The financial year 2012-13 was a very challenging year for your company amidst subduedeconomic growth across developed and emerging markets. After having achieved the milestoneof becoming "Indias largest global education company", we have seenumpteen challenges across geographies. Now, your companys business is aligned acrosssix key elements of education delivery - Teaching, Learning, Assessment &Intervention, Governance, Advanced Technologies and Consulting Solutions - that aredesigned to present customers with comprehensive and end-to-end solutions.
Our FY 2012-13 revenue grew by 16.5% to Rs. 1,907 crores 79% of which came fromthe US, 10% from the UK and the remaining 11% from India and other countries. Theoperating margins (EBITDA) for FY 2012-13 was at Rs. 735 crores at a healthy 38%. However,the profit before tax showed a decline of 10.6% over the previous year mainly on accountof the higher interest charges as well as the high depreciation and amortizations duringthe year. Your Company was able to sustain these results on account of its continuedclient relationships built in leading markets, ably supported by the ongoing developmentof IP and the ability to sew together a host of acquisitions to emerge as a specialist intechnology-driven education solutions.
Your Company has also successfully consolidated its overseas subsidiaries during theyear to exploit business and operational synergies between developed and developingmarkets. Now, Core Education & Consulting Solutions Pte Limited (the Singapore entity)is the holding company for some of its subsidiaries in USA, UK and Middle East.
Further, despite a tough financial market accentuated by global and domesticuncertainties, your Company was able to raise USD 50 million by way of a Term Loan in itsUS Subsidiary Core Education & Consulting Solutions Inc.
However, FY 2012-13 has not been a smooth ride for the Company. Your Company facedsignificant financial stress towards the end of the fiscal year mainly on account ofdecrease in sales, increase in receivables and non-availability of assessed workingcapital limits. These were a result of the economic and liquidity stress felt by variousgovernments across the world, leading to significant cuts in public expenditure in areasincluding education. Such cuts in government expenditure significantly impacted the orderflow and cash flows of the company since your Company mainly follows the Business toGovernment model. The companys fund raising plans were further impacted by a sharpdecline in its market capitalization led by a turbulent period for the Indian equitymarket, especially the listed mid-cap universe. All these have prompted your Company toinitiate discussions with its lenders to restructure its debts and it has approached theCorporate Debt Restructuring forum for the same. The debt restructuring exercise willenable the Company to comprehensively address the liquidity issues by matching thematurity profile of debt with the business cash flows which would get streamlined in sometime.
The muted growth was also a result of tightening of government budgets in yourcompanys major markets USA and UK. In the USA, the Congress passed the BudgetControl Act of 2011, which put into place automatic federal budget cuts, known as a"sequester," to take effect if Congress failed to enact legislation to reducethe federal deficit by March 1, 2013. However, since the Congress did not act on the same,these budget cuts are now in effect. Further, the austerity measures in the UK resulted ina year of stagnation there as well.
Despite all these, in line with your Companys mission of making students"campus or career oriented", your Company is betting big on vocational trainingfor the Indian market and intend to take up new initiatives in this area in the currentfinancial year. Further, in the area of vocational development, the goal is to help bringconstructive reforms in employability education.
Your Company has a collaboration with the University of Oxford and based on which ithas been able to create teacher training content which is ready for commercial use inIndia as well as across the globe. The Continuous Teacher Professional Development programis ready for launch and the Company expects to reap the benefits of this collaboration inthe near future.
In the coming year, your Company plans to foray into the Model Schools scheme to beimplemented under Public Private Partnership (PPP) model with Ministry of Human ResourceDevelopment (MHRD) in India.
Besides India, our focus on developing markets includes foray into African and MiddleEast markets. Initial success includes a partnership with the provincial government of Rasal-Khaimah in the UAE for running a higher education institute offering management,architecture and engineering degrees in content partnership with BIT, Ranchi. As you areaware, your Company had entered into a strategic tie up with BIT, Ranchi for management ofits RAK Campus. It plans to launch multiple new programmes - Diploma and Bachelor degreein Mechanical Engineering, Professional Certificate courses in IATA, CIMA etc, Part timeDegree courses in Engineering and Management Discipline.
While we have always strived to deliver our best, the global acknowledgment of same isalways heartening. We were recently named Dell Premier Partner of the year for 2012. YourCompany was also ranked No. 1 under "Indias Top 10 Transnational Companies withInternational Asset Base of USD 500 million" by Indian School of Business.
Though we expect a tepid growth in our established markets, we see a moderate pick uptowards the end of 2014 on the back of improved financial environment. Whilst we look toconsolidate in these regions, our expansion into new geographies like Middle East, Africaand Far East will contribute to the Companys overall growth in the years ahead.
In conclusion, I would like to thank all the employees for their unstinted commitmentand contribution in your Company in these tough times. I continue to look forward to theBoard of Directors guidance and your support during this challenging phase for theCompany.