Niit Limited · NSE:NIITLTD
Niit — Q3 FY2016 Earnings Presentation
50 slides from Niit's earnings presentation, February 2016
Slide 1: Investor Presentation Q3'FY16
Investor Presentation Q3’FY16
Slide 2: Agenda
Agenda • NIIT: Company Overview • Corporate Learning Group • Skills & Careers Group • Schools Learning Group • Business Transformation • Q3’FY16 Results Update • The Next Frontier: Future Direction 2
Slide 3: NIIT: IT Training To GTD
NIIT: IT Training To GTD CLG Key Competencies Training and IT Developed: Services business Global Talent Development SNC - Pedagogy CAGR >50% + Company - Management of distributed delivery process, SLG - Partnerships IFBI, Imperia MTS, Cloud Campus, NYJ Pioneered Demerger of Franchising in IT Servic
Slide 4: NIIT: Business Structure
NIIT: Business Structure Corporate Learning Skills & Careers Schools Learning Rs 4,878 Mn, 51% Rs 3,283 Mn, 34% Rs 1,413 Mn, 15% Productivity Employability Academics US, Europe India, China India • Managed Training • Service Sector skills • Teaching & Learning Services • Professional Life skills Sol
Slide 5: Capital Structure
Capital Structure Shareholding Total Capital Employed – Rs. 9,981 million Debt 20% Promoters 34% Public Equity Cash Net 43% 80% 8% Current Assets 24% FII 10% Net Fixed DMF & FI 13% Investments* Assets 56% 11% No of Shares: 165.4 million **Net Capital Employed – Rs. 3,573 million As of December 31, 2
Slide 6: NIIT has made significant contribution to training and education, globally
NIIT has made significant contribution to training and education, globally Skilled over 4 M students over the last 10 years Career courses in IT, ITES, BFSI, Mgmt, Retail, Telecom etc 379 B2C education centers 20% higher premiums for agents on- Technology enabled boarded for a leading Insurance comp
Slide 7: …and has received numerous recognitions and awards
…and has received numerous recognitions and awards Highest Rated Education Brand Ranked 4th Best Company to work for in India. No 1 in Education and Training NIIT Nguru awarded as “Best Interactive Solution 31 Brandon Hall awards for Provider” by Corporate Training ASSOCHAM NIIT USA ranked among the
Slide 8: Business Overview
Business Overview
Slide 9: Corporate Learning: End to End Servicing Capability
Corporate Learning: End to End Servicing Capability Helping Companies Over 70 Industry Awards Run Training like a Business CURRICULUM & LEARNING LEARNING STRATEGIC LEARNING CONTENT DELIVERY ADMINISTRATION SOURCING TECHNOLOGY 9
Slide 10: Corporate Learning: Marquee Customers
Corporate Learning: Marquee Customers Representative list, Logos represented above are trademarks of respective companies 10
Slide 11: Skills & Careers: A New Way Of Learning
Skills & Careers: A New Way Of Learning 11
Slide 12: Skills & Careers: Expanding Product Portfolio
Skills & Careers: Expanding Product Portfolio Current 2007-2012 Software Engineering IT Banking & Finance 1982-2006 Banking & Finance Business Process Mgmt Brick IT & Business Process Mgmt Management Education Portal Professional Life Skills SMAC Management Education Digital Marketing E-Commerce Ret
Slide 13: Schools Learning: nGuru Solutions Portfolio for Schools
Schools Learning: nGuru Solutions Portfolio for Schools Teacher Training Math Lab School Consultancy Quick School @ Cloud IT, Web & Multimedia 13
Slide 14: Schools Learning: Credentials
Schools Learning: Credentials 10 Mn + Students 400 k + Teachers 100 k + Nodes 24 k + Hrs of Content Private and Government Schools 45 k + Instructors Private Schools 16 k + Schools Cumulative 14
Slide 15: Business Transformation
Business Transformation
Slide 16: Business Transformation Journey
Business Transformation Journey • Top management succession and strengthening the leadership team • Rationalization of Subsidiaries: Scheme of Arrangement • Reassessment of existing Business/ Geographies/ Products Focus on Asset light, Growth oriented Businesses 16
Slide 17: Business Transformation: Scheme of Arrangement
Business Transformation: Scheme of Arrangement CLG NIIT SCG Limited SLG 2 1 • Transfer of school business Merger of Evolv, Scantech and NOLL with NIIT. Indian JVs Evolv Scantech NOLL HIWEL Overseas and India India India India operations operations 23.8% NTL Appointed Date: 01 April 2014 17
Slide 18: Business Transformation: Resulting Structure
