CL Educate Ltd (NSE: CLEDUCATE) Q1 FY23 Earnings Concall Aug. 04, 2022
Corporate Participants:
Arjun Wadhwa — Chief Financial Officer
Satya Narayanan R — Chairman & Executive Director
Nikhil Mahajan — CEO
Presentation:
Arjun Wadhwa — Chief Financial Officer
Good afternoon, ladies and gentlemen, and welcome to CL Educate Limited’s Q1 FY ’23 Earnings Conference Call. My name is Arjun Wadhwa, I’m the CFO of CL Educate Limited and I’ll be your host this afternoon. Like last time, we are hosting this call on our Keystone platform. Sorry we’ve had a few glitches over the last couple of minutes, but we’re all ready and ready to go now.
Joining me on this conference call today is the senior leadership team of CL, Mr. Satya Narayanan R, our Chairman CL Educate and CEO of our test prep business; and Mr. Nikhil Mahajan, Executive Director and Group CEO of our Enterprise business. This call is always will be recorded, transcribed and made available on the Investors own on our website in the next 48 hours. I’d like to start today by inviting Satya to take you through the early part of the presentation, following which Nikhil will run you through to the end. Please post your queries in the chat box. And we’ll take them up after we’ve run through our presentation.
Satya over to you.
Satya Narayanan R — Chairman & Executive Director
Thank you Arjun. Kindly do confirm that I am audible.
Arjun Wadhwa — Chief Financial Officer
Absolutely. Loud and clear.
Satya Narayanan R — Chairman & Executive Director
Yes. Thank you. Thanks, Arjun. Welcome everyone. I’m delighted to be hosting you here today at the investor presentation and the Q1 earnings call. As mentioned by Arjun, I’ll take all of us through the first three or four slides, following which I’ll hand it over to Nikhil to take us through the rest of it and all three of us will be available for the questions at the end of the presentation.
Yes. Arjun, we could move into the first slide. Okay, this is how our flow is going to be today. I’m going to cover the first part which is the journey. In short, in summary and as all of us and especially all of you who have a very, very insightful ring fence view of various businesses and across various sectors. And I just provide you with one perspective from the ATEC and Martek areas domains. But the last thirty six months has been a journey from one of Very acute disruption to one-off growth or disruption going to a very inappropriate or unfortunate challenges for various players. I’ll take us through that briefly, and then we move to business and financial updates and ending with corporate updates. Let’s move forward. One of the things that I wanted to start today was to share that the journey of our entities CL Educate has not been without its — without her share of challenges and especially even right after becoming a listed entity. However, one of the things we have always held as a bunch of entrepreneurs and entrepreneurial team over the last 27 years is that challenges come and challenges go, and the match is not lost when we have a fall. The match would actually be lost when we decide to give up and this is the place where I always would like to say and share with all humility that has seen CL has seen four phases or four waves since 1995. This wave of COVID was an exceptional disruption and EdTech has seen action like no other sector and all of you are aware in the private equity space no space got more money invested than in EdTech, but at the end of it when we are coming out of it. We think that boys will be separated from men and CL will stand very, very solid with and will come out very well in the litmus test which is always applied and which should always be applied for a listed entity from a financial investors perspective. I’ll move forward, and the way we’re seeing it is that you know when an environmental disruption that was caused how did we respond to it, what was the transformational steps that we took and how is it leading to growth. That’s what in essence, I want to cover very briefly on this slide. And it’s going to be a very short commentary across EdTech and Martek separately. To begin with, as you are aware, overnight the physical contact or face to face sessions came to a standstill and physical centers had to be shut when our Honorable Prime Minister Modi ji went up on television and said that we are announcing locked down. The thing that stood us in great state at that point in time was our mindset and our thinking that even prior to COVID there wasn’t ever in the, at least in the previous seven to 10 years, there wasn’t ever a strict partition or a separator between offline and online. It was a blended model even earlier. Let me give you an example. Even prior to that over 15% of the students never wanted to come to a physical center. Their discovery, their enrollment, their learning and experience, their testing and assessments and their are going away as an alum, giving their testimonial. All of those were online, which means quite literally we never shook hands with the students and we would run into them at an airport and they would come and say sir, you never taught me, we never met physically, but you have taught me and my name is such