Coaching giant Aakash Educational Services (AESL) is looking to raise funds through selling a part of its equity, CEO and MD Deepak Mehrotra told FE on Wednesday.
“We are currently exploring the option of offloading some equity stake to raise funds. Discussions in this regard are at a very early stage at this moment,” Mehrotra said, declining to specify what percentage of stake the company is looking to sell. He said that Aakash would need over Rs 500 crore to operate its business and meet expansion plans.
He said that the coaching industry is currently undergoing a period of consolidation, and the big brands would need to take major steps to sail through this period.
In the next year and a half, Aakash will likely be able to fund expansion through internal accruals, Mehrotra said. “But in the interim, there has to be a certain amount of infusion of capital or debt to go for. And that’s where the board is taking a decision,” he said.
In the current academic year, Aakash is aiming to open 125 new centres, on top of the 315 that it currently operates. For this, it would need around 800-1000 more teachers, along with the infrastructure.
According to industry sources, Manipal Health Systems is the largest shareholder of AESL with a 39.05% stake. It is followed by Think & Learn (parent of Byju’s) at 25.75% and Beeaar Investco Pte at 16.09%.
Earlier this month, AESL had told the National Company Law Tribunal (NCLT) that it needs urgent funds in order to survive and sustain its business.
It had urged the tribunal to set aside a previous order that had prevented the coaching centre operator from amending its Articles of Association (AoA).
According to unaudited MCA filings, Aakash Education clocked a profit of Rs 330 crore in 2022-23. It is likely to report an operating revenue of Rs 2,325.1 crore during the year. Its results are yet to be officially filed.
Meanwhile, on Wednesday, Aakash launched an advanced programme for JEE preparation under the name Invictus. This programme would have 500 teachers and will run across 25 cities. It will expand to more cities next year.
Recently, some of the centres of Aakash’s rival FIITJEE have closed owing to mass resignations of several teachers due to non-payment of salaries. Many of these teachers have joined Aakash’s Invictus.
Mehrotra said that everybody is entitled to fair compensation for the work they do.
He also said that the course of Invictus has been in the works for over 5 months and is not an overnight phenomenon.
The transition of teachers is being witnessed now as they typically change their jobs between the end of January and March when their syllabus has been completed and students sit for their exams.