TREE HOUSE EDUCATION

& ACCESSORIES LTD

Corporate Presentation
December 2014

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Our Mission
We aim to be one of the
top 3 global brands in
pre-schooling and
daycare on a selfoperated basis

Table of Contents
Tree House Key Strengths
Overview of Indias Education Sector
About the Company
Financial and Operating Performance
Platform for Growth

Annexures

Awards, Organizational Structure & Management Profiles

Tree House Key Strengths

Largest self operated pre-school chain in India*

Focus on self-operated pre-schools, enables expansion planning

Supported by franchisee pre-schools, related pre-school brands, daycare centers
Services to K-12 schools provides forward integration opportunities in pre-school clusters

One of the established and leading brands

Operate under the Tree House brand which is well-recognized for quality teaching methods
Proven track record in pre-schools helps in related diversification
Strong geographical presence across 75 cities in India

Standardized processes maintain quality of learning experience

Demand and preference for organized pre-schools with standardized curriculum

Brand associations well-trained faculty, innovative teaching methods, contemporary pedagogy
Follows consistent quality, hygiene, safety parameters
Teachers training program facilitates quality education

Scalable business model

Managed to penetrate diverse markets including Tier 2 and 3 cities

Positive attributes driving smooth penetration in new cities
Asset light model resulting in optimization of costs

Successful execution pilots strong financial results

De-risked and return focused business model spread over multiple geographies in India
Revenues from tuition fees, activities, camps, teacher training, day care, K-12 school management fees
Centralized procurement, consistent processes allow cost management and efficient in project execution
5-year CAGR of 73% in revenues and 144% in profits as of FY14
* CRISIL Industry Report on Pre-schools (Play group and Nursery) in India - August 2013

Overview of Indias Education Sector

Structure of the Education Industry in India

Indian Education Sector

Indias preschool market to double

by FY18 (INR bn)

Formal
Education

K-12
Higher Education
Preschool

Informal
Education

180
160
140
120
100
80
60
40
20
0

66.4

80.4

97.2

FY13 FY14 FY15E FY16E FY17E FY18E

Break up of Market Size 2012-13

Vocational Training
Open and Distance
Learning
Coaching
Institutions

116.1

138.3

164.7

80%
Organized

20%

Unorganized

Organized pre-school expected to grow at

CAGR of ~ 26% to reach INR 42.7 bn in FY18
from INR 13.3 bn in FY13

Source- CRISIL Industry Report on Pre-schools (Play group and Nursery) in India - August 2013

Favorable Macro Environment

India growth story

As Indias economy continues to grow, a larger

section of population will want access to quality
education

Rising urbanization

Higher level of awareness among parents towards

need of education in initial years is resulting in
greater exposure to pre-schools

Increased income levels

A growing middle class and rising per-capita income

levels will lead to increased spending on education

Increase in working women population

Growing working women population is creating

potential for the sector to expand

Aspiration for improved quality of education

Branded and quality education is increasingly

gaining wallet share with the changing demographic
profile

India; population & urbanization trend

Year

Population
(mn)

Urban
(mn)

Urban
(%)

2010

1,206

373

31%

2030

1,476

583

39%

2020

2040

2050

1,353

1,566

1,620

471

701

814

Source: United Nations Population Division , Dept. of

Economic and Social Affairs, World Urbanization
Prospects: the 2014 revision

35%

45%

50%

About the Company

Who we are
We are Indias leading educational service
provider operating the largest number of
branded self-operated pre-schools*

Source- CRISIL Industry Report on Pre-schools (Play group and Nursery) in India - August 2013

Our journey so far

Started providing
educational services
and infrastructure
facilities to K-12
schools

Established private
limited company to
carry forward
growing business

FY03

Launched the
first Tree House
pre-school in
Mumbai

10

Converted to a public
limited company

INR 90 mn private
equity investment
from Matrix Partners
and INR 310 mn
from FC VI India
Ventures

INR 350mn private

equity investment
from Matrix Partners

Launched first
franchisee pre-school

FY07

Acquired pre-school business

Global Champs in September
2012

FY08

Launched teacher
training program

FY09

FY10

INR 150 mn private

equity investment
from Matrix Partners
India Investment
Holdings, LLC

Ranked among 100

best small businesses
in Franchising World
survey

FY11

Investments of INR 412 mn

from ON Mauritius and Aditya
Birla Trustee Company

Issued warrants to promoters

which have been converted
into equity shares aggregating
to INR 400.7mn
Launched pre-schools for
underprivileged children
under the brand Global
Champs

FY12

Investments of INR 189

mn received (INR 42
mn from Matrix
Partners, INR 14 mn
from FC VI India
Ventures and INR 133
mn from ON Mauritius

Successful IPO of INR

1121 mn, listing on NSE
and BSE

FY13

FY14

Acquired Brainworks
chain in 2013

Started additional day

care centers in Mumbai,
Pune, Hyderabad and
Bangalore
Inaugurated Global
Champs in Dharavi,
Mumbai

