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Research4India Fortnightly update on Education Industry

In The Spotlight
IIT classroom content Youtube Education hub to be available on

Contents

News of the fortnight A large spread of the classroom content of the Indian Institutes of Technology (IITs) will now be available over the Youtube. National Programme on Technology Enhanced Learning (NPTEL), an initiative by IITs and ministry of human resource development is readying an offering of 1,200 courses by December. NPTEL currently offers ~450 courses across various disciplines of which 250 are through free video lectures. NPTEL has 9,600 videos of about an hour's duration each for these 250 courses. The subjects range from electronics, mechanical, aerospace to civil engineering. The content is delivered by ~1,400 faculty members from across seven IITs and IISc. Though NPTEL offers its courses free of cost, its faculty members get an honorarium of up to ` 0.25mn for each course which typically consists of 40 video lectures of an hour's duration NPTEL was launched in 2003 as IITs tried to address the huge demand-supply gap of PhDs and scarcity of quality teachers in the country. The HRD ministry came forward with an initial funding of ` 150mn in 2003, another ` 50mn in 2007 and an additional ` 960mn in 2009. It started with pre-recorded lectures on their website, followed by educational channel Eklavya, besides offering online content on their website and DVDs. Investment Activity News and Policy Update Corporate Update Stock Market Update Peer Benchmarking About Four-S Services

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Investment Activity
PE Deals in 2012
Date 15-Jun-12 20-Jun-12 26-Jul-12 Investor(s) Kaizen IFC, Proparco and Mount Kellet Acumen Fund Target Your Kids 'R' Our Kids Educomp Edubridge Learning Private Limited Stake (%) NA NA NA Amount ($Mn) 3.6 50.0 0.3 Business Pre-Schools/K12 Schools Diversified Vocational/Skills Development Stage Growth Late Early

Mergers & Acquisitions in 2012

Date 5-Jul-12 26-Jul-12 26-Jul-12 Acquirer The Indian Public School Ma Foi Strategic Consultants HCL Infosystems Target South Hills Academy Axis-V Edurix Stake (%) 100% 51.0% 100% Amount ($Mn) 10.0 NA NA Target's Business Pre-Schools/K-12 Schools Vocational/Skills Development Content development

PE Investments
Investm ent Am ount (in $m n)
No. of Deals 180.0 160.0 140.0 13 20 18 16 14 12 10 8 6 4 2 0

M&A Deals
Total Transaction Value (in $m n) No. of Deals

60
50

18

9 7

100.0

79.5

In $ mn

In $m n

120.0 80.0
60.0 40.0 20.0 0.0

40

30
20 10

55.6

164.9 2011 2012

0
2011

10.0 2012

10 9 8 7 6 5 4 3 2 1 0

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News and Policy Update
IIT Bombay format accepts common entrance Pearson and Government of Assam launch Vocational skills training in School Government of Assam (GoA) and Pearson today announced a joint initiative to provide vocational skills training for young people in schools in Assam. This public-private partnership (PPP) will serve as a platform for the introduction of the National Vocational Education Qualification Framework (NVEQF), a more ambitious national program to integrate skills, training and qualifications in schools. The GoA-Pearson undertaking is first-of-its kind in India. 89% MBA seats vacant in UP B-schools In yet another indication of the deteriorating standards of education in the the country, nearly 89% of the total MBA seats in the UP have found no takers. Out of 28,000 seats offered by 421 colleges, around 3,300 have been filled. And as far as state capital, Lucknow is concerned, the figures are shocking - the city has nearly 55 management colleges, 29 failed to get a single admission from SEE counselling, single admission has taken place in another 13 colleges while in two colleges, two students each have taken admission. Last year, only 4,373 students were enrolled in MBA as against 32,228 seats in the state. In the past five years, the management colleges have increased by more than four times. Seeing the drop in number of students in B-schools across the country, the All India Council of Technical Education (AICTE) has now imposed a blanket ban on opening of new management colleges. Panel suggests imparting Technical courses through distance learning model A government committee tasked to suggest measures to regulate the standards of distance education has recommended that technical and professional courses, like engineering, be offered through distance learning mode. The All India Council for Technical Education (AICTE) has been resisting opening up technical 3

IIT Bombay gave its nod to the common entrance for admission to the undergraduate programme from 2013 under a format which will admit students having top 20 percentile of their respective boards. The senate approved the IIT council's resolution regarding admission to the IITs based only on rank achieved in advance test subject to condition that selected candidates are in the top 20 percentile of successful list of their boards. However, he said that instead of allowing 150,000 candidates to sit in the advance test, they have sought to restrict the figure to about 50,000 students. The resolution is to be vetted by other IITs too before the Joint Admission Board gives its final seal of approval to the format Central Board of Secondary plans flexible assessment Education