and such and I’m right now this IIT or that IIM. And at the same time, there is another set of the customer group which perhaps is almost if I may put a figure to it, it would be at least two-thirds going up to 80%. As a parent, you and I would do this saying that if I have an option between a pure online and the blended I would go for a blended with 20%, 30%, 40%, 50% of it is available on demand remotely from home, but there is a lot of face to face that is available, which results in great doubt solving inspiration, conversations with peers and all of that. So this blended model or omni channel was our model prior to COVID, but because we had 15% to 17% of our students doing distantly from homes we overnight moved into an pure online model and when the COVID has gone away, our omni model is back. All our centers are back in action, and the growth is going to be reasonably exciting in our view. One of the beautiful things that I would want to always reiterate about Career Launcher is that our expansion is capex negative because of our magic sauce that we talk about is our franchisee or business partner model. More details of it I can cover it at some other point in time, but moving for a brief commentary on the MarTech part. This one I must admit was looking more threatening because of the onslaught of COVID because most of our Keystone businesses weren’t — hadn’t discovered the online world prior to COVID and it’s a great opportunity for me to acknowledge the good work by the team. The current platform that we are working upon was built by the team in a matter of 20 weeks to 22 weeks during COVID, helped on focusing the large customers who were not happy enough with a generic product online conferences or seminars or webinars or presentations and they’ve taken it to the market and as COVID has gone away and offline also has come back, the transformation in terms of organizational structure, design, team, roles etc., Keystone has done very admirable job. The jury is still out there, but I think this looks like an exceptionally exciting journey for Keystone too post-COVID in the realm of marketing technology. I will reserve the more detailed commentary about the metaverse which Keystone has embarked upon and enabling their clients. Nikhil will cover a few slides down this presentation. At this stage, I also want to pause and express our gratitude and appreciation to our shareholders, investors, who showed many of them we’re not panicking when COVID hit and some of them when we meet in the investor conversations or when they reach out to us, the conversation is extremely heartwarming in the sense that they are extremely supportive and not just supportive, but had a great conviction that this is a challenging time at the end of which CL would emerge much stronger, CL Educate will emerge much stronger, both on the EdTech and the MarTech side. In that context, as a listed entity, I want to specifically express my gratitude to HDFC as an institution, which was on our cap table for 10 years. They came much before we went public. And just a week or two ago HDFC eventually finally has exited. And we’ve got a couple of good marquee investors who have come in and relieved or the baton passing has happened and in a journey of a listed company for a variety of reasons. And HDFC had to do some of these things because of the merger between HDFC Bank and HDFC. Otherwise we would have loved to have them on our cap table. Mrs. Madhumita Bhattacharya even today continues to be on our Board. We are extremely grateful to them for the support we got for almost almost a decade. I’ll move forward. This is something Nikhil will pick it up from here. I will only make one specific comment here and hand it over to him, which is that we are at this point in time, focused upon driving the business with the good old, those seven to eight important financial health parameters Parameters being on our dashboard on a monthly basis. However, without compromising on either the academic fidelity that is needed for a company like ours, where we continue to improve our results share when a family meets you and then they say the kid went to an IIM or an IIT or a law school from Career Launcher, that’s the wealth of brand that we are focused upon on this side and on the other side in Keystone, it is about the CXOs and the heads of marketing watching for the kind of services that Keystone brings to improve their marketing efficacy. I’ll pause there and hand over to Nikhil to take us forward. Nikhil, over to you.
Nikhil Mahajan — CEO
Thanks Satya, and good afternoon, everybody. I hope I’m clearly audible. Last four quarters, we have been very steadfast and focused on two critical aspects, one was enhanced shareholder value creation and the second point was the underlying tenets, which will drive enhanced shareholder value creation. So on enhanced financial performance, efficacy, efficiency etc., we worked steadfastly overcoming the challenges of COVID, posting better margins, faster earnings growth and a significantly lighter balance sheet after having done away and cleaned up significant part of old receivables and doubtful investments from the core of the face of our balance sheet.