Our Network
Pre-schools

K-12 schools

No. of pre-schools

schools
Present in
Maharashtra,
Gujarat and
Rajasthan

No. of cities

11

Our Business Overview - Pre-schools

Pre-school Business Model

Franchise
Pre-schools

Self-operated
Pre-schools
OFFERINGS

12

Playgroup
Nursery
Junior KG
Senior KG
Day Care Services
Teacher Training Course
Summer Camp
Hobby/Activity Class

Targeting
Indias non
discretionary
consumption
spending

Self operated
pre-school
chain targeting
an untapped
segment: the
urban
aspirational

Our Advantage
Focus on Quality Programs

Tree Houses curriculum blends the Playway and Montessori methods

to provide a balance of education and fun
Curriculum content delivered uniformly across the country

Holistic Developmental Education

Learning methods attempt to develop the childs social, physical,

emotional and cognitive skills

Emphasis on role play and socio-dramatic plays (promoting out of the

box thinking)
Learning outcomes tracked for every child annually

Innovative teaching methods to prepare the child for formal education

Student-Focused

Programs are designed to cater to the needs of each child in a

customized way to help physical and intellectual growth

Focused Faculty

Regular nationwide training for all teachers

Teacher productivity and output constantly measured

Reporting Measures

13

Monthly updates to parents through newsletters

Parent involvement in special activities

Our Business Strategy (Pre-school)

Tested business model

Only scaled up self operated preschool chain in India

* CRISIL Industry Report on Pre-schools (Play group and Nursery) in India (August 2013)

Brand
Positioning
Management
Structure
Content
Customized
pedagogy developed
for Indian children
14

Decentralized
operations with focus
on center level
leadership

Affordable yet
aspirational brand

Market
Penetration
Strategy
Going deep v/s going
wide creating
barriers to entry

K-12 Overview and Strategy

Provide school management services

(annuity income) to K-12 schools in preschool clusters

K-12 Strategy
Logical extension of our preschool business
pre-schools as feeders to K-12 schools
Long term contracts with K-12 schools to provide school
management services
Leveraging the Tree House brand
Annuity model with predictable cash flows delivering year-onyear growth
15

Financial and Operating Performance

H1 Operational Highlights
Pre Schools
net addition of pre-schools in H1 FY15

GROWTH

pre-schools as on September 30, 2014

The number of self-operated preschools is 435

Ratio of self operated preschools to total preschools is 80.85%

Pre-schools in
cities in India

12 new cities launched in the first half of FY15:

Kozhikode, Ajmer, Bikaner, Gorakhpur, Dewas, Bhilai,
Ujjain, Allahabad, Gwalior, Hazaribagh, Kota and Beawar

17

Operational Highlights
K-12 School management services
The Company is providing school management services to
24 K-12 schools in 3 states in India

Employee Strength

Total staff strength as on September 30, 2014 is 2,100

Total teacher strength as on September 30, 2014 is 2,009

Day Care

18

Services are currently offered at 104 pre-schools

The model is gaining traction and presents huge
potential for growth

Q2 & H1 FY15 Performance

Particulars
Q2FY15
(in INR mn)

Growth

H1FY15

H1FY14

Growth

Income
from
Operations

497.6

412.9

20.5%

1,036.7

821.6

26.2%

296.9

229.3

29.5%

629.6

457.0

37.8%

EBITDA
Margin

59.7%

55.5%

413 bps

60.7%

55.6%

510 bps

PAT

125.9

114.7

9.8%

286.3

237.7

20.5%

PAT Margin

25.1%

27.6%

(250)bps

27.5%

28.5%

(98)bps

EBITDA
operational

bps = basis points

19

Q2FY14

Financial Trends
Total Revenues (INR mn)

412

811

1,213

1,589

FY11 FY12 FY13 FY14

1000

1,042

H1
FY15

Book Value/Share**
(INR)
41

85

95

109

FY11 FY12 FY13 FY14

EBITDA* (INR mn) & Margins

800
600
400
200

52%

41%

420

169

51%

618

892

57% 630

FY11 FY12 FY13 FY14

EBITDA

61%70%

H1
FY15

EBITDA Margin (%)

500
400

300
200
100

22%

92

116

H1
FY15

4.1

7.2

9.6

11.8

FY11 FY12 FY13 FY14

**Shareholders Funds/No. of Outstanding Equity Shares

#ROCE = EBIT/Average Capital Employed

27%

217

27%

333

27%

27%

439

FY11 FY12 FY13 FY14

PAT

Diluted EPS (INR)

*Operating EBITDA excluding other income

20

60%
50%
40%
30%
20%
10%
0%

PAT (INR mn) & Margins

286

H1
FY15

PAT Margin (%)

ROCE#
7.6

11.2%

H1
FY15

FY11

15.9%

15.4%

FY12

FY13

17.8%

FY14

30%
25%
20%
15%
10%
5%
0%

Recent Corporate Developments

On 6th September 2014, the Board of Directors approved and executed the Memorandum of
Understanding (MOU) for sale of Tree Houses land and building located at Vadodara,
Gujarat

The particular property being considered for sale under this MOU is located at Village Atladara,
Vadodara, Gujarat and represents one of five K-12 school land and building premises fully or partly
owned by Tree House. The Company plans to monetize its physical assets while continuing to
provide educational services to these institutions.

