K12 Techno Services Pvt. Ltd. February 2013
Executive Summary Company Description
• K12 Techno Services Pvt. Ltd. (K12 Techno Services) is a customized education service provider operating in Andhra Pradesh
Key Products and Services
• It offers comprehensive range of cost effective education solutions to schools, which includes managing academic, financial and strategic responsibilities
• It provides specialized education services to ‐‐ schools, ‐‐ junior colleges and over ‐‐ societies in the state
• The company’s ‐‐ is one of its major strengths; however, its ‐‐ is one of the key areas of concern
SWOT Analysis
• The company can reap significant benefits from the strong push towards the growth of the K‐12 sector by the Government of India • However, the dominance of the public sector may have an adverse affect on the growth prospects of the organization
Financial Profile
Industry Analysis
• K12 Techno Services Pvt. Ltd. generated total revenues of INR ‐‐ mn in the fiscal year FY 2012 registering a y‐o‐y increase of ‐‐ per cent. It earned a net ‐‐ of INR ‐‐ mn in FY 2012 as compared to a net ‐‐ of INR ‐‐mn in FY 2011 • The financial profile of the company includes the balance sheet and profit and loss account for FY 2012 and 2011 and the key ratios depicting the key financial figures for FY 2012 and 2011, giving an insight into the company's financial performance • K‐12 market in India was estimated at INR ‐‐ bn in 2011 and is expected to grow at a CAGR of ‐‐ per cent to reach INR 2200 bn by 2015 • K‐12 market has a ‐‐% share in the private education sector
Competitive Landscape
• Key competitors for the company can be enlisted as Company A and Company B
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Contents
K12 Techno Services Pvt. Ltd.
Executive Summary Factsheet Clientele Products & Services Key People SWOT Analysis Financial Profile Industry Analysis Competitive Landscape Competitive Benchmarking Recent News Appendix
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Factsheet Basic Information
Brief Description
Industry
• K12 Techno Services Pvt. Ltd. (K12 Techno Services) is headquartered in Secunderabad, and is a customized education service provider operating in Andhra Pradesh It provides specialized education services to ‐‐ schools, ‐‐ junior colleges and over ‐‐ societies in the state
Corporate Address
• Customized education solutions provided by the company include: Tel No.
• Firm 1 and Firm 2 are investors in the company
Fax No. Website Year of Incorporation Ownership Revenue
SA
E L P M
Fiscal Year End Auditor Key Competitors
4
Clientele – India District
Area
Client
District 1
District 2
District 3
E L P M SA
District 4
District 5
5
Products & Services K12 Techno Services Pvt. Ltd.
Service 1
• Point 1 • Point 2 • Point 3
Service 2
P M A S • Point 1 • Point 2 • Point 3
LE
6
Financial Profile Financial Snapshot Total Income
Profit & Loss Statement Net Profit/Loss
Particulars
2011
2012
INR mn 500 400
Income from Operations
I2 I1
Total Income
300 200
E L P M SA Expenditure (below)
100
Operating expenses
0
NI2
NI1
‐100 2011
Financial Summary
Interest Expenses
2012
• The company incurred a net ‐‐of INR ‐‐ mn in FY 2012 from a net ‐‐ of INR ‐‐ in FY 2011
E L P M A S
• Total income of the company increased by ‐‐ per cent y‐o‐y to reach INR ‐‐9 mn in FY 2012 • The company’s total expenditure increased by ‐ per cent y‐o‐y reaching INR ‐‐ mn in FY 2012 • The company earned an operating profit (EBIT) of INR ‐‐ mn in FY 2012
Depreciation
Total Expenditure
Operating Income\EBIT Profit/(Loss) before Tax Profit/(Loss) after Tax
Note: All figures are in INR and are for Financial year ending 31st March
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Ratio Analysis Key Ratio Analysis
Key Ratios Particulars
y‐o‐y change (2012‐11)
2012
2011
Profitability Ratios Operating Margin Net Margin