In the last four quarters, as the business earnings began to reflect, we also focused on the tangible outcome of greater shareholder value and some of the steps we have initiated including a stock split when a INR10 share become a INR5 share happening in Q3 of FY ’22 about three quarters ago. Last four quarters, we have liquidated, four significant large parcels of real estate and released close to INR60 crores of investment or cash, which is available for us not to be deployed into business to accelerate the revenue and earnings growth. And part of it has been deployed in form of a buyback at INR170 to enhance shareholder value. We completed the buyback about a week ago and the process ran for over two months, and some of the existing investors were part and parcel of who choose to exit. We thank them for being shareholders at CL. Our endeavor for the coming four to eight quarters is enhancing shareholder value, shareholder wealth, or by consistently improving business performance, accelerated revenue growth and there are certain remaining parcels of real estate which we have an endeavor to sell over the remaining two to three quarters of this current fiscal year.
I’ll come to the quick snapshot of the financial update. Many of you would have seen that, once we have uploaded our business performance, the investor PPT on our investor zone in the morning. So the quick snapshot is our revenues year-on-year increase by about 36% and our EBITDA increased by about 30% in the comparable period. The PAT or the total comprehensive income and EPS increased by a much larger multiple because that also included one-time net exceptional gain. As a consequence sale of the real estate at greater Noida. However, independent of the net exceptional gain, our profitability at PAT level has improved by about 75% on a year-to-year basis of Q1 FY ’23 versus Q1 FY ’22.
In the last four quarters and the critical changes, which you would see on the face of the balance sheet is a dramatic reduction in our borrowings. Borrowings have come down from close to INR40 crores as on June 30, 2021 to about INR10 crores on June 30, 2022 and these figures have further gone down in the month of July post the realization of money from the sale of the real estate. Our net cash position has shown an increase of close to INR60 crores and this is post, accounting for about INR7 crores to INR8 crores cash outflow on account of buyback till June 30. As I shared, our EPS those showed a four times growth on a year-to-year basis, but includes one time exceptional income. However, the ROCE and ROE on an annualized basis have also shown significant improvement with ROCE increasing from 6.1%, close to 9.8% and return on equity, increasing from 4.4% to about 9.7%. Yes, we are still both on ROE and ROCE benchmarks below a certain current expected threshold. But I just wanted to reassure that we are well on our path to reach those threshold levels over the next four quarters to six quarters.
The re-opening of the world post COVID has made some of the things, which should have happened a couple of years ago, only delayed by something like eight quarters to 10 quarters, but the business environment stayed extremely positive and we would hope things to improve going forward. A brief update on how businesses — core businesses that taken a market business performed in Q1 on a year-to-year basis. The bottom business more or less performed similarly with revenue growth of close to 33% to 34% and an EBITDA growing at around 26%. One of the reasons of EBITDA growing slightly lower in Q1 as compared to the revenue growth is because of two reasons, physical centers reopened in the first quarter and that had initial some kind of expenses, which were loaded — which will get normalized over the remaining three quarters and also in the MarTech business, we saw coming back of physical event and rebalancing of split between virtual events and physical event.
