Veranda Learning Solutions Ltd (NSE: VERANDA) Q1 2026 Earnings Call dated Aug. 05, 2025
Corporate Participants:
Unidentified Speaker
Kalpathi S. Suresh — Executive Director and Chairman
Aditya Malik — Chief Operating Officer
Saurani Pathan Mohasin Khan — Chief Financial Officer
Analysts:
Unidentified Participant
Soumya Chhajed — Analyst
Darshil Pandya — Analyst
Sravan Vijayaraghavan — Analyst
Henil Bagadia — Analyst
Sahil Bohara — Analyst
Athar Syed — Analyst
Deepesh J. Sancheti — Analyst
Atharva Kulkarni — Analyst
Presentation:
operator
Ladies and Gentlemen, good day and welcome to Veranda Learning Solutions Limited Q1 FY26 earnings conference call hosted by GoIndia Advisors LLP. As a reminder, all participants lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Soumya from GoIndia Advisors LLP. Thank you. And over to you Ma’. Am.
Soumya Chhajed — Analyst
Good evening everyone and welcome to Q1FY26 earnings con call of Veranda Learning Solutions Limited. We have on call with us Mr. Suresh Kalpati, the Chairman and Executive Director, Mr. Aditya Malik, the Chief Operating Officer and Mr. Mohsin Khan, the Chief Financial Officer. We must remind you that the discussion on today’s call may include certain forward looking statements and must be therefore viewed in conjunction with the risk pertaining to the business. I now request the management to take us to the quarter gone by. Post that we will open the floor for Q and A. Thank you.
And over to you sir.
Kalpathi S. Suresh — Executive Director and Chairman
Thank you. Good afternoon everyone. It’s a pleasure to welcome you all to veranda Learning Solutions Q1FY26 earnings call. As we begin a new financial year, I want to take a step back and reflect on the transformational journey that Veranda has undertaken over the past few quarters. FY25, the year gone by was a very defining year for the company. Not just in terms of performance, but more so in how we reshape the Veranda platform for sustainable and long term goals. Just want to take a moment and thank you all for the consistent support in this journey.
By now many of you might be knowing the Veranda 2.2 journey that has already begun. We started with acquiring profitable brands across all our segments to monetizing those assets and cross selling synergies to now deleveraging our balance sheet. It’s been a pretty significant journey just to recollect quickly as a part of our restructuring and unbundling businesses. We discussed the process strategies followed and the growth outlook in detail in the Virtual Analyst meet held on 28th of July hosted by GoIndia Advisors. So we have successfully completed two landmark strategic milestones. The 357 crore maiden QIP which helped us bring in multi institutional investors and at the same time significantly strengthened our balance sheet.
The demerger of our high growth commerce vertical which will be almost debt Free, independently listed entity. These moves were not just financial in nature, they were strategic in how they set the stage for Veranda 2.0, our next phase of execution. The central idea behind verander 2.2 is simply unbundling, creating focused verticals, giving them independent strategies and capital access and unlocking significant synergies across the platform without any operational overlap. With this, our core business, now consisting of our four pillars, academic, government, expert, occasional and commerce vertical, has a much clearer mandate to drive profitable growth, operate with financial prudence and deliver value by leveraging our shared ecosystem.
It’s not just about cutting cost or paying down debt. It’s about creating sharper execution playbooks in each of our business lines. From an operational standpoint, I think I’m proud to say we have made tangible progress during this quarter and we’ll sort of hand it over to Aditya to walk you through each one of our business units. Aditya, yeah.
Aditya Malik — Chief Operating Officer
Thank you Suresh. Good afternoon all. We’ll walk you through each of our four verticals and their performance for the quarter. In academics which is our K12 vertical, we are seeing a solid traction. Over 5,400 students have been onboarded in the new academic year. We have launched integrated courses with MEET and JD with accelerated programs, a stronger market region, a full rollout of lms as well as the technology platform across schools and multiple centers. We have also taken important steps in future training principal appointments to ensure delivery quality scale. With growth in our vocational vertical and vocational business, it continues to evolve into a multi channel, globally scalable unit.
Apart from our very strong B2C business, we had 25 plus active enterprise accounts including top names like Deloitte and PwC. And not only that, these are very strongly outcome focused programs and we have delivered more than 150 placements in this quarter alone in our government 10 square business through election related, you know, election related disruption temporarily softened the numbers. We maintained strong engagement through mock tests, faculty and social campaigns. The coming quarters are expected to be high activity with four major exams lined up and new students cohorts activated. Last but not the least, our commerce vertical which has been an exceptional segment in terms of profitability and operationality.
We have plans to expand this segment not just regionally but extending full rollout of courses and formats at existing centers as well as coupled with synergies with JK Shah classes, BB Virtual and Navtar in their own individual domains. All these achievements were delivered while we also continued executing on backend efficiency, integrating support functions across verticals, streamlining our sales and marketing engine and setting up standardized framework for delivery, assessment and content management. I hand it over back to Suresh for taking us through what is next for Veranda.
Kalpathi S. Suresh — Executive Director and Chairman
Thanks Aditya. So what comes next? I think we are now shifting gears into an execution focused goal with a very sharp eye on profitability and free cash flow. Our internal strategy roadmap focuses on a few key aspects that we think will take us forward in the next set of years. Deleveraging the remaining 195 crores of debt in a non commerce vertical through operational approvals, accelerating or monetization across B2B partnerships, global online offerings and high ticket professional programs. And last is institutional synergies using cross selling, sharing of leads across platforms and technology integration to reduce the acquisition cost and improve the learner’s long term value.