• The company’s operating margin increased by ‐‐ percentage points y‐o‐y reaching ‐‐ per cent in FY 2012; the increase could be attributed to the management’s increasing emphasis on improving profitability by exercising inefficient cost management initiatives compared to that of the previous year • The return on equity increased by ‐‐ percentage points y‐o‐y reaching ‐‐ per cent in FY 2012 indicating the company’s ability to use the reinvested earnings to generate additional profits
Profit Before Tax Margin Return on Equity Return on Capital Employed Return on Working Capital
E L
• Current ratio of the company decreased by ‐‐ per cent y‐o‐y reaching ‐‐ in FY 2012, indicating poor cash flow management
Return on Assets Return on Fixed Assets
• Its cash ratio increased by ‐‐ per cent y‐o‐y to reach ‐‐ in FY 2012, indicating the company’s ability to pay‐off current obligations with its most liquid short term assets as compared to the previous fiscal year
P M A S
Cost Ratios Operating costs (% of Sales) Administration costs (% of Sales) Interest costs (% of Sales)
• Debt to equity ratio of the company increased by ‐‐ per cent y‐o‐ y reaching ‐‐ in FY 2012, indicating that the company is leveraging itself which is likely to increase its interest expenses
Liquidity Ratios Current Ratio Cash Ratio
• The company’s asset turnover ratio decreased by ‐‐ per cent y‐o‐ y to reach ‐‐ in FY 2012, indicating the company’s inability to generate sales revenue with its total assets as compared to the previous fiscal year
Leverage Ratios Debt to Equity Ratio Debt to Capital Ratio Interest Coverage Ratio
• The company’s working capital turnover ratio decreased by ‐‐ per cent reaching ‐‐ in FY 2012 indicating that the company is not being able to finance its day‐to‐day operations efficiently
Efficiency Ratios Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover Source: Netscribes Analysis
Improved
Decline
Note: y‐o‐y change in Profitability and Cost Ratios is represented in percentage points
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Industry Analysis Indian K‐12 Market – Overview
K‐12 Market Size & Growth
• The Indian K12 education system consists of 12 years of formal schooling, with the mandatory teaching of English from class VI to class X
INR bn x4
xx% x4
• Indian education sector has seen investment by both government and private investors
x3
x2
x1
• The government spent approximately ‐‐% of the GDP on education (2007‐12)
E L P M SA
The government has given importance to education through schemes like ‘Sarva Shiksha Abhiyan’ which ensures free primary education for all students
– This is of primary importance as 70% of the Indians will at a working age by 2025
2011
2012e
2013e
2014e
2015e
Private Education Market Segmentation
– Allocation has been made for free mid‐day meals as well
• In order to bridge the gap between investments and demand, the government is keen to adopt the public private partnership model
e% d% c%
Higher Education Coaching Institutions
b%
Pre Schools
Human resource development (HRD) ministry, has sought expressions of interest from companies in joining the public‐private partnership (PPP) project to open ‐‐ schools over the 12th five year plan (2012‐17) The 2012 budget pegs an outlay of INR ‐‐ bn in 2012‐13 for the model schools
K‐12
Vocational Training a%
2011 9
Competitive Landscape Company Name
Company A
Company B
Description
• Company A is a globally diversified education solutions provider reaching out to over ‐‐schools and ‐‐ mn learners and educators across the world • It won three prestigious awards
• Company B was incepted in Mar ‐‐ as ‐‐ and is headquartered in ‐‐ • It operates self owned and franchise based centres and currently has ‐‐ existing centres all over India • Various business offerings from Company B include K‐12 solutions, ERP services, corporate training services, staffing solution services, database maintenance services, consultancy services
SAMPLE 10
Competitive Landscape (2/2) Competitive Scenario Company Name
K12 Techno Services
Company A
Company B