And as you know, the physical events generate larger revenue, but a lower EBITDA margin. So that thing will — EBITA margin will probably see debt over the next couple of quarters till things stabilize as physical world reopens, but since that would be more than compensated by much accelerated revenue growth, our absolute numbers of both EBITDA and profitability. What look much better and superior over the previous quarters. A brief update on some of the key aspects of our business on test prep and EdTech side. Along the key thing that I said at the centers reopen, our average ARPU of the products increased by about 30% plus on a year-to-year basis. The volumes have also shown Increase between 5% to 7% across most products. CUET has been a new addition to our product portfolio in the last four to five months and that has shown reasonably attractive performance by us in the first quarter and as the exam gets more accepted by a wider gamut of universities and institutions. We see this opportunity panning out over the next three to five years in a significantly larger. Our endeavor to maximize our footprint in that market in that first year to establish ourselves as the market leader in that segment. We continue to focus on undergraduate segment of students from grade 10th to 12th without over focus — too much focus in engineering medical segment. So we are focusing on CUET law, IPM study abroad and between these four or five segment, we see somewhere around 6 crores student market. CUET itself will probably in three years become one of the largest — already one of the largest exams in India and with about 15 lakh students registering for the first edition, we expect this number to go to somewhere between 70 lakhs to 80 lakhs in three to five years. And that will open up a much larger frontier for expansion in the upcoming quarters for us. Last quarter, also saw significantly increased marketing advertising spends from our side to reinforce CL brand and also to capture the market opportunity not only in CUET, but also in NPA in the last segment as the physical centers reopen and the students began coming back to schools, colleges and and the coaching institution. You will continue to see higher marketing and advertising expense in the remaining course of the year also — and we remain confident that this would translate into an accelerated revenue outcome and growth in the remaining three quarters for the year. In the publishing business one of the dampener has been a significant increase in paper cost in the last two quarters with the paper prices having increased between 40% to 45%, but we have been able to reprice our offerings appropriately, which has enabled us to more or less stay margin neutral and we have been able to pass between 90% to 100% of the paper cost increase to our customers at least in the previous quarter and we are hopeful that this trend we would be able to sustain in the coming quarters as well. I think we covered CUET significantly in our last investor call in the month of May. Also at that stage it was still evolving. Now it has become a reality. We have had about close to 15 lakh registrations for the first CUET exam, half of which is already done and the remaining half will get over in the next 10 days. This opportunity of 15 lakh applicants in the first year, we clearly see multiplying it by 5 times if not more in the next three to five years and this CL growth 3 times on an overall basis in the coming five years. We have a partner network covering about 150 cities. We have 220 odd partners, and gradually our partners are beginning to pick up this product. While in the first quarter we saw only seven sign ups, the partner sign-up has also got accelerated in the last 60 days and the number of sign-ups, which will be reflected in Q4 in the coming quarters will be significantly higher and will be shared in the subsequent quarters with you. We have also launched long term classroom products targeting greater 11 and 12 for CUET and have begun to see initial positive traction coming in that as the schools have reopened only recently after 10th and 12th board exams. Again, a reinforcement we the CUET 14 subject and we have all variance with student having the ability to study at his own in a totally canned manner, or a combination of canned plus classroom or pure classroom as per his choice. You can see the list of the subjects and probably — CL is probably the only player offering such a wide variety of subjects for this exam. Most people are either focused just on the sciences, or the commerce segment or the humanity and we are currently struggling all the three streams student and our student enrollments are also more or less evenly divided across these three streams, giving us a reasonably solid foundation as we move into the core businesses season for the current academic year. As we said the last 24 months, everybody has been talking about digital, digital and only digital and we were always of the believes that there will be a healthy mix of physical and digital in some ratio whether that ratio is 50-50, 70-30 or 30-70 what probably be decided by the consumer and now everybody has come around and veered around to the fact that omnichannel is the way to go forward. Every so called EdTech player is now clamoring to open physical centers across multiple geographies and follow a path, which we have already been doing for the last 15 years. I think the critical success factors in this omnichannel game will be a robust technology digital backbone, accompanied by the largest — large footprint spread across the country covering as many students as possible in a physical manner. Philosophically or theoretically, CL centre can exist in every district, every district headquarters in the next 26 months. And our goal stated goal is to have 500 new centres in the next 12 quarters. I think we have relentlessly and aggressively pushing down that path to maximize our footprint and I