Aakash Educational Services Limited (AESL) that was acquired by Byju’s last year, is set for a 20-30 percent growth in revenue year-on-year, says Aakash Chaudhry, Managing Director and Co-Promoter at AESL.
Chaudhry, in an interview with Moneycontrol, said AESL is confident to clock over Rs 1,250 crore of business in Fy22, and is now focusing on only physical and hybrid test prep business. It's online business, including meritnation, a firm it had acquired in digital tutoring space, has fully transitioned from AESL to the parent Byju’s.
He also spoke about the company's expansion plan, and how Byju's is backing his vision, and growth plan for AESL. Excerpts from the interview:
What has changed for Aakash as a company after takeover by Byju’s?
We have been on our track and this year was fantastic. On physical and hybrid education, we are absolutely going strength to strength. The culture for which the merger happened has lived its promises. We are adding a lot of strength to the entire Byju’s ecosystem. It’s a wonderful integration.
What has changed is Aakash, as an education venture, was earlier offering offline, hybrid and online programmes. Purely online or digital programmes have been taken out from Aakash’s kitty and logged in to the Byju’s kitty.
The entire digital portfolio, including the video lecture, online tutoring and live tutoring, has transitioned to Byju’s. We had acquired meritnation.com, and that entire business too has gone to the digital unit of Byju’s. We thought this product will be better served in that ecosystem. From three offerings earlier, we are now focusing on two, physical and hybrid.
At the time of the deal with Byju’s, Aakash Educational Service Ltd (AESL) was touted to have an annual revenue of Rs 1,000 crore to Rs 1,100 crore. How has the business grown through the last one year?
In FY 21, we had made over Rs 1,000 crore revenue and was profitable. In Fy22, we hope to make it at least 20-30 percent higher than the previous fiscal. We hope to cross our Fy20 revenue numbers (pre-pandemic) in Fy22. In Fy20, we had around Rs 1,220 crore of revenue. I am talking about AESL alone.
With the centres we are adding and the expansion we are making, we are very hopeful of catapulting our revenue in FY23. The overall support from Byju’s, the sales support from Byju’s on the ground, the robust marketing and outreach etc will help us achieve a larger revenue growth in Fy23.
And, all this happened despite your digital business, including meritnation, transitioning to Byju’s.
Yes, despite the pure digital business going to the parent company. Our digital business, including meritnation.com, had made around Rs 100 crore-plus business earlier for AESL.
It was aggressive marketing and outreach, you said. Are you stepping on the gas further on these?
We have never done aggressive TV campaigns previously. Now, we have. We have been able to leverage digital marketing. We have been able to marry the digital and non-digital spend very well and that is giving us a lot of growth confidence.
What is your parent company Byju’s guidance for you?
Its very clear – go out and reach out to as many students as you can. Do not worry about investments required for the expansion. The parent company will support our vision and growth path. The parent company is saying you understand the market and business and we shall support you with investments, marketing, sales and let’s grow together. That’s the thesis from day one. We are fully engaged with Byju’s team and completely aligned.
You mentioned about physical expansion. Please elaborate.
In the ongoing academic year for us (October 2021 to September 2022), more than 75 centres will be added. By 2024-25, we hope to have around 500 centres, almost double of what we have. We are going deeper into the cities and expand the footprint in smaller towns. Every market has some dynamics and we are trying to capture.
In larger cities like Mumbai or Delhi, we can open multiple centres. We may have smaller centres in pockets of the city beyond flagship centres. We are expanding in Chennai, Kolkata and Bengaluru. We are also looking at state capitals. We have kept the model asset light and not building physical infra as we expand.
How is the expansion going to help Aakash and the broader Byju’s?
The smaller town, we believe, lacks the amount of rigour of the test prep segment. We have got feedback that families want kids staying back if they get good facilities, test prep offerings. Going forward, as we have a penetration in smaller cities, we will be representing the complete portfolio of the larger company.
You are going to smaller towns where test prep is absolutely fragmented. Are you going to acquire smaller players there?
Right now, we are not looking at acquiring, but looking to organically growing there. Unless a smaller brand wants to join a larger brand for their next phase of journey.
There's a buzz in the market that you may expand to the Middle East.
We have been ready for some time, just that Indian market was keeping us busy. See, Byju’s team is already there in the Middle East, they are serving students in the entire Gulf region. So, it’s a matter of time before we go there as well. May be, next academic year for us (after October 2022), we can explore and add the Gulf region.