Global Education Ltd Management Discussions.

GLOBAL ECONOMIC SCENARIO

The Financial Year 2018-19 was characterised by fears of sharp slowing down of global economic growth due to an increasing degree of deglobalisation. World economic growth is projected to moderate from 3% in 2018 to 2.9% in 2019 on an annualized basis, as consumer and business spending weakened, advanced-economy growth decelerated, and recovery in major commodity-exporting emerging market and developing economies levelled o . This deceleration is due to a combination of tari wars, quantitative barriers impeding the free movement of people, products and services, and geo-political protectionism, such as Brexit, and its associated impact. Even as the U.S. economy has demonstrated an uptick recently it is believed the trade war with China will lead to slower growth. The growth in the Eurozone slipped to a 4 year low in the second half of Calendar Year 2018 and a forecast by the European Commission has revised the estimate downward to 1.3% in 2019 owing to softening exports and slowing external demand.

ECONOMIC GROWTH IN 2019

The International Monetary Fund (IMF) has predicted that over the next decade, reverse globalisation will make the playing eld of global economies uneven, resulting in reduced ability to leverage existing competitive advantages. The consequences of escalating trade actions are undeniable: higher prices in China and the U.S., less purchasing power for consumers in these countries, higher input costs, heightened nancial market volatility, and possibly higher interest rates. These the ects are likely to spill over from these countries into integrated markets. There are considerable downside risks which includes the possibility of disorderly nancial market volatility and rising vulnerability of some emerging markets and developing economies to such disruption. There are also signs of a deteriorated risk appetite among investors and a potential slowdown in China. Moreover, with no let-up in the US-China trade war, growth forecast point to more pain ahead, not just for the developed economies, but for the emerging market economies too. Trade tensions, including the imposition of tari s by large economies, have resulted in a material impact on global commodity markets, leading to trade diversion and widening price di erentials among countries.

INDIAN ECONOMIC SCENARIO

The Central Statistics O ce revised the growth rate for India in Fiscal 2018-19 from 7.2% to 7%. While the first half witnessed strong growth trends, growth in the second half was impacted by a liquidity crisis in the BFSI sector as well as global macro-economic events. Even as growth moderated, India remained the fastest growing large economy in the world. Further, growth has been quite broad-based and domestic macroeconomic indicators have remained largely stable.

Domestic demand has strengthened as the benefits of structural reforms such as the Goods & Services Tax harmonisation, improvement in governance in PSU banks and their recapitalisation take the ect. Growth remained healthy despite multiple external challenges including volatile oil prices and rupee volatility which served to place pressures on demand, in ation, current account, and public nances. However, business investment and exports remained fairly robust. Sustained real GDP growth of over 6% since FY91 has led to a fundamental transformation of Indias economy. Today, India is the worlds seventh largest economy in real terms, backed by strong demand, positive consumption pattern and rising disposable income. In PPP terms, the economy is expected to be among the top five global economies by 2020.

EDUCATION & TRAINING INDUSTRY IN INDIA

Education industry is one of the fastest developing sector worldwide, generating large scale revenues and employment. There have been major changes occurred in recent past in the structure and education technology driven by foreign education demand, e-learning and test preparation market. With the the ect of globalization, the demand for better education has increased, largely through increased private participation. E-education market is a burgeoning segment with high growth potential in the industry.

The Indian Education sector comprises of pre-school, primary and higher secondary education. This is then followed by the higher education segment, which includes professional and technical education. In addition, the segment also comprises vocational training, coaching classes, distance education through e-learning platforms and the like. The Indian Education Sector can be broadly classified into two categories, public sector and private sector. The Indian Education sector is amongst the largest in the world, with an extensive network of more than 1.4 million schools (with over 200 million students enrolled) and more than 850 universities and 40,000 higher education institutes and is expanding rapidly in light of rising income levels and growing demand for quality education in the country. Further, India also has the worlds largest population in the age bracket 5 to 24 years indicating a huge market segment. Education sector in India is a mix of government-operated and privately operated educational institutions and allied education products and services providers. India has a significant young population which calls for a robust education sector to harness potential for human capital. The sector is highly in uenced by various government schemes and policies launched primarily to improve the quality of education and the planned expenditure through several schemes As per India Rating & Research, the education sector in India is estimated to have been around USD 101.1 billion in FY19 and is estimated to grow to USD112.1 billion in FY2020. Accelerated private sector participation due to a liberalized regulatory regime has provided a llip to the education sector. More collaboration with foreign institutions and industry associations would further help the sector grow. As per Techno Pak, the school segment contributes 52% to the education market in India, higher education contributes 15% of the market size, text-book, e-learning and allied services contribute 28% and vocational education in manufacturing and services contributes 5%. Higher education segment has witnessed a rapid expansion with a steady addition in capacity for student enrolment.