think some of those outcomes will be visible in Q2 and Q3 as the plan gets rolled out. We are also experimenting and doing a pilot of having 100 distribution points in Delhi NCR region. Currently, we have 15 or 17 footprints. We want to increase the number by 5 times. Process has got stated. I think much clearer picture will evolve over the next two to three quarters. Another positive development has been that we have successfully migrated one of our pilots centers into the Metaverse, the testing and the student interaction, feedback process for this is going on and our endeavor is that over the next three to four quarters, each of the physical center will have a avatar in the Metaverse giving a significant traffic flow in the Metaverse environment and also enabling the overall metaverse game with reasonably solid traffic volumes, consumer other set of services, which are getting attractive other brands, getting attracted into the Metaverse environment besides the educational plans I’ll now spend some time on the MarTech update. On the Metaverse strength VOSMOS, which is a Metaverse platform of Keystone got formally launched towards end of June. We have signed up seven brands across different segments including art galleries, luxury brands. We have beauty product. We are currently executing a pilot for a leading hotel chain and once that is successfully executed, we hope to extend it to the entire hotel chain hotels in India. The revenue grew roughly around 33%, margins were more or less static. The operating expenses, generally increase as physical events came back and physical events posting structure is slightly higher. Dell and AWS are some of the key clients, which did significant business in Q1. The pipeline for Q2 is currently reasonably healthy and solid, and we expect to maintain the revenue run rate at least the coming quarters. Singapore operations also had a very solid start to Q1 and the pipeline looks good. Some of the virtual events and interactions, some of the customers and the clients who used in the previous quarter include Microsoft, Sun Pharma, Nutanix, Dell EMC. We did a doctor’s conference, woman leadership conference, science expo. So now this platform is widely accepted and we are now able to do physical event and a virtual event in a hybrid form successfully. We have done that in Singapore for a couple of units and a couple of years in India in the previous quarter. Just a small bit Kestone got certified at a great place to work in the previous quarter for the role, CL Educate got an appreciation towards compliance on the GST during the previous year. So, these are just some applauses, which I wanted to share. On the corporate updates, Just a couple of things, The Greater NOIDA property sale concluded, and we realized 48 Crores. The cash is in the bank. Last week buyback also has got completed. It started on 27th May and we completed it on 29th July. Roughly around INR11.8 Crores has been the total shareholder payout, including the buyback taxes. One interesting an anecdote or feature, which I saw during the buyback period, we saw a larger interest from retail shareholders and the number of retail shareholders who were in the CL capital increased by close to 10% during the buyback window. So, I think the, a healthy churn is happening, and new shareholders are coming on board. And as people come in, we hope over the next four to eight quarters, we have extremely good news and good shareholder value creation happening. I think that’s what we have on the presentation and the update side, and we are happy to take any further questions as you may have.
Questions and Answers:
Arjun Wadhwa — Chief Financial Officer
Thanks. Thanks Nikhil. As, Nikhil said, we are now open for questions. If you have any queries or anything you’d like to discuss with us right now, you can post it in the chat box and we’ll respond. Satya while we wait for some questions to come in. Would you like to spend a couple of minutes more to talk about the CUET experience and what it means going forward?
Satya Narayanan R — Chairman & Executive Director
Yes. Sure. I think the right way in my view to look at this 9th, 10th, 11th, 12th segment, and the largeness of opportunity that India provides and the coming of age of the Indian undergrad programs across these 800 universities and many new universities which are coming up with great entrepreneurial teams behind it. I think that is how I would look at it. And in a way I would call it as the Gaokao moment of India and Arjun can share that a note or appropriate links on that to all the people who are invested in it, which is the what should I call it the counterpart of, India CUET in China is Gaokao or globally, which is a SAT. And I think over the next five years to 10 years, CUET has the potential to become the number one or number two globally for undergrad admissions for not just Indian students getting to Indian universities, but Indian students going to overseas universities. For example, today, over 25 business schools across the globe accept CAT scores. Similarly global universities will start accepting CUET scores and the students coming into India for undergrad program is poised to grow from 40,000 to 400,000 in the next five to seven years. So, the way to look into this opportunity is it’s a new landscape. It’s a fresh canvas. And there are going to be exceptionally exciting stories built in a profitable way, scaled way over the next three to five years and CL would want to participate there. And we building our foundation in that space in a very hopefully focused and telling manner over the next four to eight quarters.
Arjun Wadhwa — Chief Financial Officer
Thanks Satya. I’m getting a few questions on on my phone on WhatsApp. The first question I’ve got is from Manan. He’s asking about our partner model. What are the responsibilities of CL versus our partners and where are we in terms of our journey to reach 5X distribution on the partner front?