Tree House listed among the countrys most trusted educational institutes

In the first ever study conducted by TRA (formerly Trust Research Advisory), published in August
2014, Tree House received the highest rank for any pre-school in India
The report was based on findings from 7 million data points from surveys conducted across 40
cities and 8,000 respondents, modelled on a research methodology developed with the Indian
Statistical Institute, making it the largest and most comprehensive such exercise in Indias
educational sector
Source: India's Most Trusted Educational Institutes - 2014

21

Platform for Growth

Robust Platform to drive mid-long term growth

Non-discretionary consumption-led business model driven by
a proven & institutionalized framework for expansion
Dedicated regional management
resources

Dedicated team focused on new

center additions

o Marketing and brand

awareness
o Demand creation

o Driving parent engagement

Periodic assessment of
curriculum

Center
Expansion

Constant training and

development of teaching staff
Use of internal and external
expertise for quality checks
Experienced HR team

Focus employee training

program
Sound HR practices

Remuneration and rewards

program (ESOPs to employees)

23

Experienced team of
leaders who have deep
domain expertise and
instrumental in
developing a strategic
growth path for the
company

Standardized
Curriculum

System and process standardized

for set up
Turnkey delivery covering

o Evaluation - town
demographics and local
economic drivers

o Identification center
location, logistics

o Execution contracts,
appointments, interiors

Team focused on creating high

quality education content
Programs designed to foster
competencies in children

Created to imbibe a value system

Updated with use of technology
where appropriate

Growth Initiatives
Expansion

Continue thrust on expanding self operated

pre school center network in new and existing
geographies

Focus on Training and Development

Create a platform to encourage talent growth

Sustained investments towards Tree House's inhouse training system to deliver quality education

Leverage diversified offerings- Daycare &

Teacher Training Program

Day care facility is a natural extension of the pre

school center and enables the Company to sweat
assets and have optimal utility
Professionally conducted program enables
women to become qualified teachers.

Monetize Assets

Committed towards monetizing investments in

physical assets of K-12 schools and moving
towards an asset-light operating structure

24

Annexures

Awards & Recognition

26

Tree House acknowledged as

Indias Most Trusted Brand in the
Pre-School category in a 2014
study conducted by TRA (formerly
Trust Research Advisory)
Best PE/VC backed Education
Company VC Circle (2013)
Amongst top 10 innovative
companies in India
Fastcompany.com ( 2012 )

Amongst top 500 most valuable

companies in India Business
Today (2014)

Key Management Profiles

Rajesh Bhatia Managing Director

Mr. Bhatia is the Promoter and Managing

Director of the Company
Holds a Bachelor of Engineering degree from MS
University, Baroda and Masters degree in
Business Administration from Pune University
Supported by an able management team, he
continues to oversee the strategic direction of
the Company

Utsav Shrivastava Chief Financial Officer

Vishal Shah Executive Director

27

Mr. Shah has nine years of experience in the

education field
He has a masters degree in management studies
from the University of Bombay

He has been associated with Tree House since

2007
He is responsible for marketing initiatives,
setting up of new centers, identifying properties
for expansion, appointing franchisees and
procurement

Mr. Shrivastava joined the company in April 2008

Prior to Tree House, he has previously worked with
Centurion Bank of Punjab as product head mortgages and
personal loans

He holds a Post Graduate Diploma in Business Management

from Symbiosis Institute, Pune
He is responsible for review of short term and long term
business plans, managing banking relationships and cost
reduction initiatives

Education Advisory Committee

Dr. Prerna Mohite Head of Advisory Board

PhD in Early Child Development
Ex-Dean and Professor of Human Development at MS
University, Vadodara
Has 43 years of experience

Ms. Shama Kittur

Diploma for teachers from Cambridge University and Post
Graduate in learning disabilities
Has 35 years of experience

Ms. Alaka Bhansali

ECCE from Bombay University
23 years of experience in the field of early childhood
education

28

The Advisory
Board has over
100 years of early
childhood related
experience on an
aggregate basis

Thank You
For further information please contact:

Utsav Shrivastava/Sanjay H Shah

Shiv Muttoo/Urvashi Butani

Tree House Education & Accessories Limited

Tel: +91 22 61306100

CDR India

E-mail: utsav@treehouseplaygroup.net

Email: shiv@cdr-india.com

sanjay@treehouseplaygroup.net

29

Tel: +91 22 66451207 / 1219

urvashi@cdr-india.com