These are not really one time activities. This is the fabricon which veranda 2.2 is being designed and will be used to scale. I’ll sort of just quickly request Mohsin Chief Financial Officer to walk you through the financial performance in more detail including our revenue, ebitda, margin movement and the broad capital structure. Mohsin, thanks.
Saurani Pathan Mohasin Khan — Chief Financial Officer
Hi everyone and thanks for joining. We are pleased to report a solid start to FY26 marked by strong revenue growth and a sharp improvement in profitability. As Such, consolidated revenue grew 17% year on year to 139 crores driven by broad based growth across the segment. EBITDA nearly doubled year on year to 55 crores and we continue our profitable trajectory with a net profit of 6 crores up 123% year on year reaffirming our shift to sustainable performance going forward. Coming to balance sheet we had a 510 crore debt as on March 25 we are able to clear by raising a QAP funds of 357 crores.
Now we carry a debt of 195 crores which we are planning to repay through our operational accruals and no additional debt will be paid assets going forward. We remain focused on strengthening operating leverage, capital efficiency and margin expansion while executing on veranda 2.0 strategy as explained by Suresh and Aditya. Thank you and I look forward to your questions.
operator
Soumya, you can take it.
Questions and Answers:
Darshil Pandya
Thank you sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press STAR on their touchtone telephone. If you wish to remove yourself from the question queue you may press STAR and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the Question queue assembles. The first question is from the line of Mr. Darshal Pandya from Finch Capital. Please go ahead sir.
operator
Am audible?
Darshil Pandya
Yes sir.
Saurani Pathan Mohasin Khan
Yeah. Hi. Good afternoon sir. Sir, first question would be what will be the interest cost for this situation? Scalars, you know we have substantially bring brought down the debt.
Darshil Pandya
I’ll take everything. So the balance debt for the finance cost of next three quarter should be 18 crores.
Saurani Pathan Mohasin Khan
18 per quarter you think?
Darshil Pandya
No, no. For a full year.
Saurani Pathan Mohasin Khan
For full year it will be 18 crores.
Darshil Pandya
Yeah.
Aditya Malik
Okay. And the second question would be on. The academic segment side. So you know as we see that academic segment is doing pretty good. So just wanted to understand can you break down how the business model is working here? And also where do we stand on making it aclite? Kind of in Jan. Of that we had mentioned about you know making it some asset light. So just wanted your thoughts and to understand the unit economics of this.
Darshil Pandya
I’ll get that one. This is Aditya. So from going forward, as we had shared in the call earlier we are in talks with couple of schools to take them over in an asset life model. From asset life model perspective we mean that the properties etc will remain with the. With the respective owners. We will take over the management of the students. So from your question perspective when are we going to do it and where are we? I think in the financial year we are expecting to at least do a couple of them. So that we are able to see the results of them coming in the next financial year as the next academic year starts.
Aditya Malik
And as of now how many schools and colleges are operational or if any are operational right now?
Darshil Pandya
So in academic vertical we have schools. Only the colleges which are under the brand Papasia College of Commerce and Management comes under our commerce vertical. So among schools we have six schools operational under the academic vertical.
operator
All right, thank you. I’ll. I’ll get back. Thank you so much.
Sravan Vijayaraghavan
Thank you. The next question is from the line of Mr. Sravan from Sincere Syndication. Please go ahead sir.
operator
Yes sir. Hello. Am I audible?
Sravan Vijayaraghavan
Yes sir. Please go on.
Kalpathi S. Suresh
Yes. So I moved to the company. You kindly explain me as to what the Veranda 2.0 strategy is?
Kalpathi S. Suresh
Let me take this. This is Suresh. So the first part of the strategy was really to assemble together profitable brands with pedigree which will go from K12 all the way to academics to masters to doctoral programs. That was really veranda 1.2 largely funded through debt and some amount of equity that we raised a couple of times. One through the IPO and subsequently through an offer that we made. Veranda 2.0 strategy really focuses on four key pillars into which these acquisitions have been quite carefully made.
The first is the academic that Aditya just spoke about. This is our K12 segment consisting of CBSE and Cambridge International schools that we manage. The government vertical, which is largely one of the big boys in the south around the brand of race and talent. The third is our commerce vertical led by Professor J. Kesha himself, consists again both the biggest in both online and offline brands apart from colleges and junior colleges where we take kids through 11th and 12th of commerce and through BCom through college. And the last is our occasional where we provide cutting edge upskilling platforms both in colleges and for working professional combined with certificates, degrees or diplomas.
So 1.0 was acquisition with some leverage and equity. The second one was aggregating this into the four pillars as an interim step to our veranda 2.4 strategy where we are now starting to unbundle. So the first unbundling as part of 2.0 is our commerce vertical which would be vertically split through a scheme that is expected to be filed shortly, which will list as a separate entity and as we had sort of projected expected not only to grow its margins going forward significantly from potentially an EBITDA of 140 crores to a possible 500 crores of EBITDA by FY30 under the leadership of Professor JK Shah himself.
