Educational services company CL Educate that posted a 68.4 percent year-on-year (YoY) rise in its consolidated net profit for the September quarter has seen both the test preparation and enterprise businesses grow in double-digits.
In an interaction with Moneycontrol, Nikhil Mahajan, Executive Director and Group CEO Enterprise Business, CL Educate talks about the Q2 earnings and growth plans for FY19. Excerpts:
Q: Your net profit saw a 68 percent growth. Did most of the share of this growth come from the test preparation business?
A: The test preparation business did well, as also the enterprise business. Apart from this, we are also working on certain optimisation processes. Further, the company had made some acquisitions earlier whose integration has just been completed. This led to a growth in profitability.
It is not just in this quarter, but the positive impact of these strategies will be felt in the next two to three quarters. This will also help us improve our cost efficiencies.
Q: In the test-prep segment, is there any other acquisition on the cards?
A: Currently, test prep constitutes 55 percent of our revenue and will continue to be in the 55-60 percent range.
We now have a reasonably full product portfolio and have added training modules for civil services exam, chartered accountants (CA) exam and Graduate Aptitude Test in Engineering (GATE) through our acquisitions last year. The goal is to take these products to as many locations as possible. This will help us achieve revenue buoyancy.
Q: Among the business segments, why has vocational education seen losses?
A: In the vocational education segment, we have stopped picking up any new business for the last three years. We have not picked up any new projects since 2016.
The old projects will be completed in the next 6-12 months. Due to this, the profit and loss of this segment will look negative. Our endeavour is to maximise the collections of the government. The strategy we have adopted is to discontinue the business and focus on completion of the existing projects.
Q: What are the expansion plans in the test prep and institutional business segments?
A: We currently have 188 centres in the test prep space. The scope to expand our product portfolio geographically is immense. We may add about 50 centres over the course of the next 18-24 months and increase penetration of our products in the centres. We have also started offering content on Amazon Alexa.
The institutional business is on a small base so we have a growth rate of 50-60 percent. Here, there is a huge scope to reaching out to many more educational institutions, though growth rates will moderate as the base widens.