mt edu investor presentation q2update 2013 14
DESCRIPTION
MT Edu Investment - growing company with no debtTRANSCRIPT
This presentation has been prepared by MT Educare Limited (the “Company”) solely for use the purpose of Investor meetings. This presentation (including any information contained herein and any information, whether or not in writing, supplied in connection herewith) is strictly confidential. The material that follows is a presentation of general background information about the Company’s activities current at the date of the presentation. It is information given in summary form and does not purport to be complete, is subject to change without notice and its accuracy is not guaranteed. The information has not been independently verified by any third party. Accordingly, no representation or warranty, express or implied, is given by or on behalf of the Company and its affiliates and related bodies corporate, and their respective officers, directors, employees and agents to the accuracy or completeness of the information or opinions expressed herein. To the maximum extent permitted by law, the Company and its affiliates and related bodies corporate, and their respective officers, directors, employees and agents disclaim any liability for any loss arising from any use of this presentation or its contents or otherwise arising in connection with it. This presentation contains statements that constitute forward-looking statements. These statements include descriptions regarding the intent, belief or current expectations of the Company or its officers with respect to the consolidated results of operations and financial condition, and future events and plans of the Company. These statements can be recognized by the use of words such as “expects,” “plans,” “will,” “estimates,” or words of similar meaning. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ from those in the forward-looking statements as a result of various factors and assumptions. The Company does not undertake to revise forward-looking statements to reflect future events or circumstances. This presentation is for information purposes only. It is not intended to be relied upon as advice to potential investors, and shall not constitute an offer or invitation, or solicitation of an offer, to purchase any securities. The possession, circulation or distribution of this presentation may be restricted in your jurisdiction. You are required to inform yourself about and observe any restrictions relating to any such restrictions or an investment by you in the securities of the Company or its subsidiaries. This presentation may not be reproduced or redistributed to any other person and you agree to keep the contents herein confidential. MT Educare Limited came out with its Initial Public Offering (“IPO”) in March 2012 and was listed on the BSE and NSE on April 12, 2012. The Prospectus is available on the website of SEBI at www.sebi.gov.in. Investors should note that investment in equity shares involves a high degree of risk and for details in relation to risk factors, please see the section titled “Risk Factors” on page 11 of the Prospectus. Any decision to purchase any securities should be made solely on the basis of information contained in the Prospectus issued in respect of the Offering and registered with the RoC or the final offering memorandum relating to the securities after seeking appropriate professional advice, and no reliance should be placed on any information other than that contained in the Prospectus or the final offering memorandum.
Disclaimer
2
Index
3
Executive Summary
Key Company Milestones
Industry in Growth Phase
Capturing the Entire Value Chain
Location Count
Key Differentiators
Growth Strategy
Experienced Management Team
Financial Overview and Operating Leverage
Shareholding Pattern
Executive Summary
5
Mahesh Tutorials – now a 25 year old brand; Coaching services being provided by Mr. Mahesh Shetty since 1988 under the brand name ‘MAHESH TUTORIALS’ Operates under three business verticals – School, Science and Commerce; Diversified product offerings catering to students right from Std. VIII to students appearing for Engineering and Medical Entrance Exams (including IIT Entrance), exams for CA course and MBA aspirants Geographical presence in 7 states/union territories including Maharashtra, Karnataka, Tamil Nadu, Gujarat, Punjab, Haryana and Chandigarh Network consists of 138 coaching locations with 226 Centers (Points of Sale) 70,828 students serviced in FY13; Employee and faculty strength of 2,200+ with 1,100+ faculty members, of which 300+ are post graduates Focus on result oriented quality coaching with technology enabled classrooms and digitized content and Emphasis on teacher training through intensive workshops Experienced management team consisting of senior professionals having strong background in academics and rich experience Asset light business model; zero debt with negative working capital Shareholding pattern: ~56% held by Promoter/Directors/KMPs and ~21% held by DIIs/FIIs
Milestones
7
First Branch of Mahesh Tutorials
Setup
1988 2001
Introduction of Science Coaching
for XI and XII
Introduction of Commerce
Coaching for XI and XII
2003 2007
PE Investment of USD 8mn by Helix
Investments Company for expansion in
Mumbai
2008
Centres opened in Karnataka,
Gujarat and Tamil Nadu; Acquisition
of Scholars’ Learning Centres
2009
Introduction of Technology Aided
Teaching (TAT)
2011
Acquisition of 51% stake in Chitale’s
Personalised Learning Pvt. Ltd.
