Navneet Anhal, CEO, Zee Learn
“The type of content that we provide is deep and modular which even helps the faculty to be effective in the classroom. We expect to be profitable in FY14.”
Navneet Anhal, CEO, Zee Learn, joined in 2008 as Business Head of Mount Litera Zee School and in a short span of four was designated Chief Operating Officer in August 2012. In April 2013, he got promoted as the Chief Executive Officer (CEO) of Zee Learn Ltd. Navneet as a leadership team member, played an important role in transforming the company into a leading player in the core education sector. His achievements include setting up BrainCafe Science Centers; a program for science education in Indian schools currently operational in 500 schools covering over 175,000 students. He has also been responsible in the expansion of Mount Litera Zee Schools. A graduate in Chemistry Honors, Navneet completed his Masters in Marketing. Prior to joining Zee Learn, Navneet worked with Wockhardt, Goldshield Group PLC (UK), and Nicholas Piramal.
Zee Learn Limited is the educational division of Essel Group. Listed on National Stock Exchange (NSE) & Bombay Stock Exchange (BSE), it is one of the leading education companies in India. As a significant player in Core Education, Zee Learn is set to ride on an increasing demand for quality education and development with the fastest growing chain of preschools & K-12 schools.
Speaking with Anil Mascarenhas of IIFL, Navneet Anhal, says, “The type of content that we provide is deep and modular which even helps the faculty to be effective in the classroom. We expect to be profitable in FY14.”
Brief us on the company’s performance?
For the first time we crossed the Rs.100 crore mark recording a 64% growth over the previous year. The loss at the EBIDTA levels has come down significantly from Rs. 21.75 crore in FY12 to Rs. 8.5 crore in FY13. Our focus during the next financial year would be to turn profitable at the EBIDTA level. We expect to be profitable in FY14.
What helped you arrest the losses to a large extent?
I would attribute the same to a couple of reasons. The increase in enrollments in Kidzee centers to over 73,000 students during the FY2013 from over 60,000 students in FY2012 is prime among them. We moved from an average enrollment per center of 71 last year to 76 this year. This is in spite of 180 plus new operational centers. We also successfully signed over 300 new Kidzee franchisees.
What is the game plan ahead?
We are planning to add more centers in Tier- 2 and Tier 3 cities. There are opportunities in these regions and we’re looking for growth to come in from here.
Would you say the competition in Tier 1 and 2 cities is relatively less?
No, competition is definitely not less there but it is our brand which is scoring over competition and the quality of delivery and our curriculum content. There are a lot of unorganized players who offer at lower costs in these cities.
Tell us something about Mount Litera?
We added 25 new schools this year which have an average campus size of 3 acre plus. This year we are looking to increase the average enrollment to 400. We have 25,000 students enrolled in our schools as compared to 11,400 last year.
Are you planning to increase your fees?
The fee structure and changes are market driven. We move in line with what is happening in the market and some fee structures are usually city specific.
The biggest challenge in education business is to get quality faculty…How are you dealing with the same?
Yes. While there is a dearth of overall available pool, we endeavor to bridge this quality gap through an extensive training program which is continuous. The type of content that we provide is deep and modular which even helps the faculty to be effective in the classroom. We have a very strong measurement of teacher effectiveness and academic delivery.
Is there any data available to indicate your market share?
There is no data by any industry body on this but according to our estimates, in the branded pre-school category we are number one and we control a market share of 80% in the category.
Pay-back periods are usually 2-3 years. Is the pay-back of your franchises improving since you said that number of enrollments in your schools is increasing?
Yes! We are delivering on our promise to our franchises that this is the period (2-3years) in which they will turn profitable. We have a better enrollment in the new centers that we are opening. In 2010, we had an average enrollment of 25 for the first year in a new center which has now increased to 50+ in the first year. It makes it more economically viable for our franchisees now.
You are also in talks with Gujarat government for some pilot projects in Navsari. How is it doing?
We got a pilot project in Navsari for the Ekalavya Model Residential School and it has done really well. The results show this school has outperformed most other schools in the competition. Not only did we achieve 100% passing; the overall average was also much higher. We even received a personal letter from the education department of the state for our achievement.
Give us view on the education sector in terms of market growth?
The potential remains high for the sector, India being a country with massive population. More people are added to the system every year have education and developmental needs. There is definitely growth opportunity as the market will continue to grow.
In terms of competition since even non-serious players want to get into this sector how is the sector evolving?
In the education sector, it is not just about making investment, anyone willing to get into education sector has to understand the core of this business which is learning and development. So, in order to succeed in this business, one has to understand the learning and development process of the student and provide proper content. We have an advantage since we have a large footprint in the country and our focus is on the content that we develop. But pre-school is a very non-regulated business where everybody wants to have a presence. We being the leaders, we have gone ahead with our plans. We are the only pre-school chain the curriculum of which has been validated. This business is largely dependent on the quality of education delivery in the centers and the R&D process. We have built up a strong delivery platform over the years. Some companies advertise schools about the infrastructure they provide. That alone will not contribute to the learning of a child. We have covered all the areas to give a holistic education to the child and that gives us confidence that we will outperform our competition.
What other drivers such as regulatory processes or any other than mentioned earlier that might boost the business for Zee Learn?
Overall, the market growth in terms of number of children would be the key driver. Second would be the quality of education delivery in our pre-schools and schools which is measured by positive student experience which leads to brand promotion by word of mouth. This could lead to students switching to us from schools where they are not satisfied. Constant upgradation of content curriculum will also be a key area of our investment.
You provide supplementary educational products. How are they doing?
We are content providers to the channel ZeeQ, since we understand growth and learning process which helps us in providing content for children of 4-14 years of age. Last year, the content that we provided to ZeeQ added around Rs.15 crore to our business. The channel is owned by Zee Entertainment. The other is Braincafé which is a school solutions business aimed at students. We have changed our business model of Braincafé which is a programme focused on conceptual understanding of science; the benefits will flow to the company from FY 14. These two are new areas where Zee Learn expects significant contribution to come in.
Are you looking at any acquisitions?
We are open for evaluation of acquisition opportunities.
Your message to your shareholders?
Zee Learn is committed to improving the human capital of the country. Our business caters to the need of the market and need of the time. We are working simultaneously on our business efficiency by developing an education delivery network. There is a very strong foundation laid for this company to grow in future as we are committed to the development of the country and the children. This will give us a lot of positive growth in future. And we always can leverage on our parent company’s strength, which is a big advantage for us.
India Infoline Research Team / 08:44, Jun 26, 2015
IIFL is hosting 10 companies at a Management Roadshow in Mumbai today. The opening is a subdued start. US market saw minor losses with Dow, S&P 500 and Nasdaq closing marginally lower.