About the Company: It is a diversified and integrated technology-enabled provider of education products, services, content, and infrastructure, with a presence across the education value chain.
Since it commenced operations in 1996, it has diversified its operations across six business segments, spanning the education value chain:
a) test preparation and training services, generally referred to as
a) test preparation and training services, generally referred to as “test prep”, conducted under our well-recognized brand Career Launcher;
b) publishing and content development, conducted under our brandb) publishing and content development, conducted under our brand GK Publications;
c) integrated business, marketing, and sales services for corporates, conducted under our brand Kestone, including event management, marketing support (including digital marketing support), customer engagement, managed manpower and training services;
d) vocational training programs implemented by us under Government schemes in various States across India;
e) integrated solutions to educational institutions and universities, including business advisory and outreach support services, under our brand CL Media, as well as research incubation and support services conducted under the brand Accendere; and
f) K-12 schools operated under our brand Indus World Schools.
Issue Opens on: Mar 20, 2017
Closes on Mar 22, 2017
Issue Type: Book Built Issue IPO
Issue Size: 4,760,000 Eq. Shares of Rs 10 aggregating up to Rs 238.95 Cr
Fresh Issue of 2,180,119 Equity Shares of Rs 10 aggregating up to Rs [.] Cr
Offer for Sale of 2,579,881 Eq. Shares of Rs 10 aggregating up to Rs [.] Cr
Face Value: Rs 10 Per Equity Share
Issue Price: Rs. 500 – Rs. 502 Per Equity Share
Minimum Order Quantity: 29 Shares
Lead Manager :Kotak Mahindra Capital Co.
Registrar: Karvy Computershare Private Limited
17th March – Anchor Investors
20th March – Offer Opens
22nd March – Offer Closes
29th March – Unblocking of ASBA
30th March – Credit to Demat Accounts
31st March – Listing on NSE & BSE
Objects of the IPO:
1) The proceeds of the issue will be used for acquisitions and other strategic initiatives
2) Repayment of loans, to fund working capital requirements and
3) for other general corporate purposes.
Satya Narayanan R
R Gautam Puri
Education Sector in India
The education sector in India can be broadly classified into the formal and non formal categories.The formal category comprises K-12 and higher education, up to post-graduation, and is subject to high levels of regulation in India, at the Central and State Government level as well as through the various curriculum boards and relevant nodal agencies that manage the various streams of professional education.
Another key factor governing the formal education category is that educational institutions in India cannot be set up on a ‘for profit’ basis. Business structures such as partnerships and private and public companies are prohibited from setting up educational institutions in India. Educational institutions in India are either set up by Government entities or by private sector entities such as a society registered under the Societies Registration Act,1860, a public trust registered under the Indian Trust Act, 1882, or under corresponding State laws such as the Bombay Public
Trust Act, 1950, or a ‘not for profit’ company set up under the Companies Act. The key common feature among all these entities is that profits cannot be distributed to the provider of capital, either as dividend or otherwise.
On the other hand, the non-formal category largely comprises segments like pre-schools, coaching (also known as test prepor supplemental education ), vocational and skills training, e-learning and academic publishing, which enjoy a lesser degree of regulation.
As education is on the concurrent list of the Indian Constitution, the sector is governed by both the Central and State Government. The Ministry of Human Resource Development plays a pivotal role in governing the education sector, through its two nodal agencies:
- the Department of School Education and Literacy, which is responsible for disbursing Central grants to States for building educational infrastructure at the K -12 (kindergarten to grade 12) level in India; and
- the Department of Higher Education, which is responsible for governing higher education (graduation, post-graduate and professional) in India.
Market Size of Publishing Industry
The Indian book publishing industry is valued at 244 billion as of 2015 -16, with the academic segment accounting for the largest share at 202 billion (approximately 83%) and the non – academic segment accounting for the balance 42 billion (approximately 17%).
K -12 Industry
K -12 education is part of the formal education system in India, regulated by the Central and State Governments, primarily by the respective State Government through local bodies such as municipal corporations and State -level education departments.