2012
Listing in April 2012; Acquisition of 51% stake
in Lakshya Forum for Competitions Pvt. Ltd. in
Nov. 2012
2013
Inauguration of Mahesh PU College at Mangalore
Large Addressable Market
9
24,418 40,187
75,629
2006-07E 2010-11P 2014-15P
Market Size - Classroom based coaching industry
Rs. Cr
13% CAGR
17% CAGR
Rising disposable income
Increasing household spend
on education
Infra bottlenecks for formal education
Increasing private sector participation
Growth in addressable market
INDIAN EDUCATION SYSTEM
Informal Education
Vocational Education
Formal Education
Open & distance learning
Multimedia in Pvt Schools
ICT in public schools
Play School
Higher Education K-12 Coaching
Classes
The Indian coaching industry is expected to grow from Rs. 40,187 crore in 2010-11 to Rs. 75,629 crore in 2014-15.
Strong structural factors aiding the growth of this sector A large market opportunity No. of Students appearing in various examinations
Source: Crisil Source: Crisil
Source: Websites of JEE, IIT Delhi, AIEEE, MHRD, Annual report of ICAI, Maharashtra Directorate Of Medical Education and Research
1,325,936
1,061,566
769,929
1,065,100
468,240
282,096
135,617
574,259
120,195
100,151
80,077
0 400,000 800,000 1,200,000
MSB Higher Secondary
CBSE Xth
CBSE XIIth
AIEEE
IIT JEE 2011
Com Ent Exams, Mah.
All India Pre Med/Pre-Dental Test …
CA CPT
CA PCC
CA IPCC
CA Final
Business Overview – Capturing the entire Value Chain
11
CA Final
Basic Graduation (B.Com, BMS) & CA IPCC, MBA Entrance
(CAT & CMAT) Entrance Exams – CA CPT, CS
Foundation JEE Mains, JEE Advanced (IIT)
and NEET
Std. XI and XII (Science and Commerce)
Std. V to VIII, IX & X (All Subjects – SSC, ICSE & CBSE)
Business Overview
Science Section Commerce Section Others School Section
XIth and XIIthstandard
Test prep for the engineering and medical entrance examinations (JEE Mains and JEE Advanced, NEET)
XIth and XIIthstandard
CA-IPCC , CA Final, CA-CPT
CS-Entrance
Bachelor degree in Commerce (UVA)
IXth and Xth standard
Maharashtra, Gujarat, Karnataka State Board
CBSE
ICSE
INK (V to VIII)
Coaching for MBA Entrance i.e. CAT, CMAT
Coaching services in Dubai
Government Programmes
Sale of Content under ‘Robomate ‘ brand
12
In the Secondary and Higher Secondary School Pursuing graduate degrees
Undertaking CA examinations.
A coaching services provider for students…
Preparing for various competitive examinations
Geographical Presence
14
v
98 16
13
5
2
31122
2007 2013
Growing No. of Locations
FY/Quarter No. of Locations
Sept 2013 138*
FY 13 122
FY 12 114
FY 11 103
1
3
No. of Locations over the years
* Includes 4 Lakshya locations added w.e.f. April 1, 2013.
Organized and Diversified Player
Large Pool of Quality Faculty
Members
Result Oriented Quality Methods
of Coaching
Corporatized Structure and Experienced
Management Team
No one man show or ‘Star Teacher’ concept 16
Key Differentiators…
Well Recognized Brand &
Experience
1st All India Rank in CA Final, total 6 CA Final Rankers and 10 IPCC Rankers
32 students > 90% in Std. XII (Science)
Mar 2013
2,055 scored ≥ 90% in Xth Std. Exam
A.Y 2013
98 locations in Mumbai
Sept 30, 2013
Currently operates 40 locations in Rest of Maharashtra, T.N., Gujarat, Karnataka , Punjab, Haryana and Chandigarh
1,100+ faculty members
300+ faculty Post Graduates (CA, MBA, B.Ed)
Multiple faculty teaching each subject
Continuous training
Increased visibility amongst governments and international educational institutions
Assisted in raising capital from private equity investors
Scientific coaching methods and system
Focus on conceptual knowledge and holistic development
Technology to supplement coaching
150+ Assistant Teachers – first to introduce the concept
Career Counselling:
Through seminars and exhibitions
Symphony:
A mix of music, yoga and diet controlling techniques to reduce stress, enhance memory and improve communication skills.
