Career Point Ltd Management Discussions.

India will have the largest youth population in the world over the next decade, and its ability to provide high-quality educational opportunities to them will shape future of the country. Universal access to quality education is the key to economic growth, social equality and leadership on the global stage. A best education system is the first step to transform India into a global knowledge superpower and to become Aatmanirbhar.

Being a responsible education player, Career Point has a similar mission that envisions a new dimension in learning space and to become global leader in providing exemplary education for empowerment of individuals through excellence in quality, methodologies and systems. The company has diversified products and integrated services in both regulated and non-regulated education segments with presence across the education verticals from KG to PhD. There were separate division specific strategic changes and advancements took place during the year 2019-20.

1. Test Prep for Pre-Engineering, Pre-Medical, Olympiads etc: Website: www.careerpoint.ac.in

Career Point has established a strong niche for test preparation of various engineering & medical entrance examinations and other competitive exams:

• JEE (Main & Advanced) - Joint Entrance Examination

• NEET - National Eligibility cum Entrance Test

• AIIMS: All India Institutes of Medical Sciences

• NTSE - National Talent Search Examination

• Olympiad - IMO, IPhO, IChO, iOS etc

While transforming lives through the power of education, Career Points Test-Prep division has become a benchmark in education space due to scientific & result oriented teaching methodology and individual focus with ultimate personal care. The test-prep (tutorial) services are offered to students through the following modes:

• Company operated branches;

• Franchisee centers;

• School integrated programs;

• Distance learning solutions.

2. e-Learning

Career Point has initiated innovative products to drive the next generation of education delivering process. With a goal to provide individual flexible personalized learning solutions which help them to learn efficiently and provide them extra edge in highly competitive scenario. It expands companys reach to students across geographies.

Career Points EdTech initiatives provide coaching services Direct to Home with all features of classroom coaching. Career Point is delivering quality education to students at affordable cost through different technology formats of Live Tutoring, Recorded Video Courses on USB drive, SD Card and online streaming etc.

• CPLive: Online live interactive classes on App and Web with premium services - Recorded Lectures, Study Material Package, Doubt Sessions etc.

• eClassroom Course: Video lectures on USB drives/ Memory Cards with offline & online support for doubt sessions.

• Online Assessments: 24*7 access to online test series based on latest examination pattern with detailed solution of the test and section wise analysis. It also offers all India ranking, comparison with toppers and time management report etc.

3. School Education:

The Company has a strong presence in school education by offering services to K-12 Schools in multiple geographies. While laying a very strong foundation for future at early age, Career Point empowers students on their holistic development. The residential campuses under the brand Career Point Gurukul are positioned as premier integrated schools with best of the academics, sport and extracurricular.

• Academic Pedagogy : http://bit.do/cpgintro

• CP Gurukul Concept: http://bit.do/cpgconcept

Career Point Gurukuls where the company currently provides its services include:

• Career Point Gurukul, Kota - Residential school (www.cpgurukul.com)

• Career Point Gurukul, Mohali (Punjab) - Residential school (www.cpmohali.in)

• Career Point Gurukul, Rajsamand (Rajasthan) - Residential school (www.cprajsamand.in)

The day-boarding school campuses serviced by the company include:

• Career Point World School, Jodhpur (Rajasthan) - Day School (www.cpwsjodhpur.com)

• Career Point World School, Bilaspur (Chattisgarh) - Both, Day School and Hostel (www.cpwsbilaspur.com)

• Global Public School, Kota (Rajasthan) - Day School (www.globalpublicschool.com)

4. University Education:

Career Point provides services to Universities under its higher education division. The course offerings by these Universities varies from professional development to under-grad, post-grad degree-awarding courses in various streams including Engineering & Technology, Management & Commerce Studies, Computer Applications, Law, Pharmacy, Applied Sciences, Hotel Management, Vocational Studies etc.

Academic Pedagogy : http://bit.do/cpuintro

• Career Point University, Kota (Rajasthan) - www.cpur.in

• Career Point University, Hamirpur (HP) - www.cpuh.in

Courses offered by Career Point Universities

Engineering & Technology Polytechnic, B.Tech, M.Tech & Ph.D
Computer Applications BCA, MCA and PGDCA
Management & Commerce BBA, MBA, B.Com and M.Com
Basic & Applied Sciences B.Sc and M.Sc
Health & Allied Science BPT & MPT
Pharmacy D. Pharma and B.Pharma
Law and Governance LLB, BA-LLB and BBA-LLB
Education B.Ed and M.Ed
Hotel Management BHMCT and DIFP/DIFBS
Vocational Studies B.Voc and Polytechnic Diploma
Post PG M.Phil and Ph.D

5. Skill Development - Career Point Skill Division:

Website: www.cpisd.in

Career Point Institute of Skill Development (CPISD) has been setup to fulfill the growing need in India for skilled manpower across sectors and narrow the existing gap between demand and supply of employment oriented education and training.