Then the first unbundling. So the scheme will allow for existing shareholders of veranda for every one share they have, they will have one share in the new vertical internally called J.K. shaw Commerce Education Limited which would predominantly be a mirror shareholding. Once the approval for the demerger is done, the non commerce business is expected to grow strongly across K12 again in an asset like fashion. So we don’t expect to buy large assets whether through dilution or additional debt. The government vertical and our occasional training platform, the initial step will be to grow them significantly to take care of the rest of the debt in the non commerce vehicle, all coming from internal accruals and then to establish the additional pillars as significant ones in their own strength in the market.
So all of it we want to achieve in veranda 2.2 through no further dilution, no further leverage. So the first step has been taken not just to unbundle but also significantly deleverage the balance sheet. This journey will continue and as we continue, we’ll continue to create those unbundling and value creation for existing shareholders from the other three pillars. So that’s really the 2.0 strategy started rolling out early. Part of this year currently is under execution and hopefully will deliver significant value through 2.0.
Sravan Vijayaraghavan
Great. Sir, any timeline on when would you and you see 2.0 to bear fruit? Any timeline on that?
Kalpathi S. Suresh
You want to go through the timeline for the demerger and listing? Yes sir.
Saurani Pathan Mohasin Khan
So we’ll be filing the scheme by september first week and the expected date to complete it by eight months of the projected timeline given by our advisors, which means by March, April 1st or May we should be able to list the company on the NFA and BSE. March 25th.
Kalpathi S. Suresh
I think one of the advantages that we wanted to create for ourselves is to create a significantly sharper focus as probably the leader in the commerce space. With a projected EBITDA for this year which is expected to be over 143 and our guidance and prediction seems to be intact as we speak, we probably would be overachieving it a bit. I would think profitable significantly. In the last exams we had over 140 ranks. Close to 90% of the ranks in India are coming from our stable in the commerce space and third is probably with no competitor in this space.
Well, I think couple of points which I keep emphasizing which I want to sort of mention on this call and answer to your question. In terms of unbundling of value, we think it’s a significant unbundling because as the Indian economy has changed over the last 40, 50 years, going from a top 50 to a top five economy, the GDP has moved quite a bit away from manufacturing to services. And today we are seeing a far far more robust financial services market in India. The second one is the cost arbitrage is now driving growth of very large GCCs which are predominantly doing the back office work of Western English speaking countries in India whether it is for tax filing or assisting in audit, a lot of that work is happening from India.
From projections from some of our national bodies, we expect the shortfall of a million students that are going to be required with certain level of professional qualification over the next five years. And we think with J.K. shah classes, J.K. shaw Commerce Education Ltd. I don’t think anybody is placed well to be able to not just meet this expectation of the country but creates for ourselves a very very large niche. So while there are players in the medical and engineering test prep and education, I think by far we are the leaders in commerce, education and I think with the change in competition of the GDP the time has come for this to take its rightful place.
I think as Potentially the biggest maker of the commerce segment. So we expect each of our unbundling in very real time to not just generate some value but generate significant value by taking up full position in each of the respective markets.
Sravan Vijayaraghavan
Yes sir. Thank you. My last question would be on the guidance. Do you have any guidance for FY26? Sir.
Saurani Pathan Mohasin Khan
I’ll take it. Hi. Yes. And so since I said on the Q1 we started at very good numbers so. And we’re expecting it to continue and the projected guidance for the FY20 revenue at 660 crores across commerce and non commerce with the EBITDA target of reported EBIT of 242 crores around that much and PVT of 100 crores and PAD. Of 80 to 85 crores. So this is the guidance which we are expecting for the current year to. Be reaching and
Sravan Vijayaraghavan
We are on track to achieve it.
Saurani Pathan Mohasin Khan
On track in achieving it. With the current numbers peaks, this guidance for the Q1 which can be projected yield will be having Q2 a good season. But this numbers are reachable numbers. So in the major numbers commerce is a major contributor for the guidance with 340 crores on the top line and with the EBITDA of 170 crores under TAT of 70,000 the numbers projected for the guidance.
operator
Thank you. This is a reminder for the participants. If you wish to ask a question please press star and one on your touchstone telephone. We request the participants to please limit your questions to two participants. If you have any follow up questions we would request you to rejoin the queue. The next question is from the line of Mr. Henil Bagadia from Equicorp. Please go ahead sir.
Henil Bagadia
Thank you for the opportunity and hope I’m audible.
operator
Yes sir, please go ahead.
Henil Bagadia
I actually would request some more clarity on the non commerce vertical. So if you see Most in the Q1 most of the advert actually comes from the commerce vertical. In the non commerce vertical. If you could explain when we’ve got about 195 crores of debt, how will we servicing how will we be servicing it through the current revenues and the current ebitda. And also if you could also explain the seasonality of the revenues for the vocational and the government destructive vertical.
Kalpathi S. Suresh
Moshe, you want to take the first part and explain the EBITDA for the non common stakes? Yeah.
Saurani Pathan Mohasin Khan
So the balance set in the books is 190 crores where the promoted debt is a 70 crore out of debt and the balance comes from that NCDS which you are having. So the first year of the numbers will be servicing the interest coupon for which the Internet was sufficient. And as the IHA was saying that in the main school segment we wanted to add a school and college school in that school segment where they’re projecting to add another 5 to 6 schools which can bring it EBITDA above 10, 15% of school segment. So which will help us in retain the balance at the internal growth.
