IEC EDUCATION LIMITED
(FORMERLY KNOWN AS IEC SOFTWARES LIMITED)
ANNUAL REPORT 2008-2009
I have great pleasure in welcoming you to the 15th Annual General Meeting
of your Company.
The entire world economy has gone through the most challenging period of
its time during last year. The unprecedented financial crisis considered as
worst since the Great Depression has brutally shaken the foundations of
some of the strongest economies in the world. India has also not been
untouched by this but at an cumulative level our country has displayed
commendable resilience to it. Despite of pall of gloom on us, there are
reasons to remain optimistic and confident.
The more-than-a-billion population of India calls for a vast education
system, which has observed a high growth rate. This growth rate has become
more rapid recently with globalisation and entry of a number of global
organisations in corporate and education sector in particular.
India currently has over 400 universities and more than 20,000 colleges
with an enrolment of around 14 million students. In spite of these numbers,
India still faces a lack of adequate infrastructure in higher education.
This is in light of the fact that institutions in India can accommodate
only 7-8% of the country's college-age students.
The recent initiatives and high-level discussion among the bureaucratic
circles and industry chambers to bring changes in the education sector have
brought hopes of a new thrust in strengthening India's position as a global
knowledge hub. However, the Government's expenditure pattern indicates that
a rapid scaling-up of infrastructure for higher education will not be
within reach in the near future. Considering that the Planning Commission
has identified a resource gap of INR 2.2 trillion, it seems unlikely that
the Government alone will be able to meet optimum infrastructure
Owing to constrained investment, the sector is unable to cope with growing
market demand and global competition. Increased private investment is thus
imperative to expand infrastructure and provide greater access to quality
higher education in India.
Gone are the days when educational institutes were started with the sole
aim of knowledge dissemination. The future belongs to educationists who
believe in knowledge creation through high quality research and
development. For this the institutes will have a strong focus on providing
world-class ambience and infrastructure in which intellectual capital will
thrive and bloom. India will thus be a knowledge hub where the public funds
will be used for teaching, coaching and learning. In this way the
educational institution will indulge in infinite value creation for the
India has the largest population globally in the K12 age group. Despite a
mere 37% of the K12 age group net enrolled on school rosters, private
spends on K12 schools stand at an astounding $20bn - which makes the
segment the largest within IES. The large market can be explained by a
consistent shift towards private schools - catalyzed by the absence of
quality public schools and growing awareness about importance of quality
education as also increasing ability and willingness of Indians to pay.
Within the private K12 space, the last decade has seen a gradual shift from
private aided to private unaided (i.e. costlier) schools. This clearly
indicates that more and more parents now prefer to spend substantially
higher amounts in their quest for better quality of education for their
children. Driven by such price discovery and growing acceptance of private
schools as the medium for quality education, the market for K12 is expected
to reach $30bn by 2012.
Your Company is in process of entering agreements with trusts possessing
land for the joint development of schools. The Company has already
identified Two Sites (Alwar and Solan) for the school and is waiting for
the concerned trust to get possession of lands from relevant authorities.
The Company has entered into agreement with VET for the joint development
of Senior Secondary School along with Women's Engineering College at Alwar.
VET as part of its obligation has already made 50% of payment towards land
cost and rest 50% will be made by August 2009. Once VET gets the possession
of land it will apply to statutory bodies for necessary approval.
During the year under review, your company has also done work on the
finishing schools and in the line of the same, amalgamation of erstwhile
VEF Information Systems Pvt ltd with IEC EDUCATION LIMITED has approved by
the Hon'ble High Court of Delhi, which was involved in providing the
technical and other support services to the vocational institution in North
India. Due to the amalgamation with a profit making concern having a good
brand value in the market, management has opinion that abovesaid
amalgamation will be beneficial for the company in the terms of increasing
quality of the services as well as increasing the profitability of the
The imperative for students to draw on skill sets to effectively compete in
a dynamic business environment has given birth to vocational training-a
parallel $1.5bn education system. Also, the increasing relevance of
services sector in the Indian economy calls for enhanced technical and soft
skill sets. Corporate across industries too are gleaning from their global
counterparts the culture of continuous upgradation in skill sets of
employees at all levels. While the factors suggest rapid growth as new
training areas emerge, the space remains highly fragmented.
Nearly 95% of the youth in the 15-25 years age group formally learn a trade
or acquire a skill/ competency in most of the developed world. In contrast,
only 5% of India's young labour force (19-24 years) is estimated to have
acquired formal training.
The Vocational education space encompasses training services at all levels,
be it for students passing out from schools and colleges or re-training
needs of the employed set. The Indian IT Training market has been estimated
at $525 million. The number of non-IT graduates employed in IT sector is
growing faster than the number of IT graduates, fuelling demand for private
institutions offering IT education. Another opportunity, which has come in
wake of liberalisation efforts, is the approval of Public Private
Partnership (PPP) by Government of India for upgradation of Industrial
Training Institutes (ITIs) and transforming them into Centres of
IEC Education Limited (IEC) and Vocational Educational Foundation(VEF) as
consortium, have been awarded a project under a concession agreement signed
by VEF with Department of Technical Education, Punjab for the establishment
of Polytechnic and Integrated Campus at Nanowal Vaid, Hoshiarpur. The said
agreement was signed on 30th January 2009 and the concession period is for
60 years. Your company shall fulfill its obligations as per the terms laid
down in Consortium Agreement.
ICT in Education:
With government's increased focus on computer literacy in public schools,
private companies are lining up to service the demand. For awarding the
contracts, tenders are floated by state governments for a number of schools
in a district. The contracts are awarded to 2-3 private players based on LI
and Tl bidding. While some state governments follow the 'outright buy'
model, wherein the government pays upfront (at the beginning of the
contract) for the hardware, the contracts are commonly structured as BOOT
contracts for a period of 3-6 years.
ICT is being implemented in schools through the PPP route. To date, various
states have auctioned ICT contracts to private suppliers for ~100,000
schools (indicating a market size of $90m). With the government increasing
spend for ICT (29,000 schools expected to be up for bidding in FY09) and
low market penetration (currently 11% of total public schools), we expect
this market to exhibit 70% CAGR in the years to come.
What the Future holds:
The demands of a clear structure in the Indian Education sector and the
skills requirement are so compelling that evolution of a new era in the
sector is imminent. The experience of our Company in the education sector
and the expertise of the promoters in higher education is being leveraged
to create a consolidated education business, taking one step at a time.
Brig. A.V.S. Chowdhry