Tree House Education & Accessories Ltd Management Discussions.

Overview of Operations of Our Company

Companys total income during the year is at Rs.529 lakhs which consists of the following:

Rs. in Lakhs
Particulars Early Child Education School Management Services Rental Income Sale of Educational Kit Misc Income Total
Income Operating 143.18 142.00 36.44 91.88 115.74 529.24
Expenses Other Expenses 70.70 59.07 0 70.22 0 199.99
(Apportioned) 257.40 255.27 0 0 0 512.67
EBIDTA -184.92 -172.34 36.44 21.66 115.74 -183.42

During the year due to Covid 19 pandemic, company has started its online education in its online platform https://treehouseonline.in. The Companys online platform has also catered to the K12 schools by providing online education. The company will also launch vocational skill and development courses for Standard VI to Standard X during the course of this year.

Companys Strengths:

The Brand is owned by the Company and is earning Royalty income for the company and the strong online platform created by the company has resulted in gaining students for online preschool education and other activities like online extra- curricular programs.

Impact of COVID-19:-

Since March 2020, after WHO declared COVID-19 outbreak as a pandemic and once the Government of India declared the said pandemic as a health emergency and ordered temporary closure of all non-essential businesses, the company had to stop its operations along with its owned and various franchise centers. This has resulted in developing and innovating new platforms to cater to the needs of pre-school education through online methods, since then online education has become a new norm. The online platform developed by the company has generated good response from students all over India.

The franchise centres at Metropolitan and Tier I cities have also received good response for the online education due to the closure of physical schools. The company is looking to reach tier II and tier III cities and to increase its pan India presence in online education.

In addition some of the major are as where the companys business has effected due to CoVID-19 are as follows:-

1) Cashflow crunch.
2) Closure of own and Franchise centers.
3) Reduction in collection of royalty payments.
4) Decrease in number of students.
5) Reduction in fees structure due to closure of physical centers.
6) Delay in serving debt obligation to the banks.
7) Writeoff/Impairment of Assets lying in the centres due to closure of centres.

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 control son regular intervals for their design and operating effectiveness to ascertain the reliability and authenticity of financial information. During the year such controls we retested and no reportable material weakness in the design or operation was observed.

Opportunities & Threats

Opportunities:

Due to the Covid19 pandemic, the company has started online education in following areas which has resulted in :

1. Increase in number of students directly catered to by the company in Online Pre-School Education via the self-operated model resulting in increase in fees income.

2. Online Extra Curricular Programs.

3. Online Teacher Training etc.

Threats:

Company sees Covid-19 as the major threat to the business in the following areas:

1. Reduction in franchisee renewal & royalty fees due to closure of franchise centres

2. Non-payment of royalty and shifting of brand loyalty.

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

While science and child development experts have long proven that, first 6 years of a childs life are the most critical, in India this is still an ascent 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.

Vocational Courses

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 levels of learning outcomes in Indian schools which lead to less livelihood opportunities for students and also de focus the career paths to be chosen by them. The challenge here however, is not to repeat what happens in school but to create a more customized and hands on learning environment.

The New Education Policy of 2020 enhances the focus on such vocational courses and lays emphasis on Skill Development for children from middle school onwards.

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 there of, including:

Changesin Key Financial Ratios:

Particulars 2020-21 2019-20 Change Remarks
(I) Debtors Turnover 0.27 0.14 98.91% (Increased due to increase in turnover compared to previous financial year)
(ii) Inventory Turnover -NA- -NA- N A -
(iii) Interest Coverage Ratio (4.79) (5.88) (18.64)% (Loss has increased due to decrease in other income)
(iv) Current Ratio 0.56 0.64 (13.15)% (Increase in bank loan due to non payment has increased the current liabilities)
(v) Debt Equity Ratio 0.17 0.14 24.12% (Liability Towards The Bank Loan Have increased due to non payment of Interest and Loan)
(vi) Operating Profit Margin (%) 85.57 89.90 (4.82)% (Decrease in other Income)
(vii) Net Profit Margin(%) (714.93) (295.80) 141.69% (Decrease in other Income has reduced the Net Profit Margin)
(viii) Return on Net Worth(%) (15.62) (9.56) 63% (Increase in Loss compared to last year is due to reduction in other income)

For TreeHouse Education & Accessories Limited

Sd/- Sd/-
Jugal Shah Deepak Valecha
Director Director
DIN:08334114 DIN:07736480