Tree House Education & Accessories Ltd Management Discussions

Management discussion and Analysis

Outlook of the Company:

In the academic year 2024-25, the Company had normal business in its segment and it is more focused in preparing children for future academic success. The company is in the field of Early Childhood Care and Education (ECCE) as its major business model. It is focusing on holistic development, incorporating play-based learning, social and emotional development and early literacy and numeracy skills. Income from early childhood education has increased from Rs.57 lakhs in F.Y 2023-24 to Rs.66 lakhs in F.Y 2024-25.

Financial Performance with respect to operational performance:

Companys total income from pre-school activity and other related business during the financial year was Rs. 714.49 lakhs. The summery of EBIDTA working is as follows:

					Rs. in Lakhs
Particulars	Early Child Education	School Management Services	Sale of Educational Kit	Misc Income	Total
Gross Income	164.02	418.12	31.62	100.73	714.49
Operating Exps (Apportioned)	52.39	133.56	10.10	32.18	228.23
Operating Profit	111.63	284.56	21.52	68.55	486.26
Other Exps (Apportioned)	97.56	248.72	18.80	59.92	425.00
EBIDTA	14.07	35.84	2.72	8.63	61.26

Companys Strengths:

Tree House Education & Accessories Limited runs quality preschools and also provides educational services to K-12 schools throughout the country. Tree House focuses on play-based learning, social development, and basic academic skills in a structured yet nurturing environment.

New Highlights:

While the organization is re-shaping its business after the introduction of New Education Policy, 2020(NEP 2020) company has achieved the following mile-stones during the year:

• The company has maintained the overall student strength in the preschools compared to last year.

• Revamp of curriculum for educational trusts in line with New Education Policy, 2020(NEP 2020) which has generated additional income.

• New business vertical, tuition for k12 students has received good response.

• Reduction in direct and indirect expenses and EBDITA positive.

Internal Control system and Risk Management:

The Company has adequate internal controls and processes in place with respect to its financial statements which provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements. The processes and controls are reviewed periodically. The Company has a mechanism of testing the controls on regular intervals for their design and operating effectiveness to ascertain the reliability and authenticity of financial information. During the year such controls were tested and no reportable material weakness in the design or operation was observed.

Opportunities & Threats Opportunities:

During the year the company operated owned centres as well as in franchise centres. Due to increased demand, company has the opportunity in the following areas:

1. To increase in franchise base though out India including for new verticals.

2. Opportunity to add new activities and teacher training in all pre-school centres.

3. Opportunity to start new business verticals including digital apps in the field of education.

4. Expansion of consultancy services to new K12 schools.

5. To expand tuition classes in other cities Threats:

Company has the following threats:

1. Change in Education Policy for Pre-School Education.

2. Notice from the Education Trust for reduction in Consultancy fee.

3. Cash flow crunch has restricted the expansion of business.

4. Discontinuation of Students in between the academic period results in refund of fees.

5. Non-renewal of students for the next academic year.

Industry Structure and developments.

Industry Overview

India - One of the largest education markets in the world.

The Indian education sector is one of the largest education markets (in terms of the potential number of students) in the world.

Key Market Segments Pre-school Market

Preschool offers numerous benefits for children, including improved cognitive and language development, enhanced social-emotional skills, and a smoother transition to formal schooling. It also fosters physical development through structured play and outdoor activities.

While science and child development experts have long proven that, first 8 years of a human beings life are the most critical, in India this is still a nascent concept, there is need to spread higher awareness of importance of early childhood education.

K-12 Market

K-12 schools form the core and largest segment of the Indian education system. India has one of the worlds largest networks of schools. Still, the country needs new schools to meet the demand of quality K-12 education.

Supplemental Education

While the number of schools in India makes for impressive reading, the quality of education imparted in these schools leaves a lot to be desired. There have been multiple reports in recent times that point to the low learning levels of students in Indian schools. The challenge here however, is not to repeat what happens in school but to create a more customized and hands on learning environment.

Risks and Concerns

The companys business is subject to risks and uncertainties that could have both short term and long term implications on the company. The company is exposed to different risks arising from economic, regulatory, environmental, competitive scenario and others.

