ZEE Learn Q3FY17 Concall Summary

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Performance Update

Zee Learn Q3FY17 Performance
  • Q3 is traditionally weak quarter, However this quarter was good
  • Focus would be to improve EBITDA margi
  • Strategy at the start of the year was to invest in pre schools which is paying off now

 Update on Treehouse Merger

  • Company has performed due diligence. The merger has been called off.
  • As and when co. got to know about the Treehouse, it was shared with the shareholders

Debt Negotiation and Restructuring of 100% subsidiary

  • Standalone debt is around 105 crores and consolidated Debt at the start of the quarter was 325 crores.
  • The standalone debt has reduced. Two repayments totalling Rs.10 Crore in 9 months.
  • The Date of maturity of debt has been negotiated.
  • 1st phase Restructuring of debt of subsidiary has been done.
  • Major part of the loans taken on the infra of the 5 Schools, in the books of subsidiary will be taken by the respective trusts.
  • The current interest rate for Term Loans is 11%.Interest cost on NCD' s is much less.
  • The company is in discussions with banks for interest rates.

 Margins Update

  • It is expected to be in line with previous Quarters.

 Update on New Schools

  • During 9 months the company has signed up 200 pre-schools and opened 160 pre-schools.
  • During last 3 months the company signed up 80 schools  pre-schools.
  • During the last 9 months the company signed up 15-16 K12 schools and opened 6 schools.
  • During the last 3 months the company signed up 8 K12 schools.
  • The company will maintain 15-18% growth in admissions in existing schools.
  • 4th Quarter is seasonally the best quarter.
  • The company is looking for a 5-7% price hike.

 Impact of Demonetization

  •  The company has not seen any impact of demonetization on its business.
  • Approximately 25 crores would be required as an investment to start a K-12 school by the franchise
  • Some schools were built by politicians in that area. Inquiries from them post demonetization have stayed at similar levels and have not moved adversel
  •  Impact on Fee collections
    • Majority of the fees in schools are collected by cheques
    • The fees in pre-schools are collectedby franchisees in PDC' s
    • No impact of demonetization on collections.

Kidzee

  • On an average Zee Learn closes 50-60 schools mainly due to non-compliance by franchisees.
  • Initial agreement with franchises for schools is 6 years. Majority of the franchisees have renewed their agreements since 2002 when Kidzee was first started.
  • Kidzee provides a brand image to the franchises and hence they find it useful to renew their licensees.

Tax Rate

  • The current tax rate of.the company is 20% MAT as it has some brought forward losses
  • The brought forward losses will soon be exhausted and then the company will have to pay normal tax rate