Delayed results, exam rule changes hit sales: Career Point

Career Point Infosystems blames policy changes in engineering entrance exams and delay in results for a fall in profits for the June quarter (Q1). The normalisation formula adopted by the government in engineering entrances impacted the tutorial divisions of the company, Pramod Maheshwari, CMD and CEO of Career Point Infosystems says.

However, students will gradually get used to it and admissions will pick up in the next few quarters, he told CNBC-TV18. Also read: Most expensive place to study? Not for much longer Below is the edited transcript of his interview to CNBC-TV18. Q: It turned out to be a fairly weak set of numbers. If you just extrapolate this quarter for the remaining year, it looks like FY14 is going to be lower than what you did in FY13. What are your revenue and profit expectations for the full year? A: Our tutorial division got impacted in the first quarter due to normalisation formula adopted by the government when they declared the results of various engineering entrance exams. We cater to the Class XI, XII and the students who have passed XII class. For those who have passed class XII are not taking a drop for a year and opting for a preparatory programme, which has affected the enrollment and revenue also. Though this year result of various competitive examination was declared late, from admissions will picking up from Q2 onwards. However, we still have lost some enrollment in Q1, which will probably not be able to make up in the remaining three quarters. Our company subsidiary, which is into formal education, has started generating revenue and has compensated to a great extent. Q: Why would you want to have different subsidiaries? You are relatively a very small company. The consolidated numbers are all very small. Why do you need two subsidiaries? A: We have two types of business nature. One is asset light and second is asset heavy. In asset light, we provide services, which is in the parent company. We provide educational services to the institutions, to students and schools. The subsidiary is primarily focusing on setting up infrastructure and giving it to a long-term lease to institutions. So we have kept different types of business in different companies. All the assets are lying in the infrastructure company that is a subsidiary. That is a reason for keeping this two as a separate company. Q: Has your business peaked out? Last financial year, you did not improve. There was absolutely flat performance on both income and profit and this year you started with net profit coming down by almost 50 percent. Would this year be bad compared to last year? A: There are certain policy changes in examination system and thereafter the way the result was formulated. Till last year, nobody was aware about how the class 12 board percentage will impact the overall ranking of the students in competitive examination. Everybody came to know only after the result declaration. Gradually, the student will understand the complications related to the normalisation procedure, which is being criticized by everyone. Once it is understood, things will come to normal again. For this year, the business got impacted due to the entire chaos surrounding normalisation formula.