Hum Se Poocho:
A 24 hour helpline during exam time.
Counselling Sessions:
To facilitate communication between the teachers, students and parents on the students’ requirements.
Value Added Services
Prepared by faculty heads from reference material
Theory and concept of various subjects are addressed in an efficient and simple manner
Unique Study Material
Based on experimental learning
Audio Visual Technology, Animation & Graphics
Conducive environment
Leads to greater retention
Interactive Course Delivery
Close attention to individuals’ needs & helping them in their day-to-day academics
Close monitoring of the attendance
Regular parent-teacher meetings
Close Monitoring and Reviewing
Series of tests and examinations are conducted for each course
Printed model answer paper, along with the marking scheme
Mock board examinations for school section
Tests & Examination Series
COURSE DELIVERY PROCESS
17
…Teaching Methodology
Three-pronged Growth Strategy
19
Focus on National Level Exams
Entry and expansion into college tie-ups with test prep in college campuses Asset light with lower infrastructure spend than regular centres Helps attract large volumes
Asset light college tie-ups
Pan-India strategy with focus on nationwide common entrance and professional examinations such as CA, IIT JEE Advanced, JEE Mains, CAT, CMAT etc.
Expansion outside Mumbai reducing geographical concentration Future growth expected from Karnataka, Rest of Maharashtra and North India Science & Commerce to increasingly contribute to total revenues
Geographical & Vertical Risk Management
Growth Strategy – School Division
20
Overall market trend moving towards IX-X Combo, IX-X Combo admissions up from ~2,000 in FY 09 to ~7,000+ as of date
Focus on developing the CBSE & ICSE business verticals as a pillar of strength to enable rapid scalability of operations in the school segment across all states in India
Our unique product “Robomate” with entire content in digital form developed in-house by our faculties from the school section already launched this year and has received a good response from our students. This has encouraged us to now make Robomate available even for students who have not enrolled with us. Robomate sale expected to have a snowball effect on increasing footfalls at our centres
Expansion in Maharashtra outside Mumbai with expanding in current cities like Pune and Kolhapur
INK Model already launched for Std. V-VIII for Stateboard, ICSE and CBSE in 13-14; Expecting this market to grow over the next few years
About INK Model: • Two-way communication using a web camera enabling face-to-face interaction with the faculty • Allows doubt solving and basic testing and evaluation over the internet • Limited classroom based coaching and counselling
Growth Strategy – Science Division
21
Launch of coaching for JEE Advanced (IIT Entrance Exam) in Mumbai under the brand ‘Lakshya’
Acquired 51% stake in Lakshya Forum for Competitions Pvt. Ltd. with an option to acquire the balance stake up to June 2018
Plans to launch JEE Advanced coaching in Karnataka in the next two years
About Lakshya: • Lakshya provides coaching to students appearing for IIT and medical entrance examinations
• Founded by four IITians, Lakshya started operations in 2006 in Patiala and currently operates from 4 centres in Punjab and Haryana
• Lakshya planning to expand in North Indian states of Punjab, Haryana, J&K, Himachal Pradesh and UP
Road to IIT: • Under the erstwhile system, there was a single IIT entrance exam for admission into the IITs • Under the new system, only the top 1,50,000 students based on JEE Mains score will be allowed to appear for the JEE Advanced exam for admission into IITs. • IIT admissions will be based on the JEE Advanced scores provided the student is in the top 20 percentile of each state based on Std. XII results.
• Admissions to non-IIT engineering institutes will be based on a combined score of Std. XII and JEE Mains
With importance now being provided to Std. XII and JEE Mains for admission into the IITs/other engineering institutes and JEE Mains becoming a common engineering entrance exam across states, this new exam pattern plays to the advantage of Mahesh Tutorials Science.
Growth Strategy – Science Division (Karnataka)
22
The Karnataka Pre-University (PU) College Tie-up Model is one of the most important growth areas under the Science vertical. Today, ‘Mahesh PU’ brand is a well recognised brand in the state of Karnataka.
