Revenues of Education companies to remain flat in 2020-21: Report
NEW DELHI [Maha Media]:Fewer enrolments in engineering and business administration courses and inability to raise fees amid the COVID-19 pandemic are likely to keep the revenues of education companies flat this financial year, according to a report.
Revenues are expected to be flat, due to lower fee-collection efficiency. Cash flows will be impacted as the average fee collection was down 25% on-year till November-end as new enrolments were delayed and instalment facility was offered for fees payment, Crisil Ratings said in a report. The sector relies solely on fees to meet operating expenses and maturing bank loan obligations, and typically, does not avail working capital facility from banks.
The formal education segment, comprising K-12 (kindergarten to class 12) and tertiary or higher education (offering graduation and post-graduation courses including medical course), accounts for almost two-thirds of the ?9,00,000-crore revenue of the Indian education sector.
The informal segment comprising coaching or test preparations, pre-schools and other vocational courses accounts for the rest. K-12 contributes 60 per cent to the formal segment's revenue, while tertiary education brings up the rest, the report noted.
Despite no fee hike, the K-12 segment is expected to grow 1-2 per cent because of steady enrolments, it said. The tertiary segment, comprising engineering and other technical and business administration courses that contribute about 15 per cent to the formal segment revenue, is expected to shrink 5-6 per cent owing to fewer enrolments in 2020-21. The tertiary segment offering medical education, which accounts for 5 per cent of the formal segment revenue, has a favourable demand-supply gap and is largely insulated from the economy. This segment will see moderate revenue growth of over 5 per cent, driven by higher intake and enrolments, the report stated. Revenues from other segments such as arts, science, commerce, and teacher training are seen stable, therefore, for the formal education segment, revenue will be flat this fiscal, though profitability would be undented.