And this is on the first point.
Henil Bagadia
Just on the academic part as you said, you want to add five or six more schools. So we have currently six schools. So if you could also give some clarity on what is the current occupancy of these schools. Because as I know Mr. Kalpati had said that you target the schools at about low occupancy, about 30%, 40%, barely break even kind of. And you try to get the occupancy to 60, 70%. That’s about a two year, three year cycle. So now current school which is about five to six schools, where are we at the occupancy part? And the new schools that you’re planning to acquire, where is that on the occupancy part? If you could just give more information there also.
Kalpathi S. Suresh
Yeah, so let me take it as far as the existing schools are concerned, CBSE and the international schools are concerned. We currently are running at an occupancy of over 85% because these are schools that we have acquired close to two years ago. So we have been able to work these occupancies significantly higher. Also these acquisitions form the platform on which we are now going to build the K12 segment. I will sort of just go a step back and look at the debt and what type of EBITDA we have in the non commerce space. So the non commerce space is expected to deliver an ebitda of over 60 crores for FY26.
So from a debt to overall EBITDA perspective we are sort of there at about 3, 3.2 times. Also the debt that we had taken from assertis a significant part of which got closed. Now the balance debt of about 120 crores. Apart from the 70 crores of promoted debt which is the total 190 crores. The 120 crores is currently running at an interest coupon of just over 17%. So at the end of the May call period in March 26, we expect to also refinance this loan with a significantly lower coupon. And given that the debt has significantly come down and there are couple of land and building assets which are owned by the company of value close to 100 crores.
We expect to be able to get it at a coupon if not single digit, extremely low double digit. So that is also expected to bring not just the interest burden down. That makes it significantly easy for the company to deleverage from just its operational cash flows on the occasional front which is predominantly upskilling both online and offline for college students and working professionals. I think we are restructuring and I will ask Aditya to mention a few words type of restructuring that we are doing. It is expected to significantly jump EBITDA in the coming year. Aditya.
Yeah, sure, thanks.
Aditya Malik
So in vocational segment one of the key things what we are working on is on operational efficiency. So one obviously we are combining the team from a sales and marketing operations and delivery perspective which are already started to give some efficiencies across the entities in the vocational segment. Second we have rejected the product and courses portfolio and moving from very low high ARPU courses to a middle and a significantly higher ARPU courses which will result in a significant profitability. Lastly, just wanted to add one point. By nature of that business we always carry some amount of unrecognized revenue as per accounting norms while costs are already taken care of in the financials you are seeing but the subsequent revenue of those will come in subsequent months and that also is directly kind of positively hit our ebitda.
So that’s why we are confident that we will meet the numbers going forward on that one as well.
Kalpathi S. Suresh
I think just to sum up, while FY26 we expect in the non commerce vertical the debt to EBITDA to be closer to 3 by end of FY27 we should be pretty close or a bit less than 2 times EBITDA. So the non commerce vertical is expected to also grow quite significantly going forward leveraging on its three pillars of academic government effort and probably best give a few words on the seasonality that you mentioned in the business as far as commerce is concerned it’s got a lot more evened out in the last year, year and a half that we moved from a two exam cycle to a three exam cycle for all the CA programs.
So to an extent it has smoothened out any peaks and troughs and seasonality in that business. As far as government squat is concerned it’s largely driven by notifications that come and we are a very strong player in the south. So currently we are having a great quarter in Q2 because the notification just came out in Tamil Nadu and of course we are strong in Tamil Nadu, Karnataka and Kerala where we expect the government Tesla to be largely driven by notifications and of course in the occasional space it’s probably a year round sort of business by you see a bit of a slack in Q3, you see a very strong Q4 and Q1 and that’s the nature of the business also because from our online training upskilling program under the brand of Edureka we do have quite a bit of presence of our students, especially the B2C segment in the US and European market.
So Q3 as you know has lots of holidays, Christmas, New Year and all of that tends to be a bit of a slow one for an online upskilling platform. As far as sixth Waves which works with college students as part of the occasional space, it peaks twice a year. So two quarters are big, the other two quarters are reasonably good. Because our programs run throughout the year though our collection cycle happens two or three times. The revenue recognition part happens throughout the year. As far as the college is open and working so probably 10 months in the year we are billing on a steady state basis in six years.
So overall EBITDA for the non farmers expected to be over 60 for this year and would show a strong growth next year. As I mentioned we expect the debt to EBITDA to go down from a 3 to a 2 going from 26 to 27. This is predominantly the non commerce space.
Henil Bagadia
If I may just squeeze the last question on the vocational part. What will be the split between the enterprise and your direct to customers?
Kalpathi S. Suresh
I’ll take that one. So the enterprise as of now in the whole vocational segment would be about if we count enterprises pure corporate because Pixate also works with colleges which is institutional business or semi corporate we can call it. If we keep institutional business out it will be about 8515 but if we include institutional business it will be almost about 604060 as B2C and 40% as institutional and corporate.
Henil Bagadia
Okay, thank you. I’ll fall back to Vicin.
operator
Thank you. The next question is from the line of Mr. Sahil Bohara from Alpha Alternatives. Please go ahead sir.
Sahil Bohara
Oh you have stated 195 crore debt over remains post UIB and D much work. So can you give me a breakdown of the timeline for repayment and the internal accruals are sufficient in higher capex here.
