Marching Towards IPO :: Emerging trend in education enterprises

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In an exclusive interaction with digitalLEARNING, Nikhil Mahajan, the Chief Financial Officer and Executive Director, CL Educate speaks in greater detail about the company, its firm foundations, its diversified portfolio, its growth prospects and its innate intent to file for an IPO

What is thriving at CL Educate?
CL Educate has a thriving and diversified business portfolio whereby test prep segment accounts for only 40-45% of the revenue accrual.
The publishing division of CL Educate under the auspices of G K Publications bring about authentic reference & preparatory material for various entrance examinations.
The organisation is working closely with the Governments of Uttar Pradesh, Madhya Pradesh, Chhattisgarh, Jharkhand, Odisha and Gujarat for their Skills Enhancement programmes, leveraging their ample expertise in the domain of test preparation.
The group has 7 Schools to its kitty having a total installed capacity of 6000 students, expandable to 11000. The current capacity utilisation is at 50 percent. Instead of adding new ones, the focus shall remain to grow to the full potential.

To what extent, would you augment your international portfolio?
Not Much. The total revenue expectation from the international operations is being seen not more than 4-5 percent of the entire revenue inflows.

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What are the underlying reasons for going the IPO way?
Well, the way we look at IPO is more of a landmark or milestone in our company’s progression. We have had been working for the last 5-7 years preparing ourselves to get listed. It’s more of a strategic opportunity for us to create a sizeable stable enterprise in the domain of education.
Offloading the burden of two of our private equity investors – Gaja Capital and HDFC, along with a number of individual benefactors, is also on cards, by way of raising some Rs 300-350 crores from the market.

Where do you see the maximum action happening in the education section?
For us at CL Educate, we are expecting a double-digit growth across all our business portfolios. We have always stood for a balanced growth, though the revenue mix varies for historical reasons.
In such a vast country, with progressive demographic trends, education sector happens to be one of the largest one and is slated to grow by leaps and bounds. The achilles heels, however remains the utter disorganization and non-systematic unprofessional governance of educational enterprises. This has brought some dis-repute to the sector, when it comes to public offering.

What are the core operational strengths at CL Educate?
We have evolved as an entirely process driven organization, with sound technological fundamentals. All our centres are connected through a dedicated in-house ERP system. Our testing platform is again our in-house creation which empowers the core business vertical of ours. We have moved towards a cloud-based governance ecosystem and content dissemination regime. Our mobile apps are a big sensation amongst our students at large. Though the direct revenue from the online sales is pegged at 5 percent but it’s support system has helped us scale and sustain the momentum of our growth.

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