CPISD is approved training partner of National Skill Development Corporation (NSDC), Rajasthan Skill & Livelihood Development Corporation (RSLDC) and affiliated to various sector skill councils. CPISD has setup learning centers in rural and urban locations to provide employability skills aligned to industry needs which enhance youth employability and proves business productivity.

6. Early Childhood Education - Global Kids

Website: www.globalkidsworld.in Academic Pedagogy: http://bit.do/gkindia With a mission to help each child to realize the breath of her talent; the unlimited power of mind & imagination and strength of spirit to ensure all-round development and enabling each child to cope with ever-growing challenges of life, Career Point provides early childhood education through chain of Play-schools under brand Global Kids.

With child-centered approach, Global Kids focuses not only on developing academic skills, but also intellectual, emotional, linguistic, physical, social and moral skills that will ensure life-long success for the new generation.

ij] Financials

In financial year 2019-20, the company reported income from operations of rupees 104.6 crores on consol basis and rupees 52.1 crores at standalone level. Total revenue, including other income, is reported of rupees 109.9 crores on consol basis and rupees 72.8 crores at standalone level.

EBITDA (including other income) was reported at rupees 30.5 crores st- on standalone numbers with an impressive y-o-y growth of 37.8% >ss resulted an EBITDA Margin of 41.9% (FY2018-19: 26.7%). A

3ly remarkable improvement of 1517 basis points was reported in EBITDA margin against previous year is a result of initial outcomes from ;nt successful launch of Coaching version 2.0.

rnt Net income was reported at rupees 16.4 crores and EPS (Earning per

ils. share) of rupees 9.05 on standalone with year on year growth of

to 61.8%. At consol level, the company reported net income of rupees

ch 27.2 crores and EPS of rupees 14.97 with y-o-y growth of 12.6%.

. As on 31st March 2020, Net worth of the company at consolidate level

Key Ratios (Consolidated Financials)

FY2018-19 FY2019-20
Revenue Growth (%) 12.2% 4.1%
EBIT Margin 35.6% 40.4%
Net Profit Margin 22.5% 24.7%
Debtors Turnover (times) 2.1 2.1
Inventory Turnover (times) 34.1 28.1
Current Ratio (times) 9.5 13.0
Debt Equity Ratio (times) 0.2 0.15
Return on Net Worth (%) 5.8% 6.1%

was reported at rupees 449 crores and Book value per share of rupees 247 against rupees 428 crores and rupees 236 respectively by 31st March 2019. During the year, the company board had distributed 3 interim dividends of 10% on face value each time.

Revenue from operations grew mainly on the account of increased income from Srajan Capital (NBFC subsidiary) and one-off income in Gyan Eduventure (wholly owned subsidiary). EBIT (Earnings Before Interest and Taxes) grew impressively by 16.6% y-o-y on the account of improved operating efficiency coming from launch of Coaching version 2.0. Net profit margin was increased by 216 basis points. Debtors turnover ratio remains flat. Inventory turnover ratio was declined slightly to 28.1 as the result of an increase in inventory level. Current ratio at 13x is healthy and improved further. Debt Equity ratio of 0.15 is also reasonably superior and advanced. Return on Net Worth has also improved against previous financial year. The Company management believe that it still has large potential to grow in coming years on accounts of various measures being in place.

Human Resources

Career Point has demonstrated its excellence to thousands of satisfied students and their parents. All this would not be possible without the committed and passionate people of Career Point—both academic and non-academic staff, who strive to build this a great organization each and every day. They remain committed to companys ideals of building on a strong foundation, creating a bright future and delivering great value. The company continues to strengthen the management team and add additional talent and expertise. By 31 March 2020, the Company had total number of employees of460.

Corporate Social Responsibility

The company realizes the need to create an act for posterity, a plan that delivers. To help people discover the joy and meaning of learning in an empowered, dignified world driven by competence, knowledge and wisdom. Institutions of Career Point nurture potential entrepreneurs, technocrats and managers for new level of leadership in their career. Career Point also understands the importance of giving back.

• Giving back to deserving underserved candidates through financial support programs

• Giving back to environment by several green initiatives

• Giving back to communities through a series of projects in the area of healthcare, employment and of course, education.