Saurani Pathan Mohasin Khan
So 120 of bearing debentures which are there in the asset is credit and the balance check is from the promoters. So promoters debt is there will be paying as per the requirements in the company and the Debt from the bearing is as for the schedule, so where we have still 5 year 4 year tenure to repay the debt debt so have a time to pay that debt. 4 years.
Sahil Bohara
Internal accrual is efficient in high capex year.
Kalpathi S. Suresh
Yes, I think couple of points to add to what Mohsin said. The asset is debt as I mentioned earlier in the call is currently running at about 17.2% being acquisition debt we had to take debt from special purpose vehicles so it was a high cost debt. The makeover period ends by March 26. So we expect to refinance this loan with a much much cheaper loan. As I mentioned, it’s not single digit but very very low double digit coupon rates. Given that the company has land and building assets which it owns which came as part of our earlier K12 business acquisition of about 100 crores, we expect to be able to get very favorable rates.
Given this and the growth that we expect in non commerce, as I mentioned, we expect that debt to EBITDA to come down significantly and which essentially means we expect to close this debt just from internal accrual. No new additional borrowings, no equity dilution.
Sahil Bohara
Okay. Okay. Also one more question. Given the lean balance sheet post and improved cash flow. So what is the Target ROCE for Aspire 26 and beyond.
Kalpathi S. Suresh
Question you want to take it?
Saurani Pathan Mohasin Khan
ROC you are saying? ROC currently stands at 13 percentage for output segment and is expected to grow up to 35% in the FY30 as we progress.
Sahil Bohara
Okay. Okay. Yes, thank you. Thank you.
operator
The next question is from the line of Mr. Athar Syed from HF Capital Venture. Please go ahead sir.
Athar Syed
Hello sir, am I audible?
operator
You’re audible but there’s a lot of disclosures at your end.
Athar Syed
So my first question is last time you said in a con this is headwinds in a non commerce vertical. So can you please explain which are these headwinds which you are facing last time and now you are facing these headwinds or not?
operator
A lot of disturbance. Mr. At, could you come again and please use your headset please. There’s a lot of disturbance at your end.
Athar Syed
Hello.
operator
There is a lot of disturbance in at your end in your background. Hello. Are we connected? Mr. Athar?
Athar Syed
Yes.
operator
Okay. Sir, maybe you could join the queue again.
Athar Syed
Hello. Yes. Now my first question is related to last time. Sir, you said you faced a lot of headwinds in a non commerce vertical. So can you please explain these headwinds. And what are these headwinds like still. Facing these headwinds or Not I understand so.
Saurani Pathan Mohasin Khan
So just to repeat from what I understood, I think he was asking in saying that in one of our previous calls we had mentioned that we were having some headwinds in the occasional part of the business. Wanting to understand as to what we are doing about it and if those headwinds have come.
Kalpathi S. Suresh
So I’ll talk a couple of them. Which we had highlighted the last time. I think the first was relating to the three that are happening especially with AI coming. So as Aditya mentioned, we are making quite a bit of change in our occasional space in our product portfolio. We are dropping a few of the categories we are strengthening AI, DevOps and a couple of others and going very deep in those categories where we offer master class type of program, certification, degree, diplomas in conjunction with very reputed universities and our own certification programs at a lower price point. That’s the first change we made and I think that is already showing very promising results in bit of a Q1 and you will see that in Q2.
The second one was in our higher ed business where they assist their revenue recognition and the long term programs we run typically one or two year type of degree and diploma programs that we run in higher ed the customer acquisition cost is upfront and it is charged to our P and L in the quarter in which the student is onboarded whereas the revenue gets recognized over one or two years. So that caused a certain disparity and hence had negative EBITDA margin from our higher ed business. Currently as we speak we have matured the business enough so the revenue recognition of past student acquisitions are starting to reflect and we expect the higher ed business also to be EBITDA positive going forward.
Already in Q1 we expect it to continue for the rest of the year. From a cash flow perspective, the higher ed business turned cash flow positive even last year and we expect that trend to strongly continue. I think with the change we are making in our product portfolio with a lot of focus on AI, ML, DevOps and a couple of categories in which we are driving very deep. We have also prudently pruned down on other categories which have gotten impacted because of the advancements in AI and that is starting to show strong results. Yes, as you mentioned we had some headwinds, we had gone through them, closed out, restructured during Q4 Q1 already showing results.
We’ll see a much stronger result when we report that Q2 number.
Athar Syed
And my second question is about retention. Of faculties where it is in this business. So how we are retaining our faculties and teachers in this Business. Can you please explain about it?
Kalpathi S. Suresh
Could you pick up the question? Could you answer if you have under.
Aditya Malik
Yeah. Is it. Just to clarify, is it for retention of faculty? That’s what you mentioned, right?
Athar Syed
Yes. Yes. Yeah. Okay.
Aditya Malik
So you know the. In our case, across all our businesses, first of all, in certain cases we have our faculties on our board. In certain cases we have a long term contract with the faculty which have been continuing for many years. Having said that, what is happening is firstly in none of our businesses, the dependence of the businesses on the strong or zero faculty as it is called. So we have de risked the business because our individual brands, whether it is JK classes in commerce or Nabkar or in college of Commerce, in commerce side or race in test spread, people come to our classes not to get taught by a particular faculty, but to be taught by a particular institution so that they are able to get learning because that’s how they are being consistently structured across all our verticals.
