SCHOOL BIZ WILL CONTRIBUTE 30-40% TO REVENUES: EDSERV SOFT
S Giridharan, Chairman and Chief Executive Officer, EdServ Softsystems said that the school business would contribute 30-40% to the company's revenues. "Majority of revenues will come from higher education," he added. The company plans to set up 50 new schools over the next six months, he said. He sees FY10 PAT at around Rs 18-20 crore with an earnings per share (EPS) of around Rs 15.
Here is a verbatim transcript of the exclusive interview with S Giridharan on CNBC-TV18. Also watch the accompanying video
Q: You are foraying into the school education sector, can you take us through by the end of the next one year how much of your revenues you expect from higher education and how much from school education?
A: In terms of our business in the next 12 months, we expect school business to be anywhere between 30-40% and as it is we have been in higher education segment as well as the in career placement segment that would continue to be significant and school businesses would continue to contribute in a bigger way in the years to come.
Q: But for this financial year and next one FY10-FY11- what kind of time line you have in place for setting up some of these schools?
A: We have the time line in the next six months to set up 50 schools, which would be either acquired or we could also get in providing our contents. Basically we service providing teachers and service by providing academic support the students as well as career orientation.
What we observed is that there is a career mismatch the way students have been taking their career streams. That led to a thinking to go into the schools and provide them proper career guidance such that when they come into colleges, they would be able to chose better career streams of their choice pertaining to their skills and background instead of pitching on something like engineering or management that leads to an imbalance in the way industry is looking at the man power.
So basically this K to 12, to careers we want to be there everywhere such that we are able to provide better balance in the demand-supply.
Q: The only thing which is strange is that after so many years of operations you still had sales of only Rs 8 crore in the previous year- when do you see the business scaling up to at least a reasonable size?
A: When you look at the last few years, it's only last year that we came out with a public issue and we have raised about Rs 25 crore. Ever since there has been a substantial rise in the business. This year we have already given a guideline of 300% growth compared to last year, so we have given an EPS guideline of Rs 15 and that is substantial considering the fact that we have come out with an IPO only in March last financial year.
Q: You had indicated earlier that you hoped to double the PAT for FY10 that means for the end of this year you should do anywhere between Rs 8-10 crore.
A: This year we should be doing more, our guideline on the PAT is anywhere between Rs 15-18 crore and we are confident of achieving that. Basically because we have over 440 engineering colleges to service, In Tamil Nadu has the target capacity of 4 lakh students who are in the engineering streams. Apart from that we have signed with Manonmaniam Sundaranar University where in we are supplementing their efforts in admitting Master of Computer Application (MCA) students in the first year where in we get an opportunity to do the diploma courses which gives a skip to the student to directly get into second year MCA of that particular University. So there is quite a bit of demand in the way students want to pass their exams and get into jobs.
On the other hand we also work with the clients who have been giving lot of requirements to us; we do a seamless match between their job and resources at an every stage. So we not only work on IT segments alone, it’s also non-IT. We also cater to lower-end jobs and at the moment we have 2.5 lakh jobs on our Ed campus which is virtual job engine.So with the kind of volumes we deal at the moment we are confident of achieving this type of business.