The financial year 2012-13 was a very challenging year for your company
amidst subdued economic growth across developed and emerging markets.
After having achieved the milestone of becoming India''s largest global
education company, we have seen umpteen challenges across geographies.
Now, your company''s business is aligned across six key elements of
education delivery - Teaching, Learning, Assessment & Intervention,
Governance, Advanced Technologies and Consulting Solutions - that are
designed to present customers with comprehensive and end-to-end
Our FY 2012-13 revenue grew by 16.5% to Rs. 1,907 crores — 79% of which
came from the US, 10% from the UK and the remaining 11% from India and
other countries. The operating margins (EBITDA) for FY 2012- 13 was at
Rs. 735 crores at a healthy 38%. However, the profit before tax showed a
decline of 10.6% over the previous year mainly on account of the higher
interest charges as well as the high depreciation and amortizations
during the year. Your Company was able to sustain these results on
account of its continued client relationships built in leading markets,
ably supported by the ongoing development of IP and the ability to sew
together a host of acquisitions to emerge as a specialist in
technology-driven education solutions.
Your Company has also successfully consolidated its overseas
subsidiaries during the year to exploit business and operational
synergies between developed and developing markets. Now, Core Education
& Consulting Solutions Pte Limited (the Singapore entity) is the
holding company for some of its subsidiaries in USA, UK and Middle
Further, despite a tough financial market accentuated by global and
domestic uncertainties, your Company was able to raise USD 50 million
by way of a Term Loan in its US Subsidiary – Core Education &
Consulting Solutions Inc.
However, FY 2012-13 has not been a smooth ride for the Company. Your
Company faced significant financial stress towards the end of the
fiscal year mainly on account of decrease in sales, increase in
receivables and non-availability of assessed working capital limits.
These were a result of the economic and liquidity stress felt by
various governments across the world, leading to significant cuts in
public expenditure in areas including education. Such cuts in
government expenditure significantly impacted the order flow and cash
flows of the company since your Company mainly follows the Business to
Government model. The company''s fund raising plans were further
impacted by a sharp decline in its market capitalization led by a
turbulent period for the Indian equity market, especially the listed
mid-cap universe. All these have prompted your Company to initiate
discussions with its lenders to restructure its debts and it has
approached the Corporate Debt Restructuring forum for the same. The
debt restructuring exercise will enable the Company to comprehensively
address the liquidity issues by matching the maturity profile of debt
with the business cash flows which would get streamlined in some time.
The muted growth was also a result of tightening of government budgets
in your company''s major markets – USA and UK. In the USA, the Congress
passed the Budget Control Act of 2011, which put into place automatic
federal budget cuts, known as a sequester, to take effect if Congress
failed to enact legislation to reduce the federal deficit by March 1,
2013. However, since the Congress did not act on the same, these
budget cuts are now in effect. Further, the austerity measures in the
UK resulted in a year of stagnation there as well.
Despite all these, in line with your Company''s mission of making
students campus or career oriented, your Company is betting big on
vocational training for the Indian market and intend to take up new
initiatives in this area in the current financial year. Further, in the
area of vocational development, the goal is to help bring constructive
reforms in employability education.
Your Company has a collaboration with the University of Oxford and
based on which it has been able to create teacher training content
which is ready for commercial use in India as well as across the globe.
The Continuous Teacher Professional Development program is ready for
launch and the Company expects to reap the benefits of this
collaboration in the near future.
In the coming year, your Company plans to foray into the Model Schools
scheme to be implemented under Public Private Partnership (PPP) model
with Ministry of Human Resource Development (MHRD) in India.
Besides India, our focus on developing markets includes foray into
African and Middle East markets. Initial success includes a partnership
with the provincial government of Ras al-Khaimah in the UAE for running
a higher education institute offering management, architecture and
engineering degrees in content partnership with BIT, Ranchi. As you are
aware, your Company had entered into a strategic tie up with BIT,
Ranchi for management of its RAK Campus. It plans to launch multiple
new programmes - Diploma and Bachelor degree in Mechanical Engineering,
Professional Certificate courses in IATA, CIMA etc, Part time Degree
courses in Engineering and Management Discipline.
While we have always strived to deliver our best, the global
acknowledgment of same is always heartening. We were recently named
Dell Premier Partner of the year for 2012. Your Company was also ranked
No. 1 under India''s Top 10 Transnational Companies with International
Asset Base of USD 500 million by Indian School of Business.
Though we expect a tepid growth in our established markets, we see a
moderate pick up towards the end of 2014 on the back of improved
financial environment. Whilst we look to consolidate in these regions,
our expansion into new geographies like Middle East, Africa and Far
East will contribute to the Company''s overall growth in the years
In conclusion, I would like to thank all the employees for their
unstinted commitment and contribution in your Company in these tough
times. I continue to look forward to the Board of Directors'' guidance
and your support during this challenging phase for the Company.