Risks and Concerns

With having the business operations in different industry segments, Career Point is exposed to variety of external and internal risks. Though the company has a robust mechanism for risk management in place, however, complete risk avoidance on all the financial, operational and strategic objectives cannot be promised. Boards of directors and management of the company regularly review and aim to mitigate various risks related to regulatory, competition, geography, human resource, technology, legal, political etc. The company recognizes following key risks to its business operations which may adversely affect the financial performance of the Company:

Regulatory Risk: Any changes in regulatory norms on the Formal as well as Informal Education front may significantly impact the investment made in education by the Company. The Company is continuously making an effort to upgrade its services, diversify delivery channels, leveraging technological advancements, expanding the product portfolio to minimize the regulatory risk, if any.

Decrease in student enrolment: With the increased competition, decentralization of the tutorial students or any other reasons; the Company might face a risk of decline in student enrolments. However, the Companys focused academic pedagogy and marketing strategy (which includes direct and indirect marketing) continues to attract students across its courses. Pressure on margins: There could be a margin pressure due to staff costs, cost of study material, high advertising and business promotions, etc, going forward. We believe the Company has sufficient tools to counter these factors, if the same arises. Attrition: Attrition in the senior management/faculty team may impact the business. The Companys strategy for retaining talent involves offering competitive compensation packages, faculty training system in place for new entrants and existing faculty, along with a healthy working environment.

Geographical concentration: The Company derives the larger share of its revenue from Kota in Rajasthan and Northern part of India. Hence, any disruption in operations, or competition at these locations could impact overall operations significantly. The Company is making a concerted effort to expand its operations pan-India and overseas through franchisees, business associations etc and is also boosting its Technology Offerings, Distance Learning segment etc.

Internal Controls & Systems

The Company has proper and adequate internal control systems, which ensure that all assets are safeguarded against loss from unauthorized use and all transactions are authorized, recorded and reported correctly. The Management continuously reviews the internal control systems and procedures to ensure orderly and efficient conduct of business. Internal audits are regularly conducted, using external and internal resources to monitor the effectiveness of internal controls. The Company deploys a robust system of internal control that facilitates the accurate and timely compilation of financial statements and Management reports; ensures regulatory and statutory compliance; and safeguards investors interests by ensuring the highest level of governance and periodical communication with investors.

M/s. BDG & Associates, Chartered Accountants, is the internal auditor of the Company, who conducts audit and submit quarterly reports to the Audit Committee. The Internal Audit process is designed to review the adequacy of internal control checks in the system and covers all significant areas of the Companys operations. The Audit Committee reviews the effectiveness of the Companys internal control system. The CEO and CFO certification provided in the CEO and CFO Certification section of the annual report further discusses the adequacy of our internal control systems & procedures.

Outlook

With the launch of Career Point Coaching Version 2.0; positive impacts on the profitability through cost optimization are ensured along with large potential to scale the business. Tutorial services delivery through franchisee & School association network has been providing new growth avenues.

The growth in formal education division is always more value accretive for the group because it is more annuities driven and sustainable. As per strategy of the Company; the investments in NBFC business has also been delivering significant returns. With advanced clarity on Company cash-flows through more sustainable businesses, the company management is very positive for the superior returns on capital going forward.

Cautionary Statement

This report contains forward-looking statements, which may be identified by their use of words like plans, expects, will, anticipates, believes, intends, projects, estimates or other words of similar meaning. All statements that address expectations or projections about the future, including but not limited to statements about the Companys strategy for growth, product development, market position, expenditures and financial results, are forwardlooking statements.

Forward looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The Companys actual results, performance or achievements could thus differ materially from those projected in any such forward looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements, on the basis of any subsequent developments, information or events.

Enrollments FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020
Total 29,398 24,120 27,366 30,857 29,086 29,509 29,642 25,623
Tutorial Division 27,257 20,655 22,412 23,010 21,057 18,235 15,162 13,024
Formal Education 2,141 3,465 4,954 7,847 8,029 11,274 13,772 11,814
Pre-School 708 785
Tutorial Enrollments Split
Branches-LT CR 17,262 11,122 12,946 13,688 10,689 5,836 5,100 3,023
Branches-ST CR 2,978 1,169 1,333 1,011 625 516 121 15
Franchisees-LT CR 1,754 1,764 1,576 1,395 1,605 2,049 3,512 3,917
Franchisees-ST CR 381 23 87 52 - 138 - 33
School Associations 458 1,801 3,726 2,523 3,007
Distance Learning 4,882 6,577 6,470 6,406 6,337 5,970 3,906 3,029
Formal Break-up
Higher Education 741 1,642 2,327 3,455 3,738 4,822 5,706 6,505
School Education 1,400 1,823 2,627 3,372 3,451 4,142 3,752 3,688
Vocational Education 1,020 840 2,310 4,314 1,621

LTCR - Long Term Classroom, STCR - Short Term Classroom