CL Educate
Oct 8th, 2012
1 2
A Story…
1
A Story…
2
A Story…
What percentage of Indian Children….?
Brick Wall Syndrome
TemplePerspective
Colored Sugar Water Global Identity for young-at-heart achievers
A Cobbler Champion’ companion in success
Large Conglomerate Role Model business institution
Coaching Institute Realizing Potential and making dreams come true
Where do you belong?
Strong Management Team
The driving force behind CL – Highly qualified and experienced management team supported by a strong team of level 2 managers
Satya Narayanan R.Chairman
Alumnus, St. Stephen’s and IIM Bangalore Worked with Ranbaxy for a short period of time before setting up CL in 1995
Gautam PuriVice chairman and Managing Director
NikhiI MahajanDirector, Chief Financial Officer
Alumnus, Benares Hindu University (Electrical Engineering) and IIM Bangalore Has worked in Management Consulting with AF Ferguson
R. SreenivasanDirector, Head innovation and design
Engineer and alumnus, IIM Bangalore Worked with Hindustan Lever, Britannia and VAM Organics before joining CL in 1995
Alumnus, JNU and IIM Bangalore Had successful stints with TCS and Sony Entertainment Television, prior to joining CL Motivation guru
Sujit BhattacharyyaDirector, Indus World School (IWS)
Alumnus, IIT Kharagpur and IIM Bangalore Enjoyed successful stints at Telco and Wipro and set up Dharma Systems, a US based software firm
R Shiva KumarDirector, Academics
Alumnus, IIT Madras and IIM Calcutta Had a brief stint with HTA before joining CL
Sanjeev SrivastavaPresident, Emerging Business Groups
Alumnus, DU (Bachelors in Economics and Post Graduation in Sociology) Worked in the Civil Services and as a core member with the Times, HDFC Bank and Kotak Mahindra
Sanjay ShivnaniPresident, Vocational
Alumnus, REC (Electrical Engineering) and IIM Lucknow Has spent several years working at 3M India in the sales and marketing functions
CL Educate
Business Overview
Differentiated pedagogical approach that is focused on student outcomes
Allows company to command premium in the market
Credible offerings across verticals through an unmatched portfolio of 20 products
Highly evolved and proven content developed over 15 years
Holistic approach to quality resulting in high parent and student satisfaction
80,000+ students served annually
Consistently ranked as the #1 MBA and Law test preparation franchise
Realized 16% annual growth in revenues over the past 5 years
Capital-efficient hybrid model (tailored by vertical) and integration with technology allows for scalability while lowering capital intensity
Tangible synergies across verticals by sharing managerial expertise, infrastructure and resources
One of the most experienced management teams in the Indian education sector
Graduated from India’s top universities such as IIMs and IITs
Close-knit team that has stayed together since inception in 1995
Strong corporate governance structure with well-regarded independent board members
Backed by marquee investors such as Gaja Capital, Granite Capital and HDFC
Services: Presence across the student lifecycle and learning needs
Products: Credible offerings across verticals through an unmatched product portfolio of 20 products
Geography: Pan-India presence: through [175]+ centers and [21] K-12 schools
Customers: B2C (Business to Consumer), B2B (Business to Business) and B2G (Business to Government) models
Large but nascent market with strong growth drivers
Attractive demographics - ~62% of Indian population in the 0-30 years age group
Severely undersupplied market - ~3% of GDP spent on education vs ~6% in developed economies
Inefficient and low quality public education system creating supply gaps in K-12 schools and skill development space
Inelastic demand for private education driven by long-standing perception of quality
Self-pay market mitigates funding risk
CL Educate – Ideal Platform in the $80bn Indian Education MarketCL Educate – Ideal Platform in the $80bn Indian Education Market
Premium Brand created through Differentiated Value Proposition and Consistent Innovation
Premium Brand created through Differentiated Value Proposition and Consistent Innovation
Highly Competent Management Team and
Robust Governance Structure
Highly Competent Management Team and
Robust Governance Structure
Diversified Platform and Offering Mix Covers 80% of the Addressable Market
Diversified Platform and Offering Mix Covers 80% of the Addressable Market
Highly Attractive Industry with Long-term Growth
Drivers
Highly Attractive Industry with Long-term Growth
Drivers
Robust Business Model with Strong Operational
Track Record
Robust Business Model with Strong Operational
Track Record
__________________Source: Company information, industry research.
Industry and Regulatory Landscape
Largest school aged population globally
World’s largest working age population drives need for skilling solutions
Favorable Demographic
Trends
100 110100 90
120120 520 13
0
200
400
India China US UK
(mn)
15-19 20-24 25-29
Inadequate public and private sector investment in education
Poor quality of public offerings further reduces effective supply
Supply-sideConstraints
3%4%5%
6%6% 5%
0%
4%
8%
NorthAmerica
WesternEurope
Middle East Sub-Saharan
Africa
China India
(% of 2010 GDP Spend)
Long history of private education and association with higher quality
Decreasing price sensitivity as quality of education assumes significant importance
Growing Demand for
PrivateEducation
9% 8%17% 19%22% 24%
13%21%
24%
0%
20%
40%
Primary Middle Secondary and HigherSecondary
1996 2008 2012
(% of students attending private schools)
Relatively light regulatory restrictions in multiple verticals
Greater recognition of the need for private sector leading to a supportive policy environment
Private-pay model mitigates funding risk
Limited Regulatory and
Funding Restrictions
Share of Public Sector in education spend (%)