The Central Board of Secondary Education (CBSE) that used to issue blue prints, sample question papers and marking schemes in all major subjects for classes IX and X to provide a model template to serve as a guide for entailing uniformity in assessment, proper coverage of the curricula and validity (and therefore reliability) of assessment has decided to put an end to this practice. The board decided to discontinue with this process after noticing that a large section of students and examiners punctiliously follow these documents, which results in precluding open-ended approach and diversity in expression, style and content. The blue print further micro-categorises items into difficult, average and easy with specific allotment of marks to each category, which again limits the framing of a particular type of question from a particular topic/chapter. Moreover, the release of blue prints and the sample question papers indirectly promotes teaching to the test.

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education to distance learning, arguing this will compromise the quality of education in absence of standards. The panel has suggested putting in place an effective regulatory before opening up technical education to distance learning. The HRD Ministry has accepted the recommendations and asked the AICTE to set up a committee to formulate such standards. Engineering colleges in Gujarat surrender 25 per cent management quota The 40 self finance engineering colleges in Gujarat have decided to surrender their 25 per cent management quota. The decision to surrender the quota was taken as the colleges were finding it difficult to enroll students against the quota. Officials in the education department said that one seat of management quota would be fetching ` 0.2-0.5mn. But this year since no students were available the management has decided to surrender their quota and have requested the Joint Admission Committee for Professional Courses to admit students even on the 25 per cent quota. Officials said that after the first mock round of admission, the college management and JACPC officials found that about 12,000 seats were fallen vacant as there less students against the seats available. There are about 50,000 seats available in the state. CBSE Bill likely to be tabled in upcoming Parliament session A bill seeking to make CBSE a statutory body is expected to be tabled in Monsoon Session of Parliament even as HRD Minister Kapil Sibal has started meeting Opposition leaders over other pending legislations related to reforms in higher education. The passage of the Central Board of Secondary Education (CBSE) Bill will give the Board more administrative and financial autonomy and widen its functioning. The statutory status will enable CBSE to take its own decisions through its board of governors. Besides, its orders will have stringent implications after it becomes a statutory body.

decision in consultation with the ministry on all important issues Corporate Update
HCL Infosystems acquires content provider Edurix educational

IT firm HCL Infosystems has acquired educational content provider Edurix, a move that will help strengthen its education and learning business. Edurix is a part of Attano Media and Education and designs content for the K-12 education segment. The business transfer has been completed and includes transfer of all fixed assets, intellectual property rights (IPR) and human resources of Edurix. The acquisition will help HCL expand the inhouse content capability for HCL Learning and supplement its current offerings across various segments like K-12, higher education and career development centre. This also brings in the capacity to develop and customise content for tablets, dongles and online platforms. Edurix has about 160 employees in its two offices in Mumbai and Chennai. Sesame Street steps into Indian education business Renowned for teaching kids the basics of reading and counting on TV, Sesame Street is moving to create actual schools in India. The company is currently present in Indian market through its "Galli Galli Sim Sim" show aired on kids channels. The company is now venturing into the franchising business for pre-schools and after-school clubs. Sesame Street schools are now being rolled out in Rajasthan and western Uttar Pradesh, following its first preschool in Jaipur. Sesame Workshop aims to have 20 schools up and running by March 2013, with plans for 382 within the first five years Core Education eyes GCC Core Education & Technologies plans to set up quality institutions in the GCC as it sees huge potential for business growth in the region. The Atlanta-based company, which has already established its subsidiary in the UAE Core Education & Consulting Solutions would soon 4

At present, CBSE is a registered as a society, conducting board exams in its affiliated schools. It functions directly under the HRD Ministry and takes
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announce first-ever project to expand its presence in the GCCs Dh238 billion ($65 billion) education sector. The diversified business group plans to invest heavily in the transformation of the regions education segment. Pearson eyes a stake in Manipal UK publishing and media giant Pearson and a few private equity firms have approached India's leading education services company Manipal Global for a stake buy. Manipal is seeking to raise debt and equity to buyback existing financial investors IDFC and Capital International at a valuation in excess of $850 million. Manipal Global, in which technology billionaires Azim Premji and N R Narayana Murthy too are investors, would need about $150 million after it shelved its initial public offering (IPO) plans due to lack of regulatory clarity and bad market conditions. IDFC and Capital International hold more than 12% stake in Manipal Global. Premji Invest, a proprietary investment fund of Wipro Chairman Azim Premji, may also look at a possible exit. Premji, who invested ` 2bn, hasn't converted it into equity shares for an under 5% stake. The company's revenue in the ongoing fiscal is estimated at around ` 12bn with an EBITDA of about ` 3.5bn The company had earlier explored listing the company on stock exchanges after investment banks pitched in with valuations closer to $1.5 billion.