The K-12 education structure in India can be broadly classified on the basis of management, level of education; and board of affiliation, i.e., including the CBSE, Indian Certificate of Secondary Education and International General Certification of Secondary Education. Affiliation with a board is voluntary for schools, except when the school is full or partly aided by the State Government; in that case, the school must be affiliated with the respective State board.
Under the umbrella of its brand Career Launcher, it offers reputed test prep courses for MBA, Banking and Staff Selection Commission and Law entrance examinations, as well as courses for Engineering, Medical, Civil Services, Grade VIII-XII Tuitions and International Education (GRE, GMAT and SAT), among others. During the six months ended September 30, 2016, it has 53,892 enrolments in test prep courses (including 15,491 online enrolments, referring to enrolments through its website, and 38,401 offline enrolments).
Under its brand GK Publications, it publishes niche test prep titles for popular professional and entrance examinations in India, including for Engineering, GATE, Civil Services and Banking and SCC entrances. During the six months ended September 30, 2016 and for fiscal 2016, it has released 1,851 and 1,679 titles, respectively, and sold over 0.58 million and 1.06 million copies, respectively. During the six months ended September 30, 2016 and fiscal 2016, it sold 751 and 817 titles, respectively, through the digital mode, comprising 40.57% and 48.66% of its title sales during these respective periods.
The company undertakes vocational training programs, as an implementation agency, under project tenders issued by the Central and various State Governments in India. During fiscal 2016, it had 6,663 enrolments in Government vocational training programs of varying durations, across States including Gujarat, Jharkhand, Chhattisgarh, Madhya Pradesh, Odisha and Uttar Pradesh.
It provides infrastructure and education services and license its brand Indus World School, to K-12 schools providing English-medium education. As on September 30, 2016 and March 31, 2016, 2,654 and 2,671 students, respectively, were enrolled in eight Indus World Schools, across the States of Punjab, Delhi NCR, Madhya Pradesh, Chhattisgarh, Maharashtra and Haryana.
Diversified and integrated education products, services, content and infrastructure provider, with pan-India presence and a focus on knowledge -creation.
Develop and derive synergies from publishing and content development business;
Reputed courses, particularly in the aptitude based test prep segment;
Asset -light, technology- enabled business model;
Strong brand equity;
Track record of successful inorganic expansion; and Professionally qualified, experienced and entrepreneurial management team, and quality human capital.
The auditors in the annual report quoted that the company lacks a comprehensive procurement policy for purchase of goods and services. This results into buying unnecessary or lower quality goods or goods at unreasonable prices.
A large portion of its operating revenues comes from its test preparation business. Due to lower success ratio, the organistion is unable to attract more candidates which will badly affect its business & prospects. This subsequently hampers its brand image.
The company has granted unsecured loans to the companies and other parties covered in the register maintained under Section 189 of the act, and as per the auditors, 2 out of these loans are damaging to the company’s interests as it is not charging any interest on them.
The competitive and growth strategies of the company are at execution risk which may affect its performance.
Being a part of a highly fragmented and competitive market, any failure on its part to effectively compete may affect its profitability and market share.
External Risk Factors
Political, economic or other factors beyond our control may have an adverse impact on our business, results of operations and prospects.
Changing laws, rules and regulations and legal uncertainties, including adverse application of corporate and tax laws, may adversely affect our business, results of operations and prospects.
Significant differences exist between Indian GAAP and other accounting principles, such as the International Financial Reporting Standards (“IFRS”) and U.S. GAAP, which may be material to investors’ assessment of our financial condition. Our failure to successfully adopt IND (AS) may have an adverse effect on the price of our Equity Shares.
Performance : The company has (on a consolidated basis) posted turnover/net profits of Rs. 222.08 cr. / Rs. 14.57 cr. (FY13), Rs. 229.81 cr. / Rs. 15.34 cr. (FY14), Rs. 285.08 cr. / Rs. 21.23 cr. (FY15) and Rs. 296.69 cr. / Rs. 21.687 cr. (FY16). For the first half of the current fiscal ended on 30.09.16 it has earned net profit of Rs. 12.92 crore on a turnover of Rs. 160.70 cr.
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