E-Learning: The online platform providers play a core role in online education system. Initially, the platform served as enablers by connecting prospective students and content providers. Online education in India has a mix of dedicated online only and o ine players with an online presence. C2C business models have also emerged where the platform connects prospective teachers and student. B2B offerings are prevalent in higher education, where institutions offer degree/diploma courses to students through their own platforms or third party aggregators.

Corporate Training:

Due to the inadequacies in the Indian Education system which does not prepare an individual with vocational and employment ready skills, the companies have to spend a significant amount of nancial resources on the proper organisational training of the employees. This is one of the main reasons that the Indian Corporate training market is expected to experience a steady growth by 2020. It is anticipated to reach Rs. 3,200 crore by FY2020 by a CAGR of 11% (FY16-FY20). With a plethora of new, advanced technologies and concepts such as Arti cial Intelligence, the demand for training is not only going to increase but also be diversi ed. Companies have realized that while normal calendar training is important, disruptive training is becoming the need of the hour as it is more the ective in creating a more productive and skilled taskforce.

OPPORTUNITIES IN EDUCATION & TRAINING INDUSTRY

(a) Investments in Education:

100 per cent FDI (automatic route) is allowed in the Indian education sector. An estimated investment of US$ 200 billion is required to achieve the governments target of 30 per cent GER for the education sector by 2020. The government also promotes Public Private Partnership (PPP) and tax concessions to encourage foreign players in the industry. There is a large opportunity for nancial institutions in the sector.

(b) Immense Growth potential:

India has the worlds largest population of about 500 million in the age bracket of 5-24 years and this provides a great opportunity for the education sector. The Indian education sector is set for strong growth, buoyed by a strong demand for quality education. The education industry in India is estimated to reach US$ 144 billion by 2020 from US$ 97.8 billion in 2016.

(c)Growth driver for Online Education:

? A Low-cost Alternative: Online platform needs lower infrastructure cost to serve a large base of students hence leading to saving on cost through economies of scale.

? Provides Quality education to aspirants: It has been observed that areas where availability of quality o ine education is a challenge the aspirants adopt nontraditional education methods. There is a vast di erence between the quality of education between rural and urban India which can be met by use of online courses. As per KPMG, open courses and distance learning enrolments in India to rise to round 10 million in 2021 witnessing a CAGR(Compound Annual Growth Rate) of around 10%.

? Strong growth in internet penetration: There is an increasing penetration of internet in semiurban and rural areas of India. Nearly 735 million internet users are projected by 2021. This provides huge growth opportunity for online education.

? Growing penetration of Smartphone : There are around 291 million smart phone users in India and it is estimated to reach 490 million by 2022. This will further add to the demand for online education due to convenience of medium.

? Rising aspirations for a better job opportunity: As per KPMG, around 280 million job seekers are expected to enter the job market by 2050 in India. Hence there will be an increased competition and the demand for industry relevant training is expected to grow.

? Strong Government Push: Government initiatives such as SWAYAM, E-Basta, Rashtriya Madhyamik Shiksha Abhiyan (RMSA), Skill India and Digital India will enable the infrastructure needed by students to study online.

(d) Public Private Partnership (PPP) :

Setting up of formal educational institutes under the Public Private Partnership (PPP) mode and enlarging the existing ones . In the case of PPP the Government is considering di erent models like the basic infrastructure model, outsourcing model, equity/hybrid model and reverse outsourcing model.