Standard PU College Revenue Sharing Model: • In a standard PU College Model, MT Educare Ltd. operates on a revenue sharing basis with the respective college trust
State of the art PU college at Mangalore with a capacity of 3,000 students ready. Hostel facility with a planned capacity of 1,000 students, Phase I operational from June 2013 with 300 students
Mangalore PU College campus acts as a proof of concept and is instrumental in all future college tie-ups
9 operational college tie-ups across Karnataka, at Mangalore, Udipi, Tumkur, Hubli, Bengaluru, Davangere, Belgaum, Mysore and Gulbarga
Proposing to tie-up with total 30 colleges by 2017-18
Revenue Streams
Mangalore Other PU Colleges
• Test Prep Fee
• College Rent
• Hostel Rent
• College Management Fee
• Hostel Management Fee
• Test Prep Fee
• College Management Fee
Services rendered in a standard PU College: • Test prep coaching for engineering and medical entrance examinations in college premises after college hours; every college student is a student enrolled with MT Educare for test prep • Management services provided viz. –
• Content for Std. XI and Std. XII • Sourcing of teachers and teacher training • Time-table management • Academic MIS
Growth Strategy – Commerce
23
Focus on expanding MT Educare’s reach in the CA coaching market throughout India
Chennai developed as a “Centre of Excellence” for CA with an eye on the South India market
Batches for CA already started at Ahmedabad and Rajkot
Coaching for Std. XI and XII launched in Pune and Ahmedabad
Starting batches for CS-Executive examination from next academic year
Separate batches for CA oriented and Other students for focussed attention
Sale of CA Robomate having recorded live lectures and doubt solving support
Launch of University, Vocational and Affiliated (UVA) programme with focus of creating employable graduates and bridging the gap between skills imparted by basic graduation and skills required by current professions
Currently have a tie-up with Bunts Sangha College, Mumbai to provide coaching to B. Com students along with UVA courses, CA-IPCC or MBA Test Prep; plans on expanding MT Educare’s footprint via college tie-up model
Coaching for CAT/CMAT under brand ‘CPLC’ expanding in Mumbai through integrated offering with MT Courses
Board of Directors
Has over 27 years of experience and holds a bachelor’s degree in science and education from the Mumbai University. He was awarded the ‘Pride of the Nation Award’ by the All India Achievers Association in the year 2008
Mahesh Shetty (Chairman and MD)
25
A Non Independent, Non Executive Director of our Company. He has been associated with our Company since its incorporation. He holds a bachelor’s degree in mechanical engineering from the University of Madras.
Has 23 years of experience in the education sector. Naarayanan Iyer
(Non Executive Director)
Holds a bachelor’s degree in dental sciences, a bachelor’s degree in law and a post graduate degree in management education from IIM, Calcutta.
Has over 15 years of experience in various sectors such as media, healthcare, constructions and manufacturing and has played a major role in establishing the corporate entity and expansion plans of the Company
Chhaya Shastri (Non Executive Director)
A fellow chartered accountant of ICAI and holds a bachelor’s degree in commerce from Sydenham College of Commerce and Economics, Mumbai.
Has 14 years of experience in the field chartered accountancy and taxation. She is a partner of Bansi S. Mehta & Co., B. S. Mehta & Co., and BSM Associates, Chartered Accountants.
Drushti Desai (Independent, Non Executive
Director)
Holds a bachelor’s degree in engineering from Veermata Jijabai Institute of Technology, Mumbai and a master’s degree in management studies from Jamnalal Bajaj Institute of Management Sciences, Mumbai.
Has over 26 years of varied experience in sales, marketing, business development and general management across industries. He presently, works as a business consultant and also conducts developmental workshops for working executives and teachers at various management institutes in Bangalore.
Yatin Samant, (Independent, Non Executive
Director)
Holds a master’s degree in marketing management from the University of Mumbai and a doctorate degree in physical chemistry from the Institute of Technology Mumbai.
Has over 20 years of experience in various capacities in industry and academics. He is presently, the dean - management education & assistant vice president (training & development) with Reliance Infrastructure Limited.
