EdServ buys ERP solutions provider SchoolMATE

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Chennai-based education and placement company, EdServ has announced that it has signed a Letter of Intent (LoI) to acquire Hyderabad-based SchoolMATE, a CRM and ERP software solution provider for schools.

In an interview with S Giridharan, Chairman and Chief Executive Officer of EdServ Softsystems , spoke about his outlook for it.

Here is a verbatim transcript of an exclusive interview with S Giridharan on CNBC-TV18. Also watch the accompanying video.

Q: What is SchoolMATE and collegemate all about?

A: At EdServ we have launched Vidyadhana Academy in November. This was to establish a unique progressive learning model at schools to ensure that schools get the right teachers training and also elevation of students and their performances. Towards this particular growth of school segment, we have just handed over a LoI with SchoolMATE. SchoolMATE is an enterprise resource planning (ERP) company to do with school automation. They also have a model for colleges.

They have automated more than 70 schools across Andhra Pradesh and Tamil Nadu. This means that we will have an immediate additional point of presence in 70 more schools for us to implement Vidyadhana. We already have signed 30 schools as part of Vidyadhana Academy. This means overall we will have presence of 100 schools.

As far as SchoolMATE is concerned, this is a software system that ensures through GPS/GIS technology as well as SMS methods. SchoolMATE tracks every student's logistics, performance, and attendance. It also puts across the messages to their parents through SMS at various points in time. This means that the parents have regular access to their wards' performance. So it is entirely a technology enabled scenario now. We are very hopeful that with this association now we will be able to do much better job as well as expansion as part of the Vidyadhana Academy that we have.

Q: Your press release doesn't indicate any price that you have paid for this acquisition though. What has the cost been for you?

A: The cost has been little less to a million dollar.

Q: What kind of revenues can you generate over the next one year because of being entrenched in these 100 schools now through SchoolMATE?

A: SchoolMATE jumpstarts our presence that we already have around 20-30 schools. We are planning to implement Vidyadhana to about 100 schools. Our larger plan is to acquire in an adoption and running mode of over 250 schools. So for us the 100 schools comes out immediately now.

Over a period of next one year, we should be able to clock 100 schools anywhere between Rs 30-40 crore. This means every school that we get in to adopt and run, we would be able to clock an average of Rs 30-40 lakh a year. Our own model is basically to takeover the management control of the school that is the only model we believe wherein we will be able to improve upon the standards of the way that school is run. So the promoters, the original trust or owners will be given anywhere between 10% and 15% depending on the profitability.

The same management, control, teachers and the team will be there except that our own technology, software system will be in place. We will also empower the teachers in the classrooms. The classrooms are going to be much better and more empowered now.

We are also looking at some acquisitions by which we are confident of spreading number of schools very quickly. The schools already have about 500-1,000 students depending on the capacity of the schools. This means that our own revenues will jumpstart very quickly once we start implementing the Vidyadhana.

Q: You have an approval of raising close to USD 25 million via a global depository receipts (GDR) or foreign currency convertible bonds (FCCB). Do you plan to do that in the next couple of months itself?

A: We have been exploring various routes and possibilities of raising this. A couple of such options like GDR and FCCB are infront of us. The requirement is about 25 million. We have indicated the timeframe as between April and May. This is the early part of next quarter and we are exploring options.

Options are many at the moment. This USD 25 million had given earlier as indication is for expansion of the schools and investments in the schools to smart enabled them into the next level apart from college content development spread over Pan India for education support of higher end education students. These are some of the expansion plans for which we are raising this particular fund. We are exploring the options.

Q: You have a guidance of Rs 50 crore revenue for this current year. Once these 100 schools kick in post acquisition, should it take your revenues to Rs 80-85 crore for the next year revenues?

A: For the next year guideline, it is about 200% growth. In terms of numbers, our own project will be between Rs 150 -180 crore for the next year. Strategically, the school expansion is one in which we are sure to clock even more than Rs 40 crore. If we are looking at any more number of schools apart from this, acquisition alone is taking us to more than Rs 40 crore. Nevertheless there are other business streams like ministry of labour and employment where we are a vocational training provider (VTP) already that should take us through another Rs 40-50 crore.

So we should be able to do easily about Rs 150-180 crore looking at academy and other higher education support and anywhere anytime kind of web based services that we are on.