Chennai-based edtech company Veranda Learning Solutions hopes to become Ebitda-positive by the end of March quarter of the current fiscal. It is also in talks with multiple firms for potential acquisitions in both offline and online segments in FY24. The publicly-listed company, which had acquired 76% of the outstanding capital of CA test-prep provider JK Shah Education (JK Shah Classes) in October this year for `337.82 crore, is in the process of integration of the company.
In an exclusive interview, Kalpathi S Suresh, executive director and chairman of Veranda Learning Solutions, told FE: “After the listing in April, September was the second consecutive quarter where we declared losses. However, in the process, we have made investments and I think we will be able to become Ebitda-positive by March quarter end, as they (investments) will be starting to pay off.”
Explaining the reasons behind the optimism on achieving profitability, he said the offline vertical of the company – Edureka Learning Centres – which is being developed for quite some time now, will start giving returns. Also, the businesses the company acquired will help amortise the corporate cost, coupled with contribution of the newly formed higher education business.
The company is planning to take the JK Shah Classes, which is currently in Maharashtra and Gujarat, to 15 key states, including the south. In another three to five years, the plan is to reach the number of JK Shah Classes units to 350-400 from the current 75, and most would be on a franchisee model.
Veranda had acquired Edureka, a live-instructor-led online solutions provider for the IT industry, in 2021 for Rs 245 crore. This 100% acquisition marked Veranda Learning Solutions’ second buyout since December 2020. It had acquired the online business of Chennai Race, a coaching institute for banking, SSC, and PSC exams in late FY20 and had launched Veranda Race subsequently.
During the second quarter of FY23, the company, promoted by the Kalpathi AGS Group, expanded its offline centres under Edureka brand, named Edureka Learning Centres and founded its higher education business. “We have a hybrid business, we have the online business which we are taking offline and vice-versa, so that we have both flavours,” he said.
Talking about the potential acquisitions, he said the company is in talks with multiple companies in both online and offline segments. “ I don’t mind whether it is an online education company or offline one, I can make an online into offline as well and vice-versa. I am looking at two things only, one is the pedigree and the other is the profitability.” he said.
Initially, the company will raise debt for the purpose of buyouts and once the deal is done, it will plan to raise the equity funding.
The company had completed a preferential allotment of Rs 193 crore and a debt raise of Rs 82 crore, which is utilised towards strategic acquisitions to boost inorganic growth. The equity raised through a preferential issue includes an investment by the promoters in the form of convertible warrants.