Having said that, all these brands, as Suresh described at the opening of the call, these are legacy brands whom Veranda has acquired as part of aggregating the key brands. These brands are 20, 30, 40 years old and have been working in the industry for long. So the relationship and the contract with the faculties that sustained over a period of time and will continue to sustain. Having said that, the basic hygiene in terms of ensuring the right compensation, ensuring the right incentives, ensuring the right working environment, like most of the professional companies, is being provided to each of these faculties and across all our companies.
So I think, in short, just to sum up, while we have ensured that across all our training programs there is a significant de emphasis of what the industry parliament calls as a star faculty, in all our businesses, the faculty is the institution. Whether it is J.K. shaw, classes in commerce or raised in government test rep or for that matter Educa and software. It is the institution, our pedagogy, our methodology, our content, which is really the star. So the emphasis is clearly away from star faculty. Having said that, I think we pay one of the best industry compensation and combined with that, the stock option that we give to all our faculties has ensured that while we have said we are independent of Start faculty, the company depends intimately on the quality that our faculty deliver and we ensure they are compensated and incentivized as best of industry standards.
Athar Syed
Thank you sir. Thank you so much.
operator
Thank you. Participants, we request you to please limit your questions to two per participant. Should you have any follow up questions, please rejoin the queue. The next question is from the line of Mr. Dipesh from Mania Finance. Please go ahead sir.
Deepesh J. Sancheti
Hi, I hope I’m audible.
operator
Yes sir. Please go ahead.
Deepesh J. Sancheti
Okay. Is there plan to raise equity or take on any structured debt in the non commerce vertical? Post the demoji.
Kalpathi S. Suresh
The only. The only thing that we are currently looking at is to refinance the high cost debt that we had taken from asset based a part of which in the commerce vertical got close. The balance is being carried in the non commerce vertical. As I had mentioned earlier in the call, it’s at a coupon of about 17.2%. We expect to refinance this by March when the makeover period gets over. And given the strong land and building asset that’s already owned by the company, we expect to be able to get a high single digit coupon or a very low double digit coupon debt.
But that will be a refinancing of the current debt with the low cost debt. But outside of that we are really not looking at any other form of structured debt or equity to be able to deleverage the non commerce vertical and make it debt free except to rely on our internal accrual to tear down the debt.
Deepesh J. Sancheti
Coming to that refinance part only sponsor wanted to know when was this last refinancing of 17.2% done? And does the promoter debt also hold. The same coupon rate?
Kalpathi S. Suresh
You want to take it?
Saurani Pathan Mohasin Khan
Yeah, yeah. So the last date was taken during the March 24 on the April 24 period where there was a We acquired by UNDS for the fund was to acquire at LASIA Education institution. Right. Limited and to the existing loans which are available at that point of time and promoted that which is there in the books is at 61.8 to 86 crores for which the rate is kept at 9.25 which is the market rate, not the higher rate it get a normal rate.
Deepesh J. Sancheti
So what is the logic of having such a high debt on the books when we are. I mean when the company’s roe itself is always negative.
Saurani Pathan Mohasin Khan
See what I think today is saying that considering the acquisition financings are not done by the more normal nationalized bank or any bank. So we have to go to Pecas and vehicles where generally the expectation is around 17 like more than 15 percentage to 22. And that was the whole reason. And as you said and also the acquisitions which were done earlier is not entirely on debt. There was a part of debt and part of ECB being raised at every stage of the acquisition being planned from the day one when we started this journey and Veranda 1.2.
Every type of acquisition positions were made part of debt and equity so that they get benefit of leverage and the equity. And as a 2.2 strategy. Now the unbundling is happening and we are taking equity to close down the date and unlock the value from the operate organic growth. That’s the plan and we have stuck to this plan.
Deepesh J. Sancheti
Completely understand that. But point is. Sorry, you were adding something I’ll wait for.
Kalpathi S. Suresh
Yeah. So I think first is 17.2% is an astronomically high cost of debt. There’s absolutely no denying it. I think the only reason we had taken that debt was because the number of vehicles that can finance an acquisition are fairly limited. So we had to go to organization structured debt that can finance acquisitions. At the same time we were very clear when we took it that we did not want to run it through the entire life of that loan which typically is for five, six years. The idea was to complete these acquisitions, demonstrate synergy and value and then raise equity to close it as we get closer to the make home period.
In this case the make hold period is about two years. So by March 26, all of the loan which is now sitting outside of the 310 crores of principal which we closed, the balance debt will also get refinanced the moment we hit March 26th to a much lower cost.
Deepesh J. Sancheti
Yeah, so sorry.
Kalpathi S. Suresh
Yeah, so it is a high cost debt. We had to go to a structured finance because we were acquiring businesses.
Deepesh J. Sancheti
Can I come in? Okay, so whatever the debt which we. Have closed because of the PYP, what. Are the cost of that debt?
Saurani Pathan Mohasin Khan
17.23. Yes.
Deepesh J. Sancheti
Yes. Okay.
Saurani Pathan Mohasin Khan
The reason we close. High cost. Yes. The whole.