Uday Lajmi (Independent, Non Executive
Director)
Key Management Personnel
26
Anish Thakkar (Business Head-
Commerce Section )
Chandresh Fooria (Business Head- Science Section )
Sujeet Koyoot (Business Head-
Karnataka )
Murali Subramanian
(Business Head- Pune)
Shrenik Kotecha (Business Head-
UVA)
A member of the Institute of Chartered Accountants of India. He joined MT Educare in 2003 Has over 16 years of experience.
Holds a bachelor’s degree in engineering (instrumentation) from the Swami Vivekananda College of Engineering, Mumbai.
Has over 18 years of experience in the field of teaching and administration.
Holds a bachelor’s degree in science and education and a post graduate degree in science (electronics) from the University of Mumbai.
Has over 13 years of experience in the field of teaching and administration.
Holds a bachelor’s degree in engineering (electronics) from University of Mumbai. Has over 14 years of experience and has been associated with the company since its inception.
Holds a master’s degree in commerce from R.A. Podar College in Mumbai and has completed his MBA from D.Y.Patil College.
Before joining the company, he was associated with Thakkers Eskays as a partner. Has special expertise in mentoring students, business networking and new business development.
Key Management Personnel
27
Vipul Shah (Business Head-
Gujarat )
Mahtab Khan (Business Head-
CSR and INK )
Parag Chitale (Business Head -
MBA)
Yagnesh Sanghrajka
(CFO)
Ashwin Patel (Company Secretary
and Compliance Officer)
Holds a master’s in business administration (MBA) from Jamnalal Bajaj Institute of Management Studies (JBIMS)
Founder – Promoter of Chitale’s Personalised Learning Pvt. Ltd. (CPLPL)
Has over 18 years of experience especially in the services sector, in financial strategy planning, investor relations, management information reporting and corporate finance.
Before joining the Company, worked with large corporate houses (Hinduja Group) and a leading PE firm Handles Finance & Accounts, Investor Relations and Acquisitions / Tie-ups
A member of the Institute of Company Secretaries in India and has a bachelor’s degree in law from Mumbai University
Has over 20 years of experience Handles Secreterial and Legal function
Holds a bachelor’s degree in computer engineering University of Mumbai and has completed masters in marketing management.
Also looks after marketing at MT Educare Ltd.
Holds a bachelor’s degree in science and education and a post graduate degree in science (electronics) from the University of Mumbai.
Has been associated with the company since incorporation
Key Financials
Revenue (INR Mn) EBITDA (INR Mn)
PAT (INR Mn) Networth (INR Mn)
732 8321,055
1,3061,573
0200400600800
1,0001,2001,4001,6001,800
FY 09 FY 10 FY 11 FY 12 FY 13
92 125190
23129313% 15%
18% 18% 19%
0%
10%
20%
30%
0
100
200
300
400
FY 09 FY 10 FY 11 FY 12 FY 13
EBITDA EBITDA Margins
2652 81 132 1804%6%
8%10% 11%
0%
5%
10%
15%
0
100
200
FY 09 FY 10 FY 11 FY 12 FY 13PAT PAT Margins
29
358 411 476 5711011
7%13% 17%
23%18%
-10%
0%
10%
20%
30%
0
500
1,000
1,500
FY 09 FY 10 FY 11 FY 12 FY 13
Networth RoE
FY 09-13: 21% CAGR
FY09-13: 62% CAGR Net worth as of Sep. 30, 2013: INR 1,140 Mn
FY09-13: 34% CAGR
QUARTERLY AND HALF YEARLY FINANCIALS – CONSOLIDATED
30
Particulars For the half year
ended 30th September 2013
For the half year ended 30th
September 2012
For the quarter ended 30th
September 2013
For year ended 31st March 2013
Fee Income 10,617.72 8,043.75 6,030.19 15,049.30
Other Operating Income 258.56 241.76 59.19 678.83
Total Revenue 10,876.28 8,284.82 6,089.38 15,728.14
Cost of Goods Sold 11.54 - 11.54 123.03
