The Successful Partnership between Ramdev and Balkrishna

While Ramkrishna Yadav, popularly known as Baba Ramdev, is the mascot of the multi-million empire of Patanjali Ayurved, his number two, Acharya Balkrishna, is the key operative in the company. Ramdev and Balkrishna founded the Divya Yoga Mandir Trust in Haridwar in 1996, and they set up Patanjali Ayurved in 2006. Ramdev’s pupils initially helped set up Patanjali Ayurveda as they loaned him seed fund for the company. Fast forward to 2012, and the company posted a turnover of $63 million, which by 2015–2016 had risen to $700 million. 

Balakrishna, whose parents were Brahmins and Nepalese immigrants, now owns 94% of the company and is its Managing Director. Undoubtedly, he is a close aide of Ramdev’s. Balakrishna was also voted one of India’s 50 Most Influential People in 2020. According to Forbes India, Balakrishna is India’s third-youngest billionaire as of 2020, with a real-time net worth of $2.3 billion.

Selling Swadeshi and Marketing Nationalism

Before entering the business world, Ramdev established himself as the de facto Yoga Guru of India. He showed the actual value of this traditional art and his desire to bring it to the general public. With years in the making, Ramdev built the brand of Patanjali Ayurved on the heightened sense of Swadeshi, increasing popularity of yoga, and the inherent by-product of these – nationalism.

Over the years, Ramdev has transformed Patanjali Ayurved into an Indian multinational and one of the biggest FMCG companies based out of Haridwar, a critical religious spot for North Indian Hindus. To create his market, he spurred an awakening among the consumers with the call for Swadeshi nationalism to promote herbal and Ayurvedic products to counter the flight of money apparently “looted” by international MNCs operating in India.  

Regulatory Framework for Mergers and Acquisitions

The Companies Act, 2013

The Companies Act is the primary law applicable to all companies registered in India. All business transactions, including mergers and acquisitions, must comply with the Companies Act of 2013.

Securities Laws

The securities in the Indian market are subject to the rules and guidelines issued by the Securities and Exchange Board of India (SEBI). M&A transactions are also dealt with within SEBI’s Substantial Acquisition of Shares and Takeovers amendment of 2018.

Foreign Exchange Management Act (FEMA), 1999

Foreign Exchange Management Act (FEMA) guidelines state that any exchange that intends to settle mergers in India must abide by FEMA guidelines. FEMA guidelines also require the supervision of full-time responsible persons such as administrative staff and secretaries who are members of the companies, as the companies involved in such cross-mergers have a testamentary liability.

Major technology acquisitions in recent years: Flipkart, eBay and Myntra

In 2017, Flipkart raised $ 1.4 billion from global technology leaders eBay, Tencent and Microsoft, announcing a merger with the Indian branch of eBay. eBay invested $500 million in cash and sold their business to Flipkart in exchange for an equity stake in the e-commerce giant. In addition, Flipkart acquired Myntra in 2014 for $300 million. The move consolidated Flipkart’s position in the e-commerce market and placed it on the global map of tech start-ups that “made it big.”

Glance through a bit of history of Byju’s and Aakash

Let us take a quick look at the journey of Byju’s and Aakash so far for us to get a better perspective of the deal and the road ahead.

A brief history of Byju’s Learning App (Think and Learn)

Byju Raveendran, the founder CEO of Byju’s was born into teacher parents and raised in Azhikode, a small, humble town in the Kannur district of Kerala. When Byju Raveendran was working as an engineer with a shipping company based in the UK, he started to help his friends prepare for the CAT exam, an entrance exam for getting into the best b-schools of India. To test himself out of curiosity, Byju also gave the exam and secured 100 percent in his first attempt. Surprised and thinking it was a fluke, he attempted once again. Again, 100 percent score! Maybe that was the first big turning point in his life.

Though he secured a score others would die for, Byju decided not to enter into India’s finest graduate programs known for their cut-throat competition and minuscule admission rates. Soon the two friends who wanted him to tutor them for CAT turned into 4, and then 8, all of a sudden 16. Between 2006 and 2011, Byju’s tutoring sessions went from 40 students to over 1,000 at crowded venues across various metro cities. By 2010, over 1,200 aspiring MBA applicants fought their way into this popular course through his classes.