$80bn
market with
Fundamental
long-term
Growth
Drivers
__________________Source: Industry Research.
320 320
60%
63%
65%
68%
70%
FY1991
FY1993
FY1995
FY1997
FY1999
FY2001
FY2003
FY2005
FY2007
FY2009
FY2011
Highly Attractive Market with Long-term Growth DriversHighly Attractive Market with Long-term Growth Drivers
Structure of the Indian Education MarketStructure of the Indian Education Market
Structure of the Indian Education MarketStructure of the Indian Education Market
Formal sector to see large investments as the currently low GERs represent a huge opportunity
High demand for test preparation…..High demand for test preparation…..
5100 20 1 10 35
2005 1
205300
180
500350
472
1,000
2,000
40 15 21 60
CAT/XAT MAT/Others CA/CPT Bank PO CSAT IIT J EE AIEEE State -Engineering
BBA/HM Law GMAT GRE
Seats Available Aspirants
2% 33% NA 4% 0.2% 2% 4% 10% 13% 7% NA NA
Very few seats at Institutes / colleges are available compared to the number of students taking the entrance examinations…
Leading to a robust growth in the test preparation industry…
Test preparation and training industry is expected to
grow at a CAGR of 16% (FY10P-13P) on account
of:
Shortage of quality education institutes
Inadequate level of teaching in the formal education system
Low capital requirements and higher returns
In ‘
00
0IN
R b
n
Success Rate
NA NANA
Source: Company estimates, Research reports
Although IITs and AIEEE have significantly increased capacity in the past 5 years,
there are still 40-50 applicants per spot, versus 10 applicants per spot at MIT in the
US
For example, only 1 out of 150 applicants get admission into the elite Indian Institute of Management (IIMs) compared to a ratio
of 1:11 for Wharton in the US
Source: Press Release for each exam.Based on 2010 Data
211285
40729
60
136
5
14
8
2006-07 2009-10P 2012-13P
Curriculum based coaching Graduation test prep Postgraduation test prep
Along with changing dynamics of the industry….
Law
Engg.
MBA
IAS
2011 – industry structure
MBA: 3 national players account for more than 85 % of market
IAS: Fragmented market with no significant player
Law: With one single exam, market is highly concentrated, with CL having significant market share
Engineering: Highly fragmented with more than 12-15 large players; biggest player with <2% market share
Evolution of market
Con
cen
trati
on
of
mark
et
Engg.
IAS
MBA
Law
Evolution of marketC
on
cen
trati
on
of
mark
et
Engineering: Along with other knowledge based tests, will remain fragmented
IAS, Law, MBA along with other aptitude based tests, will become national, online and the market will get concentrated in the hands of few players
2015 – industry structure
Knowledge based tests Aptitude based tests
Aptitude test to replace preliminary examination in 1st stage for Civil Services Examination
New JEE pattern to include an aptitude test for the exam from 2013
Will benefit players like CL as more exams move towards aptitude based
Tectonic Shift
It is expected that Engg will also slowly move
towards aptitude based test
Along with changing dynamics of the industry….Along with changing dynamics of the industry….
Vocational training – addressing the “skilled manpower” gapVocational training – addressing the “skilled manpower” gap
With high skilled manpower demand expected
And significant government focus
Government has set a goal of training 500 mn people
Various schemes have been launched at center and state levels for training people
NSDC is targeting to train 150 mn people by 2022 with funding requirement of upto INR 150 bn; equity of INR 10 bn mn has already been infused by the government
Various state governments together have annual budget of INR 50 bn for skill training purposes
Vocational training – a large opportunity
Indian vocational training services market expected to be a US$3.6bn market by 2012 (As per IDFC SSKI research report)
Majority of educated Indians (graduates & post graduates) are unemployable due to lack of technical education
Countries like Korea, Germany and UK have 96%, 75%and 68% vocationally trained workforce respectively
As per a recent report, out of 100 graduates only 10 were found employable (Source: UNESCO, Indian Planning Commission paper)
Note: *National Sample Survey Organization, Vision 2020
3
43
3 4 2
176
60
16 9 8
Retail Tourism Healthcare BFSI I T/ I TeS
Man
pow
er
(#,
in m
n)
2008 2022E
58.2% 3.8% 19.8% 8.0% 14.6%CAGR
CL’s target sectors for B2B offerings
Source: NSDC, Vision 2020
Key players
57%
12%
28%
3%
Redefined Higher Education Landscape(2005-2011)
Continued Diversification(1996 – 2004)
Initial Foundation (1938-1995)
1995
47%
22%
14%
7%
10%
~ $ 89 Mn
From a small test prep company, to being a pioneer in online higher education, K12 and professional training
Kaplan - The Journey (1995-2004-2011)
20112004
• Founded in 1938, • Acquired by The Washington Post
Company (1984)• 150 centres across USA, Canada,
Puerto Rico and London (UK)• # Enrollments ~ 1,35,000
$ 1,135.9 Mn
$ 2,465.0 Mn