Direct Costs 5,178.56 4,229.50 2,517.05 8,037.23
Personnel Costs 1,560.35 1,123.68 901.44 2,189.18
SD&A Costs 1,831.18 1,207.22 985.74 2,445.95
EBIDTA 2,294.65 1,724.42 1,673.61 2,932.74
Finance Costs 0.56 - 0.28 -
Depreciation 603.53 392.06 327.62 859.35
Other Income 158.51 267.38 57.91 465.13
PBT 1,849.08 1,599.74 1,403.62 2,538.52
Income Tax 595.20 448.05 452.90 756.94
PAT (Before Minority Int.) 1,253.88 1,151.69 950.72 1,781.58
Minority Interest (10.61) 0.56 (12.18) (23.09)
PAT 1,264.49 1,151.13 962.90 1,804.67
INR in Lakhs
Lakshya Forum for Competitions Pvt. Ltd. (Lakshya) has been consolidated w.e.f. April 1, 2013. Previous half year/year figures do not include Lakshya
31
Division Wise Revenue - Consolidated
H1 FY 14 H1 FY 13 FY 12-13
Revenue 2,903 2,267 4,010
No. of Students Serviced*
9,612 10,241 13,511 Scie
nce
H1 FY 14 H1 FY 13 FY 12-13
Revenue 1,953 1,507 3,264
No. of Students Serviced*
16,480 14,828 22,088
Com
mer
ce H1 FY 14 H1 FY 13 FY 12-13
Revenue 4,656 3,814 7,044
No. of Students Serviced*
23,287 22,101 33,224 Scho
ol
*No. of Students Serviced represents students coached for a course during the period under consideration. While a student is included in the no. of students serviced from the start of the course, the corresponding revenue for that student is accrued evenly over the course duration. Thus, the revenue recognized for the student builds up as the financial year progresses which is reflected by the annual average fee realization per student being higher than the average fee realization for the interim periods. The average fee realization per student serviced for the period under consideration is not comparable with the average fee realization for the full year.
H1 FY 14 H1 FY 13 FY 12-13
Revenue 207 172 274
No. of Students Serviced*
1,900 1,621 2,005 CPLC
Others consists of income from management fees, Dubai, Govt. Projects & Franchisee Income.
H1 FY 14 H1 FY 13 FY 12-13
Revenue 547 524 1,138 Oth
ers
H1 FY 14 H1 FY 13 FY 12-13
Total Students Serviced
53,165 48,791 70,828
H1 FY 14 H1 FY 13 FY 12-13
Revenue 610 - -
No. of Students Serviced*
1,886 - - Laks
hya
(Nor
th)
(Revenue - INR in lakhs)
32
Key Balance Sheet Trends
(1,683)
(2,778) (2,994)
(2,623) (2,403)
(3,263)
(3,807) (3,870)
(4,899) (4,961)
(6,000)
(5,000)
(4,000)
(3,000)
(2,000)
(1,000)
- FY 08-09 FY 09-10 FY 10-11 FY 11-12 FY 12-13
INR
in L
akhs
Net Current Assets (Excluding Cash & Cash Equivalents & Investments in Mutual Funds)
Advance Fees
Operating at negative working capital
Utilization of IPO Proceeds: Out of INR 3,500 lakhs raised via the Initial Public Offer (IPO), as of June 30, 2013 INR 3,293.15 lakhs have been utilized towards the objects of the issue.
Cash Balances: The cash and cash equivalents (including current investments) as on September 30, 2013 is INR 4,348.02 lakhs.
INR Mn FY09 FY10 FY11 FY12 FY 13 Total Operating Income 732 832 1055 1306 1573
Total Income 753 858 1076 1346 1619
EBITDA 92 125 190 231 293
EBITDA Margins 13% 15% 18% 18% 19%
Profit Before Tax 37 70 128 192 254
PBT Margin 5% 8% 12% 15% 16%
PAT 26 52 83 132 180
PAT Margins 4% 6% 8% 10% 11%
Networth 363 411 476 571 1011
Growth Rate* 14% 13% 16% 20% 77%
Capital Employed 413 411 521 571 1011
RoE * 6% 13% 16% 23% 18%
Historical Financials
33
Shareholding Pattern as of September 30, 2013
35
Category % Share-holding
Promoter & Promoter Group 45.3
Directors/Top Management 10.8
Mutual Funds / FI /FII / Banks 20.6
Bodies Corporate 4.0
Large / Small Individual Investors 19.3
Total 100.0
45%
11%
21%
4%
19%
Promoter & Promoter Group Companies
Directors/KMP
FII / FFI / FIs / Banks / MF
Bodies Corporate
Individuals