Crisis-hit Aakash Educational Services Ltd (AESL) thought a ₹250-crore rights issue would be its big reset after senior exits and a swing to losses in FY23. The test-prep chain, once a profit engine for Byju’s, needs fresh capital to steady operations and fund growth.
The board opened the first ₹100-crore tranche to existing investors, including all major shareholders, such as Think & Learn Pvt. Ltd (TLPL), wiring their proportional amounts. However, AESL has now put TLPL’s ₹25-crore allotment on hold, stating that the funds do not comply with Foreign Exchange Management Act (Fema), the Companies Act, and External Commercial Borrowings (ECB) rules.
Mint explains what that dispute means for the rights issue itself and for TLPL’s shrinking stake in Aakash, a key asset caught in the middle of Byju’s insolvency.
How Aakash got here
The ₹250-crore rights issue follows a months-long legal tussle over Aakash’s plan to raise fresh capital through a shareholder offer. The fundraise was challenged by Byju’s, which acquired Aakash in a cash-and-stock deal worth about $950 million in April 2021, and one of its creditors.
Ranjan Pai’s Manipal Group now holds about 58% of Aakash, even as the engineering and medical entrance-test chain grapples with leadership churn and uncertainty linked to Byju’s insolvency proceedings. The rights issue plan was opposed by Byju’s parent, Think & Learn, and its US-based lender GLAS Trust Co., but the petitioners failed to secure interim relief at the National Company Law Appellate Tribunal (NCLAT) in late October. The Supreme Court later declined to admit civil appeals against those orders, effectively clearing the way for Aakash to proceed with the shareholder-approved rights issue and related capital-raising steps.
Even as the money began to come in, the C-suite was in a state of flux. Chief financial officer Vipan Joshi left on 31 October, about two months after chief executive officer Deepak Mehrotra resigned in August, underscoring a rapid succession of top-level exits. Mehrotra has been succeeded by Chandra Sekhar Reddy Garisa as managing director and CEO from 19 August; Garisa most recently headed Claypond Capital, Pai’s family office.
Why TLPL’s ₹25 crore is stuck
TLPL, the parent of Byju’s, is currently undergoing a corporate insolvency resolution process. Its resolution professional had unsuccessfully opposed the Aakash rights issue before the NCLT, NCLAT and the Supreme Court. Despite that, TLPL moved to exercise its pro-rata rights by depositing ₹25 crore in the issue.
Subsequently, former promoter Riju Ravindran filed an application before the NCLT, Bengaluru, alleging that TLPL raised the ₹25 crore by issuing ₹100 crore of debentures under a structure that may breach Fema, the ECB guidelines and the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019. National Company Law Tribunal (NCLT) is examining these allegations. On Aakash’s insistence, the RP shared the debenture subscription agreement between TLPL and Byju’s Alpha Inc., a Delaware-incorporated investor, along with a legal opinion asserting that the subscription monies complied with Fema.
After reviewing multiple legal opinions, Aakash’s board decided to defer allotment of shares to TLPL until the NCLT rules on the structure. The ₹25 crore is being parked in an interest-bearing account pending a final decision, while AESL has also indicated it may launch a second ₹140-crore rights issue in due course. Two persons familiar with the company’s operations confirmed that TLPL’s funds are parked separately and stated that this arrangement could have wider implications for the current rights issue.
The second person said the board considers the ₹100‑crore rights issue “closed for all practical purposes”, with only TLPL’s portion pending. “It’s closed except for waiting for clarity from the court, as there are some conflicting opinions on whether we can take their money or not,” this person said.
Archana Balasubramanian, partner, Agama Law Associates, said that ECB guidelines, while currently liberalized, do not permit the usage of borrowed funds for reasons other than business expansion, infrastructure expansion, etc. Similarly, speculative investment and investment in equity through the ECB mode is not permitted, she added.
“However, if the investment is to fund infrastructure activities of a wholly owned subsidiary, that may be treated differently. The intention of the law appears to be to prohibit speculative dealing in equity and not stone-wall genuine business expansion,” said Balasubramanian.
Is the rights issue technically ‘on hold’?