Satya Narayanan R — Chairman & Executive Director
Okay. Thanks Arjun. Anything that involves common work such as R&D, content, technology, curriculum, material, training & certification, all of those is anchored. And that, is the responsibility of the central office Career Launcher – Head office or the backend team that sits in Delhi. And that releases a, huge amount of stress and the business partner focuses on customer acquisition and customer delivery locally. That’s in short. More details if needed, can be shared as in for supplementary questions or, later. Other important thing is that with the coming in of newer segments the potential for building a hundred hyper local distribution points in a place like Delhi or a place like Bombay is possible. And every single district headquarters, every single town that has 10 to 12 schools now can have a profitable CL centre run by an entrepreneur who keep 75% of the revenue and pay 25% of it to us. We take a INR100, we retain INR25 and INR75 is given forward to the local entrepreneur business partner. That’s the core of the model. And I would want to sign off my response to that question by saying that if you ask me, this is the magic sauce in our business, and there are products that when something gets announced by the government, our response to the market at times is as little less 24 hours. And, in the worst case, we could be ready and be alive in the market in anywhere between four weeks to 12 weeks. Even if it’s a brand-new initiative like CUET.
Arjun Wadhwa — Chief Financial Officer
Thanks Satya. There are questions regarding when will we return to pre-COVID levels in terms of revenue. And what kind of margins can we expect going forward?
Satya Narayanan R — Chairman & Executive Director
I think one of the things that we do refrain from doing is being extremely prophetic about future. We don’t put numbers out as a matter of internal clarity and discipline. However, what I can say is that we hope to get there soonest. Lot of our centres have begun to fire only now and margins like Nikhil mentioned margins at an overall level will continue to improve in absolute numbers. But we are also consciously not holding back in brand and people and technology investments. Those will be in the realm of extremely controllable, but percentage margins might by design be given-in in order to accelerate the growth because we believe that the leadership vacuum new opportunity has to be filled in in the next four to eight quarters. But it suffices for me to say that we look reasonably solid without promising anything but we are looking at extremely robust path for ourselves for the next 12 quarters
Arjun Wadhwa — Chief Financial Officer
Okay. Satya, there are also a few questions from Vivek and Vikram on CUET. Since I have you on that Vivek said can you elaborate on the CUET market in terms of competition? And Vikram is asking, what is the seasonality in that business and what kind of market shares are we targeting?
Satya Narayanan R — Chairman & Executive Director
Okay. In a sense for those of you who are it for the first time, this is the Common University’s Entrance Exam. It started off as the Central University’s Entrance Exam, but even before the first MVP pilot was done by the government, it had gathered huge amount of momentum to the point where the acronym has remained the same, but the name has changed from Central Universities which we have 54 in our country, instead of it being Central University’s Entrance Test, it has become a Common University’s Entrance Test. Over 90 universities have already enrolled and, informally over 150 universities are likely to seek and simply put on their website that CUET scores will be accepted by us. What does it do? It dramatically alters and creates a level playing field for the aspirants to apply for one exam. So, costs are reduced for a family. Transparency goes up from a social perspective and universities which have enrolled into CUET have seen their applications jump by a factor of 5 to 15.
And what it is going to do is practically no university in the country is going to go and now invent their own entrance exam. The way CAT is used now for practically every Business school and CLAT is used by most of the law schools, CUET is going to be used by 800+ universities and maybe a few thousand colleges very soon. That’s the landscape. As a thumb rule India has 1.5 Crore kids in class 12. Take multiply that by four. So 9th, 10th, 11th, 12th is 6 Crore children compared to 200,000 in CAT. Even if you take only 11th and 12th it is 3 Crore children. It’s a massive opportunity. It is going to be working very closely with the board exams because NTA (National Testing Agency) has said, that if there is a tie, they will also take the board exams, performance of the students. So, whenever you think of CUET, I would want you to look at it as CUET plus Boards. That’s the figure. And Nikhil mentioned 15 Lakh applications in the inaugural edition. But it is likely to go up by 4 to 8 times in the next three years to five years.
And leadership question that you ask, if you ask me and it’s not easy, even if you do, we do one fifth of it. It’s, great. In, in an MBA, in a law, in an IPM, there are two things that we look at. Typically, the test prep takers thumb rule is 50% of the applicants, which means if this figure goes to 50 lakhs, 25 lakh people will be taking preparation for CUET and in CAT 200,000 takers a 100,000 take preparation. CL has between 35,000 to 40,000. Which is about a 15-17% of the universe. And 30-33% of the active preparers. Now you can do the arithmetic. The numbers are mind boggling, but it’s a long, very solid game and we must come good in both areas. Academic outcomes are the litmus test in our business. It’s not advertising on television. Word of mouth gets 90% of our, enrolments. So, we’ll focus on that, but by being smart in marketing and brand investments, which we have already begun, if you have noticed in some cities and locations on radio for the last eight weeks.