Deepesh J. Sancheti
I just hope that, you know, 2.0 we’ll be having a, you know, better debt position and I mean at a lower cost. Okay. I also saw in a lesser presentation that was uploaded on 28th July. If I could just sneak in this question. That’s it. That was uploaded on 28th of July. In the commerce vertical segment there was zero debt. But still I see some deferred items in the balance sheet. Can you explain on that?
Saurani Pathan Mohasin Khan
Yeah, I think we explained that same call if you have attended that. So this was before we acquired the companies like BG Papasa. We have a residual stake which need to be bought from the other founders which will be bought in the respective areas where we have agreed with them. Like for example tapasa in FY28 and db in FY13. So as for India, we have to recognize the liability as on the date of books. What we’ll be paying for the balance stakeholder. That’s what you are seeing 408 crores in the slide. Debt is below the deferred consideration for The balance stake accretion.
Kalpathi S. Suresh
Just to add, based on the modeling we have done with our cash flows, the internal accruals and cash flows that we generate would be more than adequate to buy off the residual stake when they fall due without resorting to any level of debt or any dilution in those variations.
Deepesh J. Sancheti
I just hope so whether that future acquisitions we will take into account that what is the ROE which we are getting from the acquisitions and what is. The debt rate which we are taking. Because I mean at these astronomical debt.
operator
I would have to request you to join the queue again sir, we do have participants in the line. Thank you so much. Participants. Please restrict your questions to one per participant so we can ensure that the management can answer to your questions. Right. The next question is from the line of Mr. Bunty from inception Finance. Please go ahead sir.
Unidentified Participant
Hello. Hi everyone. First of all, congratulations to the entire management team. I think they’ve done a wonderful job. Actually you can see the green shoots from the version 2 that we are embarking upon. Quick question from my side. Basically would be good if you can get some numbers on how it’s been the June, July month in terms of commerce and non commerce collections.
Kalpathi S. Suresh
You want to share?
Saurani Pathan Mohasin Khan
Yeah, I can share sir. So we are able to collect 65 crores in the current July where the 45 crores came from the non common segment. 40 crores and came from the non commerce. Thank you so much.
operator
Thank you. The next question is from the line of Mr. Sudarshan, an individual investor. Please go ahead sir.
Unidentified Participant
Congrats for the good result. Regarding the recent dynamics in the overall. Industry particularly you could see that upskilling has become a primary objective and also. People shifting towards the government jobs. So with this recent change are we strategizing in terms of our upskilling and also government preparation and also into the. New area geographies as well. And also we strategizing get more students on board too.
Kalpathi S. Suresh
I think that government business has found favor with a specific category of people who value long term job commitment and who are fairly resilient to any changes in the environment. So for instance when Covid happened, I think our government programs did extremely well because the government was the only one which did not do any retrenchment or salary reduction during the COVID period. So I think if segment of people look at the government test prep and government jobs as something that’s very secure, that’s continuing to do well off late.
What we have seen possibly in the last four to six weeks is with the changes and the unease that AI and AI related software is creating in the market, especially in the upskilling space, people are starting to look at the government job as fairly more secure with all the uncertainties that AIA and its advancement is creating. So in that sense we are starting to see some resurgence. It is showing in our Q2 numbers. Of course it is also coinciding, as I mentioned earlier, with the notifications that are coming. And so it is having a very significant impact.
But clearly, like you mentioned, we think going forward the government jobs will find lot more takers because they see it as being secure from changes that especially AI related advancements is bringing into the upskilling space. We are yet to see the end of it. I think it’s an evolving thing. But early indicators that we are seeing, we expect the government assert programs to start becoming and showing stronger revenues.
operator
Thank you. The next question is from the line of Mr. Atharva Kulkarni from Ohm Stockbrokers. Please go ahead, sir. Hello. Yes sir, Please go ahead.
Atharva Kulkarni
Yeah, so my question is what are the new markets I have seen correction. And what are the cost efficiency levels? That gives you a confidence towards your EBITDA margin improvement?
Kalpathi S. Suresh
You take it.
Aditya Malik
Yeah. So former, you know, two or three things happening, very interesting things happening in our commerce vertical. Apart from CA coaching which has been our mainstay and a core product, we are seeing a significantly higher traction in global certifications like acca, csa, CMA, et cetera across the country. We had started and piloted that in a couple of regions. Now as we roll it out nationally, that’s seen significant traction. Similarly in our online commerce coaching business as well, a similar trend. Under the brand DB Virtual, we are seeing that all courses are seeing a fairly significant traction as we launch them across as we launch them under the DB Virtual platform under non commerce segment in test prep, in government test prep.
We have launched Karnataka as a new market. As Suresh had mentioned earlier, we are fairly strong in Tamil Nadu and Kerala. The new geography we have launched is Karnataka early green shoots. But we are seeing some decent traction coming up from that market. A long way to go, but a decent start. In all other businesses like vocational business, the traction is coming from new products which have been introduced, new high value products which have been introduced which are online degrees, online certifications in the categories which are new. Since it’s online business, it is Pan. India and in fact global. We are seeing significant traction coming from the new product category. So to summarize, E commerce under global certification in government test prep green shoots in the new market which is Karnataka in vocational segments, predominantly new product categories which are high RP categories which are giving us significant traction across the country.
Atharva Kulkarni
Okay, thank you. Could I put in another question if that’s possible.
operator
Sorry sir, we do have a participant in line.
Atharva Kulkarni
Sure, Understood.
operator
Thank you. The last question is from the line of Mr. Henil Bagadia from Equicorp. Please go ahead sir.