Lawyers Mint spoke with say that parking TLPL’s contribution does not, by itself, resolve the core question: whether a rights issue can be treated as complete when one shareholder has subscribed but cannot be allotted shares because of a legal bar on its funding route.
“If the subscription to a rights issue faces a legal impediment for even one shareholder, the issue in its present form should not go through,” said an arbitration and insolvency lawyer who advises clients in NCLT matters, speaking on condition of anonymity.
The lawyer added that a rights issue, by definition, is made to all existing shareholders on a proportionate basis, and hence can’t be designed in a way that one identified class of shareholders is effectively disabled from participating while others are free to subscribe and walk away with a larger stake.
“That creates an imbalance by design and undermines the very character of a rights issue,” the lawyer added.
The lawyer also pointed out that whether a shareholder ultimately chooses to exercise or renounce its rights is a commercial call, but all shareholders must at least have a legally viable path to subscribe.
If an investor is willing to take up its rights, tenders the money, but cannot be allotted shares because of a legal restriction on the source of funds, “then in substance it stops being a true rights issue and begins to look like a selective or preferential allotment in favour of those who could participate”, the lawyer said.
Hardeep Sachdeva, senior partner, AZB & Partners, said that in the present scenario, the mere fact that one shareholder’s subscription to a rights issue is kept on hold should not invalidate the entire issue itself. The company should be entitled to proceed with allotment to other shareholders, subject to necessary approvals, including that of RP and the monitoring committee, Sachdeva said.
“Such dilution is not prima facie unlawful, NCLT will examine whether it was carried out in a manner consistent with the IBC (Insolvency and Bankruptcy Code), the Companies Act, and the principle of equitable treatment of stakeholders,” added Sachdeva.
Apart from this, Sachdeva of AZB & Partners, pointed out that if a shareholder argues oppression or mismanagement, the tribunal typically asks whether the process was transparent, whether regulatory bars such as Fema restrictions were genuine, and whether value destruction was avoidable.
“Technically, a fresh rights issue can be launched during CIRP (Corporate Insolvency Resolution Process), but prudence suggests awaiting clarity from NCLT on the earlier subscription structure. Otherwise, the company risks compounding disputes and undermining confidence in the resolution plan,” he added.
Who is Beeaar Investco, and why it matters
Two people familiar with Aakash’s cap table said Beeaar Investco Pte. Ltd, which holds about 16% in AESL, is a Singapore-registered vehicle through which Byju Raveendran retains an economic interest in the company. The board has cleared Beeaar’s proportional participation of roughly ₹16 crore in the ongoing ₹100‑crore rights issue, even as TLPL’s ₹25 crore remains parked pending NCLT scrutiny of its funding structure.
Raveendran’s links to Aakash run deep. Pai first backed Byju’s through Aarin Capital in 2011 and later doubled down on Aakash in 2023–24 by buying out debt and converting it into equity. A CARE Ratings report dated August 2025 notes that Raveendran holds 41.49% in AESL through TLPL and Beeaar Investco Pte. Ltd and continues on the AESL board, even though, according to AESL and MEMG management, he currently has no role in day‑to‑day operations or treasury decisions.
The person aware of AES’s operations, as quoted earlier, added that Beeaar Investco’s shares are effectively ring-fenced for now. “Beeaar Co’s shares are with Byju (Raveendran), but they’re under litigation with (investors from) Qatar and us, along with Byju, for those shares. So he has no control to sell or liquidate them till the litigation ends,” the person said, requesting anonymity.
With Think & Learn now under insolvency, Aakash itself has become a highly contested asset. The NCLT process has drawn competing bids from Pai’s Manipal Group, which already controls about 58% of AESL, and from Ronnie Screwvala’s upGrad.
Screwvala, whose edtech firm is focused on higher education and upskilling, has clarified that upGrad isn’t eyeing the K-12 segment.
“upGrad wishes to clarify that it is not in the K-12 sector, nor is our interest there; but there are assets in Think & Learn that are in the Higher-Ed space, as also where young learners/college graduates aspire to learn more, and we would be focused on those assets,” Screwvala had said in an earlier statement.
This has turned Aakash’s ₹250-crore rights issue into a proxy battle for what remains of Byju’s, with its key subsidiaries, including Aakash and Great Learning, now at the heart of the insolvency resolution fight.
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