Arjun Wadhwa — Chief Financial Officer
Thanks Satya. There’s a question Nikhil from Krishnakumar Srinivasan, what’s the way forward in terms of use of Cash on the balance sheet, any acquisitions, contemplated?
Nikhil Mahajan — CEO
Okay. We are currently investing to sustain accelerated growth rate in both the Edtech and the MarTech business in terms of accelerated marketing spend and accelerated people hiring which are the two core drivers to reach. The designated goal over the next three to four quarters on the acquisition front – We continue to explore the market. We continue to scan the market and if, and when we find a right sized opportunity, which is profitable, cash generating, sustainable and comes at the right price, we will explore it seriously at this very moment. I just want to say that nothing specific is being explored or changed. We will keep a very cautious outlook for opportunities and as, and when And some things is serious and sustainable business at the right cost. We will get more details and share it at an appropriate forum.
Satya Narayanan R — Chairman & Executive Director
If okay, I’ll just add one sentence to it Arjun. Am I audible?
Arjun Wadhwa — Chief Financial Officer
Please go ahead.
Satya Narayanan R — Chairman & Executive Director
Yes. So just to add one sentence to what Nikhil’s sharing was as we’ve mentioned, we’ve spoken for the last five minuteas to 10 minutes. I think there’s an unprecedented opportunity, which is organic and which is likely to be extremely disruptive from an ROE, ROCE point of view, which is the organic opportunity through, for the 11th-12th board plus CUET. I think that is something that calls for our undivided attention and focus. Also in MBA, there are certain events that have happened, so we are not wanting to be in a position. No, we don’t want to take MBA, law & IPM for granted. We have work to do there. There are some mergers and acquisitions and challenges that are happening in the competitive market space, even in MBA.
And like Nikhil mentioned, however, when this investment winter sets in, when this focus of private equity investors is going to move in, funding is going to stop. There are going to be assets that are going to be available at 100th the cost, maybe more, but that’ll happen in my view, only six months or nine months from now. And that must be so good, and it must pass our test, which is, it has to be profitable. And it must be capital light. We don’t want to be going after expensive acquisitions that spoil a lot of hard work that we had to do. Coming out of, couple of businesses are capital extensive. So, we are not going to repeat any mistake and throw capital to gain growth and, that’s what our focus would be for the next three years.
Over to you Arjun.
Arjun Wadhwa — Chief Financial Officer
Thanks Satya. Nikhil, there are some questions on the MarTech business. What are the revenues from the VEP segment and how is our platform different and who are our major competitors in this space?
Nikhil Mahajan — CEO
Okay. I’ll answer that in two parts – One, See in last two years physical events had totally dried out and every event was taking place in the virtual environment. We had started tracking the virtual platform events independently, and we had reached a size of about $4 million last year. However, with the reopening of the economy, not just in India, Asia-Pacific and the US as well we are seeing most of the events are now happening in a hybrid mode. So, there is a physical event and there is a virtual event part of it. So in an integrated event, which probably is generating a revenue of say a US$100,000 there could be a US$25,000, which is attributable to the virtual part and US$75,000 for the physical event. So, segregation in that segment is not very in that manner is not very digital. However, on an apple-to-apple comparison, I think your virtually event revenues have been slightly below a US$1 Mn in Q1 FY23. So that’s what the apple to apple comparison is for our platform. While basically it does similar things like other platforms. However, it is different in terms of its adaptability. Others have a 2D platform, ours is a 3D platform. Probably the closest platform to us is six-connects and in different markets for different customers, we have different competitors. If you ask me, there is not a specific competitor in a specific customer segment, different customers, we have different competitors and we, fight on a project to project basis.
Arjun?
Arjun Wadhwa — Chief Financial Officer
Yes, go ahead.
Satya Narayanan R — Chairman & Executive Director
I think there is a query on Vidya Mandhir. Is that what something you want me to pick up?