EDUCATION SECTOR - THREATS & CHALLENGES & CONCERNS FOR GEL:

With having the business operations in di erent industry segments, Global 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 nancial, 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.

? 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 the ort to upgrade its services, leveraging technological advancements, expanding the product portfolio to minimize the regulatory risk, if any. ? Pressure on margins: There could be a margin pressure due to sta costs, cost of study material, high advertising and business promotions,

etc, going forward. We believe the Company has su cient 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 Maharashtra. Hence, any disruption in operations, or competition at this location could impact overall operations significantly. The Company is making a concerted the ort to expand its operations pan-India, overseas and is also boosting its Technology Offerings, Distance Learning segment etc.

? Threat of New Entrants with moderate Minimal infrastructure requirements allow start-ups to venture into the pre school and vocational

study sectors. The rapidly changing world, the speed of knowledge creation, and economic pressures are causing higher education institutions to place greater emphasis on exibility.

? Education Institutions are in serious nancial crisis. Moreover, increased student fees, substitutions of loans for grants, diminishing subsidies

to student facilities and so on form a nancial barrier to perspective students .

PERFORMANCE OF YOUR COMPANY:

Your Company is strategically preparing itself for the next phase of growth through value-added capabilities, new capacities, continuous perseverance, and inventiveness. It is taking on new opportunities which are bottom line accretive and margin accretive. The expansion strategies have been devised keeping in mind its risk-mitigating approach towards incurring capex and making continuous investments into the productive assets to become "future ready" and deliver on our promises.

The Company achieved Gross Value Sales of Rs.2997.446 Lakhs during the nancial year, compared to Rs.3156.30 Lakhs in the preceding nancial year on standalone basis. Pro ts before tax were Rs. 929.53 Lakh as compared to Rs. 989.56 Lakhs on standalone basis during the previous year. Operating EBITDA increased slightly by Rs.75,000/- ie to Rs.1232.37 Lakhs from Rs.1231.57 Lakhs in the previous year during the nancial year 2018-19.Pro t after tax stood at about Rs. 666.66 Lakhs as compared to about Rs. 696.28 Lakhs on standalone basis, in the previous year. The Balance Sheet of the Company is also quite healthy with almost no debt, reasonable working capital cycle and cash/liquid investments valued at about Rs. 118.91 Lakhs as on 31st March 2019.

On a consolidated basis, the Company has one Wholly Owned Subsidiary and one Associate Company as on March 31, 2019. The standalone results mirror the consolidated results as the impact of consolidation of subsidiaries results with consolidated results is insigni cant. During the current nancial year 2018-2019 ended 31st March 2019, the Associate Companys total Revenue from operation is Rs. 11,44,854/- (Sale of Services) as against of Rs27,83,782/- (Sale of Services) in the corresponding previous year 2017-2018 ended 31st March 2018. The Loss after tax for the nancial year 2018-2019 ended 31st March 2019 is Rs. 29,33,413/- as against Loss of Rs. 14,89,791/- of the corresponding previous nancial year 2017-2018 ended 31st March 2018. During the year under review there were no operations and the Wholly Owned Subsidiary Company did not register any income as on 31st March 2019. Your companys subsidiary continues to focus on providing specialised Printing and Publication solutions for the new age digital and home learning environment. We have restructured the operations and spent a significant amount of money on development of new titles, the benefit of which will come over the years.

a) Performance of the Segments of the Company: i) Educational Training and Development Activities: The Company achieved Gross Value Services of Rs.1951.138 Lakhs during the nancial year, compared to Rs.1749.387 Lakhs in the preceding nancial year on standalone basis. This segment reported steady performance during the year on the increase demand for training and soft skil development programs in the Corporates and other allied institutions. This was further aided by benefits accruing from Deen Dayal Upadhyaya Grameen Kaushalya Yojna (DDU-GKY) (a scheme of Ministry of Rural Development (MoRD)) skilling for imparting for training & skill development programs in the State of Maharashtra and to transform rural poor youth into an economically independent and globally relevant workforce.

ii) Educational Business Support Activities:

