Hugh Profit is due to book entry. Transfer of rights in high Learning Biz to JV with Pearson which is loss making. And book that right transfer as income in this Qtr in Eucomp (and s Equity in JV - Accounting ingenuity!
Margins have dropped -that is understandable.
However big issue - No visible progress on Raffles JV. Over 15 months old.
School learnings Solutions contributes over 96% of Revenues and is a Capital Intensive Biz - funding requirement large. Wants to securitize future earningss - means Margins will fall (cost of securitization and not going to be easy). Only banks approached are Nationalized banks - somebody should study why nationalized banks ONLY being approached - is it easier to get work done by extraneous means (in PSUs)- it is a open question. Will come under scrutiny soon.
Average receivable is over 210 Day (checkout revenues real) !! Somebody raised that issue - I am only highlighting.
You will see all QIP guys run faster than all small time investors. I see USD to touch Rs 50 in tehshort term as run for safety. EmergingMarket will see a large outflow. Look at VIX today - it is 18%. That means FIIs will run. DI will see redemption, so what will they sell all high PE companies. Educomp qualifies prime candidate.
Also very difficult for them to get more funding now onwards - so no growth. They also realise that - so moved to outright sale than BOOT model - they realise cash trap. That means they are changing their color - so no Annuity Biz. If that is the case, no sticky Biz. Thus more difficult to sell (as customer / schools have to buy upfront than pay over 5 years!
Watch fun. I expect it to touch back to 400 levels.
ninkyji would love to have ur assessment on edserv ( in edserv board) as major portion of their revenues are accounted for by sundry debtors (possibly franchisee fees/lumpsums due). thanks in anticipation.
i happened to attend edserve agm. the chairman answered the audience against a query on high sundry debtors as having received over 3cr of debtors during the first half (Apr-Jun09).
| NIFTY 