To mitigate these risks and ensure consistent business growth and success, the company continuously scans the external and internal environment, to identify risks, track them and devise effective remedies to mitigate them. The company also continues to take measures, to further strengthen its risk management mechanism and remains stay ahead to mitigate the probable adverse impact.

Internal Control system and their adequacy:

The company has adequate, proper and well placed Internal Financial Control System, which ensures that all the assets are safeguarded and all the transactions are authorized, recorded and reported correctly in a timely manner.

The Internal Finance Control System comprises due compliances with companys policies and Standard Operating Procedures (SOPs) and audit and compliance by different Internal Auditors independently. Internal Auditors comprising of professional firm of Chartered Accountants have been entrusted to conduct regular internal audits and report to the Management, the lapses, if any. Both Internal Auditors and Statutory Auditors independently evaluate the adequacy of Internal Control System. Based on the Audit observations and suggestions, follow-up, remedial measures are being taken including review and increase in the scope of coverage, if necessary. Independence of the Audit and Compliances is ensured by direct reporting of Internal Auditors to the Audit Committee of the Board. The Audit Committee of Directors in its periodical meetings, review the adequacy of Internal Financial Control System and procedures and suggest areas of improvement.

Material developments in Human Resources including number of people employed.

The company recognizes human capital as its key assets. Developing, retaining and recruiting key talent is key to achieve Companys growth plans and aspirations. Institutionalizing a framework as an ongoing process to identify succession gaps, loss of expertise and retained knowledge of the organization, continuity of critical roles, loss of time and efforts to recruit and train the employees are critical areas. Any gap in these efforts could impact the performance of the Company.

Segment -wise or product -wise performance.

The activities of the Company comprise of only one business segment i.e. "providing education and related services including leasing of education infrastructure". The company operates in only one segment.

(i) details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations thereof:

Changes in Key Financial Ratios:

Sr ^ Particulars	2024-25	2023-24	Variance	Measure	Remarks
i) Trade receivable Turnover ratio	4.64	12.11	(61.66)	Percentage	Delay in recovery from sundry debtors.
ii) Inventory Turnover	NA	NA	NA	NA	Since company is providing services, the inventory shown is negligible.
iii) Debt Service Coverage Ratio	NA	NA	NA	NA	Company is free of debt, interest on debt is nil.
iv) Current Ratio	4.43	4.79	(7.44)	Percentage	Ratio has decreased due to delay in collection from debtors.
v) Debt Equity Ratio	2.85	2.25	26.74	Percentage	Ratio increased due to delay in repayment of liabilities.
vi) Operating Profit Margin	68.06	68.05	0.01	Percentage	-
vii) Net Profit Margin	(42.59)	(45.78)	6.98	Percentage	-
viii) Return on Equity	(172)	(2.08)	17.51	Percentage	-
ix) Trade payable turnover ratio	5.02	3.53	1.42	Times	-
x) Net capital turnover ratio	3.70	4.53	0.82	Times	Decrease in turnover compared to last year.
xi) Return on capital employed	(162)	0.07	(22.95)	Times	Due to wright off of obsolete Fixed Assets, Company has Incurred loss.

Details of any change in Return on Networth as compared to the immediately previous financial year along with the detailed explanation thereof:

Particulars	Rs. in lakhs
Networth as of 31.03.2025	17,734.55
Networth as of 31.03.2024	18,032.68
Change in Networth	(298.13)

The Networth of the company has gone down by Rs.298.13 lakhs mainly due to write off of fixed assets classified as "Assets for Sale/Write off" during the financial year 2024-25, amounting to Rs.366.55 lakhs.

2. Disclosure of Accounting Treatment:

Managing Director and CFO heading the finance function have certified to the Board that, they have indicated to the Auditors and the Audit Committee:

(1) significant changes in internal control over financial reporting during the year;

(2) significant changes in accounting policies during the year and that the same have been disclosed in the notes to the financial statements.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis describing the Companys objectives, expectations or predictions may be forward looking within the meaning of applicable securities, laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that would influence the Companys operations include cost of raw materials, tax laws and economic developments and such other factors within the country and the international economic and financial developments.

	For Tree House Education & Accessories Limited
	Sd/-
	Rajesh Bhatia
Date: 23rd July, 2025	Managing Director & CEO
Place: Mumbai	DIN: 00074393