The Company achieved Gross Value of Trading and Support activities comprised of Rs.1046.30 Lakhs during the nancial year, compared to Rs.1406.91 Lakhs in the preceding nancial year on standalone basis. The Performance Products segment demonstrated a slight decrease in FY 2018-19 with revenues of Rs.1046.30 Lakhs for test preparation of various examinations and other competitive exams . However your Company has developed an extensive network of domestic clientele and undertaken meticulous the orts to position its products into right geographies, cater to high value end-users and elevate operational the ciencies.

b) Capital Expenditure: During the year under review, your Company entailed a capital expenditure of around Rs. 268.659 Lakhs towards expansions in Supply of Infrastructure & Other services segments, to enhance the capacities of major services and also towards increasing operational the ciencies.

c) Dividend Policy : Your Company continues to reward its shareholders well. Given improved performance, your Company declared cumulatively Dividend of Rs.4/- per Equity Share in FY 2018-19, on a face value of Rs.10/-, amounting to 40%. Cumulatively, the Board of Directors of your company has declared / recommended a total Dividend of Rs. 99,32,000 /-per Equity Shares @ 40% for the year under review.

Our Company has no formal dividend distribution policy ; however the said dividend pay-out is in compliance with the applicable Secretarial Standard -3 (SS-3) on Dividend issued by the Institute of Company Secretaries of India.

d) Signi cant Changes in Key Financial Ratios:

Key Financial Ratios Financial Year 2018-2019 Financial Year 2017-2018
Debtors Turnover Ratio 4.78 9.01
Debtor Days 76 Days 40 Days
Inventory Turnover Ratio 48.56 20.91
Inventory Days 8 Days 17 Days
Interest coverage ratio 36.24 45.53
*Debt Equity Ratio Nil Nil
Current Ratio 5.77 6.73
Return on Net Worth (%) 22% 28%
Operating Pro t Margin (%) 32% 22%
Net Pro t Margin (% 22% 28%

* Cash Credit of Rs.2,50,00,000/- is not considered as Debt. Apart from the same, the Company has no debt.

Debtor days: The debtor days have increased from 40 days in FY 18 to 76 days in FY 19 on account of the Companys conscious the ort to sustain in the competitive market, it has revised the credit days to attract new customers and new clientele.

Inventory days: The inventory days have reduced from 17 days in FY 18 to 8 days in FY 19 on account of a greater focus on liquidation of inventory and also reduced inventory holdings in the trading segment.

Interest coverage ratio: The interest coverage ratio has declined from 45.53 in FY 18 to 36.24 in FY 19.This is on account of reduced pro tability margins as well as a build up in debt and attendant interest costs in FY 19.

Current ratio: The current ratio has largely been stable at 5.77 in FY 19 as compared to 6.73 in FY18.

Operating profit margin: the operating profit margin has increased from 22% in FY 18 to 32% in FY 19 on account of Educational training & development activities

Net profit margin: The net profit margin declined from 28% in FY 18 to 22% in FY 19 on account of the decline in Revenue from Business support activities as well as higher operational expenses costs during FY 19.

Return on Net Worth: The return on net worth declined from 28% in FY 18 to 22% in FY 19. This decline was due to the decline in net profit from Rs.696.28 Lakh in FY 18 to Rs.666.66 Lakh in FY 19.

e) Publishing and Content Development:

Under its brand Global Publications, the Company publishes niche test prep titles for popular entrance examinations in India. The Company seeks to leverage "Global Publications" brand image and reputation to reach out to what it believes to be a significant student population currently relying on self-study, to cross-sell its test prep courses. Further in addition to content in English, the Company is in the process of gradually adding dual language titles (in Hindi and regional languages),across di erent examinations, with the objective of deepening its presence in regional markets.

HUMAN RESOURCES:

Global has demonstrated its excellence to thousands of satisfied students and their corporate clients. All this would not be possible without the committed and passionate people of GEL-both academic and non-academic sta , 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 2019, the Company had total number of employees of 203.