Financial Information (INR mn – FY 2012) Total Revenue Net Profit/(loss) Number of Schools (India) Tie Ups With Schools Geographic Presence (India) North South East West
SAMPLE H: High; L: Low; M: Medium
Present Not Present 11
Competitive Benchmarking Key Financial Ratios – FY 20‐‐ (1/2) %
Operating Margin
Net Margin
B1
20
B2
10 0
x1
‐10
x2 K12
%
A1
A2
Company A Return on Equity
ROCE
10
• It recorded a net margin of ‐‐ per cent, higher than that of A which recorded a ‐‐ net margin but lower than B which recorded net margin of ‐‐
E L P M SA
Company B B4
B3
5 0
x4
x3
‐5
K12
A4
A3
Company A
• K12 recorded an operating margin of ‐‐ per cent, lower than that of both A and B which recorded operating margin of ‐‐ and ‐‐ per cent respectively
Company B
• The company recorded return on equity (ROE) of ‐‐ per cent, lower than that of A and B which recorded ROE of ‐‐ and ‐‐ per cent respectively • It recorded return on capital employed (ROCE) of ‐‐ per cent, lower than that of both A and B which recorded ROCE of ‐‐ and ‐ ‐ per cent respectively
Operating costs
% 150
x5
A5
100
A6
50
• The company recorded operating costs (% of Sales) of ‐‐per cent, higher than that of both A and B which recorded operating costs of ‐‐ and ‐‐ per cent respectively
0
K12
Company A
Company B 12
Appendix Key Ratio Definitions Operating Margin
(Operating Income/Revenues)*100
Measures company’s pricing strategy and operating efficiency
Net Margin
(Net Profit / Revenues) *100
Indicates the proportion of total revenues the company keeps as earnings
Profit Before Tax Margin
(Income Before Tax / Revenues *100
Measures pre‐tax income over revenues
Return on Equity (ROE)
(Net Income / Shareholders Equity)*100
Assesses a company's ability to generate profits with the shareholders’ funds
Return on Capital (ROCE)
EBIT / (Total Assets – Current Liabilities)*100
Indicates efficiency and profitability of a company's capital investments
Return on Working Capital
(EBIT / Working Capital) *100
Measures company’s profitability over its working capital
Return on Assets
(EBIT / Total Assets)*100
Indicates the company’s profitability relative to its total assets
Return on Fixed Assets
(EBIT / Fixed Assets) *100
Measures management’s efficiency of using the company’s fixed assets to generate earnings
Operating Costs (% of Sales)
(Operating Expenses / Sales) *100
Measures proportion of operating costs incurred for generating revenues
Administration Costs (% of Sales)
(Administrative Expenses / Sales) *100
Measures proportion of administration costs incurred for generating revenues
Interest Costs (% of Sales)
(Interest Expenses / Sales) *100
Measures proportion of Interest costs incurred for generating revenues
Current Ratio
Current Assets / Current Liabilities
Current Ratio measures a company's ability to pay its short‐term obligations
Cash Ratio
{(Cash & Bank Balance + Marketable Securities) / Current Liabilities)}
Measures a company’s ability to pay off current obligations through most liquid short‐term assets
Debt to Equity
Total Liabilities / Shareholders Equity
Indicates the proportion of equity and debt the company uses to finance its assets
Debt to Capital Ratio
{Total Debt / (Shareholders Equity + Total Debt)}
Evaluates the proportion of debt and equity in a company’s capital structure
Interest Coverage Ratio
EBIT / Interest Expense
Determines the company's ability to pay interest on outstanding debt
Fixed Asset Turnover
Sales / Fixed Assets
Indicates how efficiently the company’s fixed assets are used to generate revenues
Asset Turnover
Sales / Total Assets
Indicates how efficiently total assets are used to generate revenues
Current Asset Turnover
Sales / Current Assets
Indicates how efficiently current assets are used to generate revenues
Working Capital Turnover
Sales / Working Capital
Indicates how efficiently working capital is used to generate revenues
Capital Employed Turnover
Sales / (Shareholders Equity + Total Debt)
Indicates how efficiently equity is used to generate revenues
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