- 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.
- 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.
- 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.
- 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