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 the cient conduct of business. Internal audits are regularly conducted, using external and internal resources to monitor the the ectiveness of internal controls. The Company deploys a robust system of internal control that facilitates the accurate and timely compilation of nancial 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 C. R. Sagdeo & Co.; Chartered Accountants, Nagpur (ICAI Firm Registration No. 108959W) is the internal auditor of the Company, who conducts audit and submit quarterly reports to the Audit Committee. The Internal Audit is processed to 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 the ectiveness of the Companys internal control system. The WTD and CFOfficerti cation section of the annual report further discusses the adequacy of our internal control systems and procedures.

ROAD AHEAD

? Various government initiatives are being adopted to boost the growth of distance education market, besides focusing on new education techniques, such as E-learning and M-learning. The concept of anywhere, anytime, self-paced learning through live and interactive digital media is gaining widespread popularity and acceptance among students, especially those who are otherwise unable to receive quality education in physical classrooms. Over the next five years, the digital education segment looks set to track higher growth trajectory even as the government intensi es its focus to transform India into a digitally empowered and knowledge-based society. According to CRISIL, revenues from the e-learning segment are expected to grow multifold to Rs. 70-75 billion by 2020 from Rs.8-9 billion in 2015.

? Education sector has seen a host of reforms and improved nancial outlays in recent years that could possibly transform the country into a knowledge haven. With human resources increasingly gaining signi cance in the overall development of the country, development of education Infrastructure is expected to remain the key focus in the current decade. In this scenario, infrastructure investment in the education sector is likely to see a considerable increase in the current decade.

? Moreover, availability of English speaking tech-educated talent, democratic governance and a strong legal and intellectual property protection framework are enablers for world class product development.

? The Government of India has taken several steps including opening of IITs and IIMs in new locations as well as allocating educational grants for research scholars in most government institutions. Furthermore, with online modes of education being used by several educational organisations, the higher education sector in India is set for some major changes and developments in the years to come.

? Accreditation and Recognition

With a steady vision and focused growth strategy, GEL is currently involved in the mission for enhancing the human capital of the country through skill development and employability training. GEL has collaborated with Deen Dayal Upadhyaya Grameen Kaushalya Yojna (DDU-GKY) (a scheme of Ministry of Rural Development (MoRD)) skilling for imparting for training & skill development programs in the State of Maharashtra and to transform rural poor youth into an economically independent and globally relevant workforce.

OUTLOOK:

Revenue growth with significant margin development during year 2018-2019 was an outcome of the Companys consistent investments into business fundamentals. Increasing contribution from the new & existing divisions was quite remarkable as well. Now, the Company is well placed to capture the enormous potential and large opportunities available in key education verticals such as e-Learning and Vocational Education.

Strategically, the Company has got a perfect mix of high returns and more sustainable business segments. Educational Training and Development Activities provide higher returns whilst Educational Business Support Activities offers annuity and sustainability. The new initiatives ie e- Learning (Tapping multiple media Youtube, Mobile Apps and Portals), Skill Development and Publication are also expected to fuel the growth without any additional significant capex. There is a continuous thrust from the management to develop a strong R&D and technical service team to develop new products, explore new applications and understand better the changing customer needs.

With the Companys continuous endeavour to improve the ciencies and performance at all levels and functions, your Board view the prospects for the nancial year 2019-20 with cautious optimism.

CAUTIONARY STATEMENT:

The statements contained in the Boards Report and Management Discussion and Analysis contain certain statements relating to the future and therefore are forward looking within the meaning of applicable securities, laws and regulations. Various factors such as economic conditions, changes in government regulations, tax regime, other statues, market forces and other associated and incidental factors may however lead to variation in actual results.

For and on behalf of the Board
ADITYA BHANDARI GURURAJ KARAJAGI
WHOLE-TIME DIRECTOR DIRECTOR
DIN: 07637316 DIN: 01330419
Address: Flat No. A/502, 5th Floor, Shri Mohini Address: 14, Gurukripa, Cholanayakanahalli
Raj Apartment, Khare Town, Dharampeth, R.T.Nagar Bangalore 560032 Karnataka,
Nagpur 440010, Maharashtra, India India
Place : Nagpur
Date : 29 May 2019