Score! InternationalPTTPHE InternationalTPHE Ventures
• $1 billion in revenue in 2004,• Around 400 centres across USA,
Canada, South America, Europe,
Australia and Asia• # Enrollments ~ 5,00,000
• ~500 locations in more than 30
countries• # Enrollments ~750,000• Washington Post Company -
“education and media company”
100%
Test Prep
Source: The Washington Post Company Annual Reports and Press Releases
33%
40%
11%
16%
44%
39%
10%
7%
From a humble beginning, to being a credible brand name having strong platform and well diversified business model
CL Educate - The Journey (2006-2012-2015)
0.05%
99.95%
2006 2012
INR 18,467 lakhsINR 5,387 lakhs
Voc. & FE CL MediaTest Prep K-12 Voc. & FE CL MediaTest Prep K-12Test Prep K-12
INR 37,975 lakhs
2015 (P)
2011200720062005200019991995 1997–1998 2000–2004 2008–2010
• Career Launcher India Ltd. founded; started with a PDP program for CAT aspirants
• 1st franchisee center in Modinagar
• Acquisitions for entry into CET, Engineering and Law Test Preparation
• Acquired KITS (2000), ARC and LST (2004) respectively
• Buy-back of Intel Capital
• Launch of Employability Training; acquired Kestone to strengthen training; agreement with Government of Rajasthan under Rajasthan Mission of Livelihood (“RMoL”)
• Pegasus – first product for CAT launched
• Extended into other domains with Magic Lamp (BBA/Hotel/ Law/Fashion)
• Investment by Intel Capital
• Foray into K-12, Higher Education and Vocational training
• 1st Indus World School (“IWS”) opened in Hyderabad
• Investment by Gaja Capital in CL
• HDFC takes a stake in K 12 business
Key Milestones
A Credible Brand Name…
• Founded in 1995 by alumnus of IIM –B
• Superior track record in delivering strong student outcomes and one of the most respected education brands in India
• A market leader in test prep; current offerings include
• Test prep and training services
• Education publication
• Vocational and employability training & Further Education
• K-12 schools
• Backed by Gaja Capital and HDFC Limited
…having strong platform and well diversified business model..
• Unique educational platform given its vast presence and captive network of highly experienced franchisees
• Diversified from test prep company to a full service education company
• Growing “institutional ” service offerings
…With a Pan India presence… …and Quality Management Team at helm
• Led by one of India’s most talented and entrepreneurial education management teams
• One of the most stable Management team together for close to 12 years
• Track record of introducing new products, entering new cities and expanding into new businesses rapidly
• A team with over 100+ individuals from IIT’s / IIM’s and other leading institutionsTest Prep
VocationalK-12 Schools
One of India’s leading Education Services Player
High ROI Low Capex requirement
Presence in attractive segments
Test preparation & Training, Media and Publishing
• Over 2 million students take exams every year
• More than 7000 private engineering colleges
• 4000 business schools
• More than 300 private medical colleges• Estimated market size $3 bn in FY12 • Publishing Business over $ 2 Billion in FY 12
Vocational Training & Further Education
• Indian workforce currently stands at 460 million
• Largely untrained and unorganized
• Only 25% of fresh graduates are employable
• Estimated market size $4 bn in FY12 and growing at a CAGR of 24% (FY08-12)
K12 Education
Huge untapped potential Opportunity to partner with leading corporates
School going population of India increasing by 20 million every year
Government schools suffer from poor quality infrastructure Increasing disposable income enhances propensity to spend on
education Estimated market size of $34 bn in FY12 and growing at a CAGR
of 14% (FY08-12)
Huge demand supply gap: 20,000 – 25,000 new K12 schools ‐required annually for urban middle class
Government’s initiative to push for PPP in K-12 seen as a potential game changer
Favorable Industry Dynamics
ePravaalCL Educate powered by technology – The schools interacting and engaging
Congratulations ! Indus World School
Our Scores
Who are we looking for• Fire in the belly• Fearlessness• Future anchored• Questioning
status-quo
• Entrepreneurial• Tech in education• New media• Teaching and
facilitating
Model• Entrepreneurial progression:
– Many who are entrepreneurial have taken their entrepreneurial dreams to greater heights being part of CL, by merging
• Eg: Law school entrance - Sachin Malhan;
– Over a hundred have started their own enterprises, over time, after being part of CL
• Eg: Sports portal - Arjun Wadhwa
• Intrapreneurial Progression:– Started with CL as a management trainee, been there for a few years
then moved out to other corporate • Eg: Adi - Google Asia HR head… many many more..
• Interns– Those who have done short stints with CL, across any of the verticals
• Eg: Rahul Govind - IIM grad, went on to do his Ph.D in the US, and is a Mktg Prof in an IVY league B-school
Thank Youhttp://www.cleducate.com/