’s options. It wants to
grow, but is made to defend its existing market share, rather than increasing it. Aakash gives
Byju’s that avenue. But how far it keeps finding such avenues, only time will tell.

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BIBLIOGRAPHY
https://aws.amazon.com/solutions/case-studies/byjus/
https://en.wikipedia.org/wiki/BYJU%27S
https://www.aakash.ac.in/blog/what-is-so-unique-about-the-teaching-methodologies-of-
aakash-institute/
https://www.fortuneindia.com/enterprise/why-byjus-is-buying-aakash-educational-services/
105367

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