"This
growth would not have been possible without the efforts of the entire team at
Treehouse"-
Dear
Shareholders
It gives me great pleasure to welcome you to the 6th
Annual General Meeting of Treehouse Education and Accessories Limited. The
Company's accounts for the year ended March 31, 2012, along with the Directors'
and Auditors' report, a Letter to the Shareholders, and Management's
Discussions and Analysis, have already been circulated to you. With your
permission, I would like to take them as read.
I am particularly happy to welcome you to the 1st AGM after the
successful IPO of the Company in August 2011. As you know, the IPO was offered
at a price of 135 rupees per share with a 6 rupee discount to retail
shareholders. You will be pleased to note that Treehouse is one of the few
companies which has created shareholder wealth after the IPO. We are now part
of the BSE 500 index also. We believe that this reflects the faith of the
investors in the education sector and in the performance of the Company.
1. Company Strategy
As many of you would already be aware, Treehouse is India
With so many operational centers across the country, your Company
has now reached a critical mass. We are not only growing in number of
operational centers, but also in the number of children studying under the
Treehouse brand. The previous year saw significant growth in admissions at our
centers. This was the primary driver of revenue growth for the Company.
2. Business and Financial Performance
For the financial year ended 31st March 2012, Total revenue of the
Company increased from 41.15 crore rupees to 81.08 crore rupees , reflecting a
growth of 97%. EBIDTA increased from 18.83 cr ore rupees to 45.88 crore rupees,
a growth of 143%. EBIDTA margin saw an increase from 45.7% to 56.5% as compared
to last year. Net profit increased from 9.19 crore rupees to 21.66 crore rupees
on a year on year basis.
Reflecting the good performance of the Company and confident that
the performance will continue in the future, the Board of Directors have
recommended a maiden dividend of 10% , ie 1 rupee to all the shareholders of
the Company. This growth would not have been possible without the efforts of
the entire team at Treehouse , which is very admirably lead by Mr Rajesh Bhatia
, who is the Managing Director and Promoter of the company. His vision ,
hard-work schedule and quick decision making has been largely responsible for
this performance and will be of importance for the growth of the Company in the
future.
3. Industry outlook
The Indian education system is one of the largest in the world and
is divided into two major segments - core and non-core businesses. While, the
core group has schools and higher education, the non-core business consists of
preschools, vocational training and coaching classes. The concept of preschool
is gaining immense popularity due to increasing awareness about the fact that
about 40% of a person’s ability to learn is shaped during the first four years
of the child’s life. We, at Tree House understand this, hence we handhold them
for their future during their formative years.
According to a research report released by CRISIL, the preschool
business is expected to reach 13300 cr by 2015-16, out of which the branded
preschools are expected to contribute approximately 4500 cr. Factors
contributing to this growth are expanding urbanization, rising disposable
incomes and increasing awareness about the role of pre-primary education.
The Indian Parliament adopted The Right of Children to Free and
Compulsory Education Bill in 2009, which envisages education to children in the
6-14 years age group obligatory. As per this bill, every school will have to
earmark at least 25% seats in their lowest class for poor sections of society.
The bill seeks to do away with the practice of schools taking capitation fees
before admission and subjecting the child or parents to any screening
procedure. The bill also seeks to ban private tuition by teachers and ensure
that no child is subjected to physical punishment or mental harassment. It
shall be the duty of every parent or guardian to admit the child to a neighborhood
school for elementary education and no child should be denied admission for
lack of age proof. We welcome this initiative of the government and believe it
is beneficial for society in the long run.
4. Treehouse
Operations
Ø
Our offerings today include the following
Ø
Preprimary classes for ages 18 months to 66 months
Ø
Teacher Training courses
Ø
Activity and Hobby classes
Ø Day care services
Ø Day care services
Management
contracts for K-12 schools
Treehouse expects
to keep growing in the future by opening more centers in existing cities and
also in new cities. Over the next 3 years, we expect to grow in each of the
above activities and should reach a stage where we are a significant player in
all the top cities in India
Factors contributing
to the differentiated offering are:
Ø
Best in class curriculum which is constantly updated
Ø
Teachers who are passionate about teaching and love children
Ø
Continuous high quality training of staff
Ø
Stringent Quality Control both on Infrastructure as well as
curriculum delivery
Ø
Regular Assessment and feedback mechanism for parents
Ø
Top of the line infrastructure and facilities
Ø
Willingness to innovate
·
5. Human Resources
Treehouse is a
unique Company where women constitute 98% of the employees in the Company.
Employees are attracted to our HR practices which are based on the principles
of being secular, fair, transparent, professional and conducive to learning.
Our teachers keep growing not only in terms of compensation, but also in terms
of their overall learning and exposure to global best practices in the
preschool space. Treehouse has a robust talent management program wherein
employees are primed to take on higher responsibilities within the Company. Our
employees are our key assets and we are committed to providing them the best
facilities to work in and the best opportunities to grow.
6. Building the
Nation
All of us know
that our children are the future of our country. Treehouse is contributing to
nation building by providing proper preschool education to thousands of
children across the country. Our students are well equipped for further studies
based on the solid foundation built at Treehouse. Our children are not only
smart in terms of academics, but have strong moral and social values instilled
in them. We sincerely believe that our students will go on to become ideal
citizens of India
7 .
Acknowledgements
With these words,
I would like to take this opportunity to thank the shareholders, investors,
bankers, financial institutions, lenders, suppliers, vendors and parents for
their continuous support. Treehouse would not be where it is today were it not
for all of them.
I thank all my
colleagues on the Board for their support and consistent encouragement.
Finally, I acknowledge the selfless commitment and passionate dedication of the
Treehouse employees who are building a truly world-class business enterprise.
Thank you.
Sanjaya Kulkarni
Chairman, Treehouse Education and Accessories Limited
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