07 Dec 2009 INTERVIEW - EdServ to raise $25 mln by June to boost growth

Education services provider EdServ SoftSystems Ltd plans to raise $25 million by June 2010 to fund its expansion plans seen bumping up growth for the firm next fiscal year, its chairman said.

Chennai-based EdServ, which secured a board approval to raise up to $500 million, said on Monday it plans to raise $25 million through global depositary receipts (GDRs) or foreign currency convertible bonds (FCCBs).

"In the next 12-18 months, we should be able to plough in the funds we would raise through GDRs or FCCBs into the business and we should be able to achieve 200 percent growth for the next fiscal," S. Giridharan said on telephone.

For the year ending March 2010, EdServ expects to report net profit of 180 million rupees on revenue of 500-600 million rupees, largely led by growing business from the government and cementing its presence in more schools, he said.

EdServ, which will provide training services to 50 schools across Tamil Nadu state by March, aims to boost this to 250 schools across India in 12-18 months and simultaneously strenghthen its online tutorials, he added.

For the fiscal year ending March 2011, EdServ is tageting a net profit of 300-350 million rupees on revenue of 1.5-1.8 billion rupees.

It notched 36.9 million in profits on revenue of 84.5 million rupees for 2009/10, with revenue split equally between the government and private sectors, he added.

EdServ bagged a government contract in October to provide vocational skills training estimated to yield revenue of 1 billion rupees in 12-18 months.

Giridharan sees revenue from such business growing as the government, in collaboration with the World Bank, has plans to spend up to 4 billion rupees by 2012 to provide employment skills training.

It plans to train 250,000-300,000 students in 18 months to dip in the government corpus earmarked for the project, he added.

"On the private side, we will grow our online tutoring and our centers and we will also target private schools. So this segment will continue to contribute 50 percent to our revenue in the next two years."

The company plans to raise its training centers to 1,000 in 12 months from about 300 now, he added.

Shares in Edserv have quadrupled in value since their listing in March and were up by their daily maximum limit of 5 percent at 226.15 rupees in a weak Mumbai market.