Henil Bagadia
Thank you for the opportunity again. So I would just like to ask what are, what is the capital expenditure that we do in terms of a content cost across all the four verticals? So as you alluded that you’ve entered into the new market in case of Karnatak for the. For the government tested business. So I mean what part of the capex capital expenditure also goes into say entering into a new job effect? Because I think so Karnatak government exams will be different and you would have significantly built up on your existing content.
Kalpathi S. Suresh
I can take that. So in the government tetra apart from the language, the content is 75 to 80% the same because that relates to the national history and the national geography. There is a state dependency on the curriculum and specifics on the state and the language which is about 20%. Having said that, with the advancement and as I mentioned the advancements one is seeing translating into local languages is now lot faster with the AI tools that are already there. And the time to market can be very quick. So it is extremely cost efficient. It is extremely time efficient for us in terms of content into the type of monies that we spend on captives for content the government says is almost negligible and all of it is charged towards the endless.
There is no capitalization or content that we do in the government space as far as our commerce space is concerned. We currently have about 100 physical centers in over 40 cities in India. These are physical centers of gatekeshar classes. It exists and in many of these cases while we go into new cities, new locations to set up centers of learning, almost all of which are least premises. The capex that we only do is in terms of tables, chairs and possibly air conditioning in very very few locations. So the capex cost is much less than 1 crore for a new location that we go into.
Majority of it is all leased, very, very few things except for a few pieces of furniture that we actually buy. Essentially all of it is leased. So it is very capex like when we set up new centers in the commerce vertical, content creation and government vertical, very negligible. All of it is charged to our P and M. So as we go into Karnataka, like you mentioned, there is change in language. There is about 20, 25% change in content. But with the new tools that are available, it’s becoming extremely cost and time efficient. So little cost, all of it is charged to our pml.
As far as content creation is concerned, I think it is also in some sense allowing us to expand lot faster than what could have been possible say about a year and a half before we are able to move much, much faster.
Henil Bagadia
What will be a projected expenditure for this year? And I mean as you entered Karnatak last year, so any new geographies you plan to enter for any other vertical or as you said, you are getting deep into the AIML part and the development part for the vocation. So for all the, all the four verticals, if you could just give some more clarity there.
Kalpathi S. Suresh
Mohsin, what is the capital allocated for spending for expansion in commerce and non commerce?
Saurani Pathan Mohasin Khan
Now Commerce allocated 25 year.
Kalpathi S. Suresh
So just to expand on it in the commerce space, significant monies are going actually into setting up new managed colleges. That’s really where we are putting money. Typical cost is about 3 to 4 crores. Predominantly goes into security deposit, lease deposit and then of course for furniture that we buy, air conditioning that we put in the new college locations that we set up. So roughly about 3 to 4 crores. The plan is to add 526 college of commerce under the capacity of brand during this year and that broadly the allocation that’s being made in the commerce space.
Mohsin, what’s in the non commerce space?
Saurani Pathan Mohasin Khan
Non commerce is very low. It’s usually at 4 to 5 crores.
Henil Bagadia
Yes, you are audible. Yes you’re audible. Yeah. Okay. Yes sir, the five to six floors if you could give where you would be spending. So as you said in the commerce vertical, it will be for new Tapasya centers.
Saurani Pathan Mohasin Khan
It will be vocational segment which with the government as per getting the new colleges in Karnataka market and going to outside the academy, yes.
Kalpathi S. Suresh
Typically again you know, we look for operational management of schools. So in any of these schools where we operationally take over, again the premises are all lease. So again lease deposits, security deposit, initial marketing, typically about 2 to 3 crores per operational school that we take over.
Henil Bagadia
Okay, thank you sir.
operator
Thank you. I would now like to hand over the conference to the management for closing comments. Please go ahead sir.
Kalpathi S. Suresh
Thank you. First, thank you for all for participating in this call. Spending a good one hour on the call for us it has been a satisfying quarter essentially because this is our second consecutive quarter of being positive. I think clearly we are demonstrating with an EBITDA in excess of 50 crores for the quarter, we are clearly demonstrating that our projections as part of a Veranda 2.0 strategy that we sort of spoke about early part of this year is well on its way to being delivered. With the debt that we just closed, we expect our cost of money, interest cost to significantly come down in the quarter’s coming effect.
As I mentioned, we closed the debt end of July, August 1st, so we suffered only one month of significant interest cost that should go away in this quarter. So we expect Q2 on the back of that to be significantly, far more positive than Q1. Our Q2 target should be well ahead of Q1 given that the interest burden is almost going away for the full year we expect, and our guidance is fairly intact, we expect to be able to reach an EBITDA well over 240 crores, India’s reported numbers, and an EBITDA of close to 200 crores for the full year.
So for us, it’s a satisfying quarter because it has clearly set the stage both in terms of numbers, strategy, outcomes, in terms of where we want to be. So we are thrilled with the quarter, the way it has shaped up. We think we’ll come back to you with a much stronger Q2 and a full year that you will start seeing taking shapes when we announce numbers for the next quarter. Thank you once again for all of you for spending your valuable time with us on this call today. Thank you.
operator
Thank you, sir. On behalf of Go India Advisors llp, that concludes this conference. Thank you for joining us. And you may now disconnect your lines. It.