Tuesday, November 01, 2005

Educomp to mop up Rs 60cr through IPO

Educomp Solutions, a new age education company, is planning to expand its global business with a focus on the North American market. To materialise this plan, the company, is planning to go in for an IPO in the second or third week of November through the book-building route and will issue 40 lakh shares, reports DNA.
The 25-crore (Rs 250 million) networth company is looking at mopping up Rs 50-60 crore (Rs 500-600 million) from the market.
“Educomp intends to invest Rs 16 crore (Rs 160 million) for expansion of its smart class programme which is a digital library that can be used by both teachers and students. An investment of Rs 30 crore (Rs 300 million) is planned for stepping up business with the government, Rs 10 crore (Rs 100 million) for content development capability, and another Rs 10 crore (Rs 10 million) for acquisition of smaller entities. We will spend roughly about Rs 8 crore (Rs 80 million) over the next two years for global operations,” explains Shantanu Prakash, Director, Educomp Solutions.
Any shortfall in funds will be taken care by internal accruals, clarifies Prakash.
“We look at reaching out to around 10 million learners through our products and services by 2008 and aim to be among top 10 learning companies in the world,” says Prakash.
Educomp registered a turnover of Rs 32.2 crore (Rs 322 million) for the year 2004-2005 and has grown 25% year-on-year over the last few years. Presently, the company is integrating technology in schools by treading the public-private partnership. Like a one-stop shop, it provides hardware and software to government and private schools.
The company’s smart class programmes has many takers in Singapore while in the US, it is carrying out pilot projects in Santa Barabara schools.
“For each school here, we invest between Rs 40-80 lakh, and enter into a long term, three-year pact with the school. The school does not have to make any lump-sum repayment. Instead, every student pays a certain amount per month,” explains Prakash.
“Currently our business is going strong in all regions, but we really need to tap private schools in the eastern market,” adds Prakash.
The company is all set to address the US market, world’s largest education market, that has a K12 content spend of over USD 10.2 billion in 2004, an online market spend of over USD 4 billion and an assessment market spend of USD 2 billion as entry potential.
“On the domestic front, Educomp will try to leverage its leadership position to further strengthen its market share in professional development and turnkey solutions for the schools,” says Prakash.
Large market spend on digital divide initiatives - in the region of Rs 1,200 crore (Rs 12 billion), (FY2004-2007) and private initiatives estimated to be in the region of Rs 2,200 crore (Rs 22 billion) over the next three years forms a bulk market potential for the company in the coming years.


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