Zee Learn posted a net profit of Rs 1 crore as against net loss of Rs 3.40 crore (Y-o-Y) in the third quarter. Though the net sales were down 13 percent at Rs 20 crore against Rs 23 crore, EBITDA jumped 350 percent to Rs 4.50 crore against Rs 1 crore and margins soared to 22.5 percent versus 4.3 percent on a year-on-year basis.
In an interview to CNBC-TV18, KVS Seshasai, CEO, Zee Learn, spoke about the company’s performance and its plans ahead.
Below is the transcript of KVS Seshasai’s interview with Reema Tendulkar and Ekta Batra on CNBC-TV18.
Reema: While the turnaround in the bottom line is very impressive, the top line has been absolutely flat if I look at it for the last nine months or so. What’s the outlook for the top line in FY16?
A: Yes, the top, line growth has been muted, however there is a particular reason for it. Last year we were in the business of providing content to the channel ZeeQ which was part of group company Zee Entertainment Enterprises Ltd. At the beginning of this financial year, we transferred the content provision business to Zee Entertainment Enterprises Ltd. Hence there has been a negative impact on our bottom line. From our perspective, the good news is the fact that our core business which is pre-schools and schools have shown a 20 percent growth in the nine months ending December. We have seen a 55 percent growth in signups in Q3 and an overall 33 percent growth in signups of new schools and pre-schools in the first nine months of the year. So, we see these results as very strong because our strategy has been to consolidate around our core business of pre-schools and schools and take our investments and our attention away from other non-core businesses which are part of Zee learn at this point in time. So, while we go through this process of consolidation, we will see some impact on the top line.
However what we are very happy about at this point in time is the fact that we continue to deliver strong earnings before interest, tax, depreciation and amortization (EBITDA) margins. Q1,Q2,Q3 have been consistently at between 23 and 22 percent EBITDA margins and of course the bottom line growth is there for all to see.
Ekta: Can you tell us about your segmental performance, that is KIDZEE as well as K-12, how did that do?
A: From a segmental performance perspective, we’ve seen a 25 percent growth in enrollments in KIDZEE for the nine months ended December and for K-12 schools we’ve seen a 31 percent growth in enrollments for the nine months ended December. Like I mentioned earlier, we have seen very strong growth in signups of new schools as well as new pre-schools. So the performance there continues to be very strong.
Reema: In nine months the company has reported a profit of Rs 5.79 crore. At least its in track compared to the previous year. What can we expect your earnings per share (EPS) could be for FY15?
A: We normally don’t give a guidance as far as the end of year results is concerned. I would only like to mention that our expectation is that we will continue to deliver the same EBITDA margins that we have delivered in Q1, Q2 and Q3. So, we hope to end the year at a similar 22 percent EBITDA margin and last year we were profit after tax (PAT) negative, so this year we definitely expect to see ourselves PAT positive which would be in line with the kind of results that we’ve shown in the first three quarters.
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