May 30, 2013 03:22 PM IST | Source: CNBC-TV18

Preschool ops to improve; expect profits in FY14: Zee Learn

Zee Learn hopes turn profitable in FY14 on the back of ramp-up in its preschool and BrainCafe business.

Zee Learn ,which runs K-12 chain of school, expects to turn profitable in current financial year following a ramp-up in its preschool business and BrainCafe business, Navneet Anhal, CEO, Zee Learn told CNBC-TV18.

"We are looking at improving our overall average enrollment for preschool to 80 plus from 76 plus today,” Anhal said.

The company expects to enroll 85,000 students in Kidzee-preschool business as against 68,000 students last year. Zee Learn will also change business model of its BrainCafe initiative which has been driving the profitability of the company.

The company posted standalone net loss of Rs 7.35 crore for the quarter ended March as compared to Rs 7.68 crore standalone net loss in a year ago quarter. The total income from operations for the company stood at Rs 36.4 crore, seeing a 76.7% rise over previous year. On a consolidated basis, the company posted a net loss of Rs 21.4 crore for the financial year 2012-13, in comparison to a net loss of Rs 27.6 crore in FY12.

Below is the verbatim transcript of the interview

Q: You have been lose making this quarter, what are the pressures that you guys are facing currently and going ahead when do you think you can turn into black both on the operational side as well as the bottom-line?

A: This year has been very positive for us as compared to last year, we have significantly reduced our losses. We were on an EBITDA of negative Rs 19.5 crore last year and this year we are on negative EBITDA of Rs 8.5 crore. So there is a significant reduction in the losses and we are looking at FY14, our focus is on driving profits and we have our strong foundation being laid down to drive profit in the coming year.

Q: The question is that the top line is growing quite considerably but that is not translating into EBITDA losses being cut in that proportion and hence the net loss still remains at the same level. By when can we see big EBITDA positive growth like you saw in the top line as well?

A: There are two parts of our business, one is our established business which is the preschool Kidzee and the Zee school business. We have the BrainCafe-our school solutions business, which is still in early stage. This coming financial year FY14 we are looking at scaling this business up with a new business model. So there is a change of business model which has happened in the BrainCafe, which will drive the profitability of our operations. So FY14 is the year where we are looking at turning into black from Red. Last year has been significantly better even in our cost of operations versus the year before. Largely it is because of the scale up of Kidzee and Zee School which have happened in the year. As I mentioned we are looking to become profitable in FY14.

Q: In your K12 school segment what kind of enrollments are you looking at in FY14 versus what you did in FY13?

A: Our average enrollment in FY13 was 200 students per school. In FY14 we are looking at doubling this enrollment to 400 per school. So we will be around 25000 enrollments in our K12 school.

In our preschool business Kidzee last year we had 68000 students, this year we are looking at crossing 85000 students. So our average per preschool will move from 76 plus to 80 plus. This includes 180 new centers becoming operational this year. Every new center that we add in the first year, it has a lower average. Still we are looking at improving our overall average enrollment for preschool to 80 plus from 76 plus today.

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