An aha moment occurred for Byju when he realised that many of his college graduate students were struggling in math and science from a foundational perspective. He felt that the students didn’t have a core understanding of logic; their entire schooling was focused on exam grades, not learning the concepts and fundamentals. Pain point identified, the next big turning point for Byju.

“I was a teacher by choice and an entrepreneur by chance.” – says Byju Raveendran. In 2011, Think and Learn (Byju’s learning app’s parent company) was launched by him, and his wife and co-founder, Divya Gokulnath. Byju realised if he could raise the funds, he could create, package, and deliver the best educational content for students across India to solve the identified pain points because he had an uncanny passion and knack for teaching ideas and concepts the way which would later revolutionise such coaching.

He correctly identified the need for a product and platform that would appeal to the parents of the students, who prioritise quality education for their children over anything else. That meant that Byju’s would have to beat out the incumbent players in the conventional tutoring and coaching space that many traditional households were already paying for.

In 2015, he launched Byju’s – The Learning App which currently has over 80 million students cumulatively learning from the app, 5.5 million annual paid subscriptions, and an annual renewal rate of 86 percent. This was achieved by strategically pivoting from exclusively serving aspiring graduate school applicants to the larger untapped market: 250 million+ K-12 grade students in India.
In place of the traditional model of integrating physical classroom environments into digital tools or platforms, Byju’s decided to disrupt the outside-the-classroom digital experience. By investing upfront in content development and curation focused on the core subjects of Math, Science, English language, and Arts, Byju’s did develop a massively entertaining and engaging library of lessons in fundamental subjects for every student in the K-12 segment and undergraduate students aiming for admission to India’s premium graduate schools.

Rather than just offering a digital version of outdated learning methods/styles as has been the trend till recently, Byju’s strategy is to embrace everything that makes learning fun, entertaining and relatable. For example, students would learn about gravity via a neatly assembled graphic video of the earth, moon’s orbit, and an instructor walking quickly but articulately through an example of the moon’s relationship with the earth. Byju’s methods ensure that complex concepts and theories get delivered in easily comprehensible and digestible forms.

Byju’s co-founder Divya Gokulnath declared a $370M in revenue for the year ended 31st March 2020. The elite venture capital investors across the globe have started noticing Byju’s potential and strengths, and funds have started flowing in easily. Funding rounds have so far come from some big investor names like Tencent Holdings, Sequoia Capital, Qatar Investment Authority, Chan-Zuckenberg Initiative, Owl Ventures and Mary Meeker which in turn has boosted Byju’s valuation and enhanced its brand.

All these firms are chasing the first true EdTech company that has successfully reached such great product-market traction quickly. With the support and strategic reach of these powerful firms, Byju’s stands formidable in its quest to gain international access.
With lots of cash on hand, BYJU’s has been aggressive in constantly keeping the brand top of mind of households by roping in the likes of Shah Rukh Khan, Virat Kohli, Lionel Messi. Some of the big sports celebrities sport the Byju’s jersey in various Indian national matches of different sports which reach large numbers of viewers across India and the globe.

A quick history of Aakash Educational Services Ltd

From a tiny brick and mortar coaching centre started in Delhi in 1988 to a Rs 1,200-crore-plus annual turnover, Aakash Educational Services (AESL) has dreamed big ever since its launch.

Starting a coaching business was a novel concept when it started but founder J C Chaudhry ensured that the company stayed relevant to changes and trends in the educational needs of students. In 2006, Aakash Chaudhary, his son, also joined ASEL after graduating from Harvard Business School.

Aakash Educational Services has more than 215 test prep centres, which coach 250,000 high-schoolers and prepare them for the hard-to-crack competitive exams to enter India’s top engineering and medical schools.

When Aakash wanted to expand and was in need of funds, there were plans to go IPO. When the IPO plans took a backseat, Blackstone picked up a 37.5% stake in AESL for $184 million in October 2019, valuing Aakash at $480 million.