Arjun Wadhwa — Chief Financial Officer
Yes. Those equity. Can you talk about the experiences with Vidya Mandhir and learnings from the same, would you like to take that Satya?
Satya Narayanan R — Chairman & Executive Director
Arjun, I’m unable to hear you. I hope you can hear me. Okay. So I’ll, pick this up. Our, association our, collaborative Alliance led experiment with VMC for IIT-JEE and NEET continues this year in Bombay and, Middle East where, we have taken it to the market. And we are looking at it. It is working well in parts. In some parts there is improvement that is needed. And the review of it happens on a quarterly basis at a senior level. And the engineering and medical segments continue to be of interest to us with some caveats and those caveats will be applicable even for an M&A conversation. And that’s something that I’ve already mentioned a little while ago, so I, don’t repeat myself, but this Alliance led models, If it works out well, at some point in time, it could lead to interesting conversations. We are not hurrying it. Our hands are full. So, it’s being treated as a Business-As-Usual run by senior teams who run these businesses in those geographies. And for those projected groups we will keep you updated perhaps a more substantial update could happen. More likely in the Q3. Thanks Arjun.
Arjun Wadhwa — Chief Financial Officer
Thanks Satya, Nikhil just wanted to check if you can hear me. Satya wasn’t able to.
Nikhil Mahajan — CEO
Yes, I can.
Arjun Wadhwa — Chief Financial Officer
Okay, great. The next question was where are we in terms of our goal to becoming a zero debt company.
Satya Narayanan R — Chairman & Executive Director
Arjun, will you take that or?
Arjun Wadhwa — Chief Financial Officer
Yes. I’ll happily take that. We’ve reduced our borrowing significantly from June 21, where we were at about INR40 Crores to about INR10 Crores now. We are on track towards our stated aim of becoming a Zero debt company by December 2022. It won’t be exactly Zero but will be very close to zero and it’ll be virtually negligible in terms of debt on the balance sheet.
There’s another question in terms of how the management divides its time between EdTech and MarTech considering that there two vastly different businesses?
Nikhil Mahajan — CEO
I’ll take that. Arjun. So basically, EdTech and MarTech are two different businesses and are run by two different business teams as a board and the highest level EdTech business reports to Satya and the MarTech business reports to me. And we spend roughly about 75% of our time dedicatedly to the respective businesses, which report to us except for the corporate responsibilities. So, we have reasonably well-established teams, processes, systems, business goals, and monitoring systems to drive them and take them to the next level.
Arjun Wadhwa — Chief Financial Officer
Thanks Nikhil. We’ve reached 5 O’clock, which was our cut off time. So I’ll Just take one or two last questions. I see a couple of people who are still typing. Manoj Dua asks, as a franchise owner of CL Educate What kind of support would a franchisee expect from the company?
Nikhil Mahajan — CEO
I think Satya is not able to hear. So I’ll take that. Manoj, our franchisee looks at couple of key factors before he signs up. One is what is the brand description? What is the brand reputation? What is the word of mouth? Its product repository? How well distributed is it geographically? Pan India? So, the key support that he looks for is the Brand and the associated marketing standing, the technology backbone and the content backbone and the repository. So basically, as a franchisee, all this comes to him from the corporate side, he’s expected to do local marketing and Student acquisition and the delivery on the ground in his local market. This broad model has been in place for the last over 20 years and has been reasonably successful. We currently have about 200 partner centres over 130 cities to 135 cities across India and probably going forward we expect not too many changes from our side in terms of contribution. We are always open towards feedback and any incremental support, which the partners require at different points of time. For example, during COVID we enabled digital delivery of classes to every centre either centrally or enable them to take classes locally in a digital medium. So those kinds of interventions when an external event happens are provided to them and will continue to be provided to them as and when required.
Arjun Wadhwa — Chief Financial Officer
Thanks, Nikhil. I see there are a few questions that are still unanswered. What I would request you to do is if you’d like us to address those, feel free to, to give me a call after this session gets over and I’ll be happy to take you through any queries or any specifics that you want on a one on one basis. Alternatively, we can schedule sometime either tomorrow or early next week to address any additional questions that you may have. We’ll wind up our session here for today. Thank you, Nikhil, thanks Satya, and we’ll see you all at our AGM in early September. Thank you