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Stock Market Update

Share Price Performance

Core Education Educomp Navneet Tree House Zee Learn NIIT Ltd MT Educare Aptech Everonn Career Point Compucom Edserv Jetking

Market Cap (`mn) 32,680 22,151 13,340 7,380 6,831 6,232 3,401 3,298 3,018 2,566 878 467 274

Price (In `) 289 154 56 219 26 38 86 68 138 142 11 18 47

1 Week 0.1% 5.7% -2.6% 0.9% -3.3% -9.8% -4.0% -11.9% -25.8% -7.1% -5.9% -12.1% 1.3%

Percentage Price Change 1M 3M 6M -2.8% 3.0% 12.7% 35.3% 18.8% 6.4% -1.3% 1.4% 1.4% -1.2% 1.9% 3.0% 2.6% 27.1% 79.3% -9.7% -14.2% -10.2% -3.4% -22.5% -10.0% -9.2% -23.7% -35.0% -39.7% -50.7% -13.0% -24.5% -47.1% 2.8% -5.5% -30.5% -18.9% -16.4% -57.0% 2.1% -10.5% -21.1%

12M -2.0% -33.2% -16.5% 21.5% -31.7% -51.2% -71.5% -55.7% -77.0% -

Financial Benchmarking
Quarterly Results Q4 FY 12, ending 31st March, 2012
Figures in Rs mn Educomp NIIT Ltd Core Education Navneet Everonn Aptech Edserv Career Point Compucom Zee Learn Tree House Jetking Year Ending March March March March March March March March March March March March Fiscal year 2011-12 2012-13 2011-12 2011-12 2011-12 2012-13 2011-12 2011-12 2011-12 2011-12 2011-12 2011-12 Quarter Q4 Q1 Q4 Q4 Q4 Q1 Q4 Q4 Q4 Q4 Q4 Q4 Revenues Last Year 4,887 3,148 2,977 951 1,339 464 422 197 180 142 79 EBITDA Last Year 2,052 307 1,200 145 518 46 176 64 104 1 13 PAT Last Year 1,457 131 703 79 262 537 115 76 30 0 6

Current 5,136 1,999 4,819 1,181 898 386 77 216 176 203 221 72

% growth 5% -36% 62% 24% -33% -17% -82% 10% -2% 43% -8%

Current 1,381 114 1,678 145 -415 28 -274 93 88 -53 109 5

% growth -33% -63% 40% 0% NA -39% NA 45% -15% NA -58%

Current 615 115 792 38 -630 38 -154 89 16 -77 51 1

% growth -58% -12% 13% -53% NA -93% NA 16% -49% NA -90%

Figures in Rs.`mn Trailing Twelve Months (TTM)

Figures in Rs mn Educomp NIIT Ltd Core Education Navneet Everonn Aptech Edserv Career Point Compucom Zee Learn Tree House Jetking MT Educare TTM Quarter Q4 FY12 Q1 FY13 Q4 FY12 Q4 FY12 Q4 FY12 Q1 FY13 Q4 FY12 Q4 FY12 Q4 FY12 Q4 FY12 Q4 FY11 Q4 FY12 Q4 FY12 TTM Y0 14,913 12,883 16,379 6,086 3,596 1,666 857 796 716 610 772 333 1,272 Revenues TTM Y-1 13,509 12,743 10,912 5,485 4,247 1,920 1,218 786 726 427 392 389 1,051 % growth 10% 1% 50% 11% -15% -13% -30% 1% -1% 43% 97% -14% 21% TTM Y0 4,132 1,282 6,284 1,403 351 223 -85 284 400 -245 420 45 231 EBITDA TTM Y-1 5,443 1,613 3,936 1,263 1,555 204 563 297 398 25 169 98 187 % growth -24% -21% 60% 11% -77% 9% NA -4% 1% NA 148% -54% 24% TTM Y0 1,371 1,086 3,231 804 -676 259 -58 298 112 -276 217 22 128 PAT TTM Y-1 3,405 923 2,250 776 676 938 412 232 120 19 92 67 80 % growth -60% 18% 44% 4% NA -72% NA 28% -7% NA 136% -68% 61% % EBITDA margin 28% 10% 38% 23% 10% 13% -10% 36% 56% -40% 54% 14% 18% % PAT margin 9% 8% 20% 13% -19% 16% -7% 37% 16% -45% 28% 7% 10%

Figures in Rs.`mn

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