Business Transformation: Resulting Structure CLG NIIT • Simplified entity structure Limited SCG to reflect realigned business operations • Enabling structure for 23.8% 100% Indian JVs more funding NTL MLSL and Overseas operations opportunities for Schools operations business SLG Appointed Date: 01 A
Slide 19: Business Transformation: Reassessment of Businesses/Geographies/Products
Business Transformation Reassessment of existing Business/ Geographies/ Products 1. Exit capital intensive government businesses and capex driven models in schools 2. Sharpen focus on Skills & Careers business on the larger markets and exit other international geographies 3. Capacity & Structure con
Slide 20: Q3'FY16 Results Update
NE) T FRONMER Q3'FY16 Results Update
Slide 21: Environment
Environment • Increased global economic uncertainty driven by slowdown in emerging markets. IMF cut global growth forecast for CY2015 to 3.1% (vs 3.3% earlier) • Lower commodity prices and volatility in exchange rates creates risks and opportunities • Corporate spending on training in US and Europe
Slide 22: NIIT Growth Platforms
NIIT Growth Platforms Corporate Skills & Careers Schools MTS Beyond IT & Cloud Campus nGuru 27 global MTS Beyond IT contributes 38% Signed 38 Schools in customers vs 24 in Q3 vs 36% in Q3 FY15 Q3. Total 2,841 FY15 71% centres cloud enabled schools addressed Revenue visibility at 78% port
Slide 23: Q3'FY16: In Perspective
Q3’FY16: In Perspective Corporate Learning Group (CLG): Continued Strong performance Revenue at INR 1,586 Mn up 17% YoY; Constant currency growth @ 15% YoY; EBITDA margin at 12% (rock steady consistency) Added 1 new MTS customer; MTS now contributes 91% to CLG revenue Revenue Visibility at $ 1
Slide 24: Key Financials
Key Financials INR Mn Q3 FY'16 Q3 FY'15 YoY Q2 FY'16 QoQ Net Revenue 2,623 2,482 6% 2,725 -4% Operating expenses 2,459 2,424 1% 2,473 -1% EBITDA 164 57 185% 252 -35% EBITDA% 6% 2% 393 bps 9% -302 bps Depreciation 117 152 -23% 129 -9% Net Other Income -67 4 -71 mn -51 -16 mn Profit before Tax -21 -91
Slide 25: Business Mix
Business Mix Q3 FY16 Q3 FY15 Schools Net Revenue Schools 8% Skills & 13% Careers Growth 32% Skills & Corporate Corporate 17% Corporate Careers 60% 55% Skills & Careers 3% 32% Schools -33% NIIT 6% Q3 FY16 Q3 FY15 EBITDA Schools G ro w th Schools 8 -15% Skills & C o rp o ra t e +26 M n Careers Skills
Slide 26: Corporate Learning Group
Corporate Learning Group INR Mn Q3 FY16 Q3 FY15 YoY Q2 FY16 QoQ Net Revenues 1,586 1,360 17% 1,448 9% EBITDA 184 157 17% 170 8% EBITDA % 12% 12% 2 bps 12% -14 bps Number of MTS Customers • Revenue at INR 1,586 Mn up 17% YoY; 27 Constant currency Revenue growth at 21 24 15% YoY 14 • Strong business m
Slide 27: Skills & Careers Group
Skills & Careers Group INR Mn Q3 FY16 Q3 FY15 YoY Q2 FY16 QoQ Net Revenues 828 808 3% 1,045 -21% EBITDA 5 -108 -105% 69 -93% EBITDA % 1% -13% 1,396 bps 7% -597 bps • Revenue at INR 828 Mn up 3% YoY (vs -3% in Q1 & +1% in Q2, and -12% in Q3 FY15); Revenue from Focus-Business up 2% compared to drop of
Slide 28: Schools Learning Group
Schools Learning Group INR Mn Q3 FY16 Q3 FY15 YoY Q2 FY16 QoQ Net Revenues 209 314 -33% 232 -10% EBITDA -25 8 -416% 14 -285% EBITDA % -12% 3% -1453 bps 6% -1786 bps • Overall revenue impacted due to planned ramp down of government school projects • Revenue from Focussed IP led private school busines
Slide 29: People
People 3,021 3,028 2,942 2,927 2,786 2,732 2,705 2,695 Q4 FY14 Q1 FY15 Q2 FY15 Q3 FY15 Q4 FY15 Q1 FY16 Q2 FY16 Q3 FY16 Headcount down 27 QoQ and down 323 YoY * excludes project retainers 29
Slide 30: Future Direction
Future Direction
Slide 31: The Next Frontier: Strategic Agenda
The Next Frontier: Strategic Agenda Technology Enabled Shared Service Platform 31
Slide 32: Corporate Learning Group: Future Direction
Corporate Learning Group Future Direction
Slide 33: CLG: Corporate Training Spending
CLG: Corporate Training Spending 15% Corporate Training Spend 12% 10% 10% in USA: $90+ Bn 6% 2% Global Training Spend: $135Bn+ Source: Bersin By Deloitte -11% -11% 2007 2008 2009 2010 2011 2012 2013 2014 • Continued surge in corporate training spending, as US corporations focus on reskilling their w
Slide 34: CLG: Managed Training Services
CLG: Managed Training Services MTS Revenue (Rs Mn) Number of MTS Customers 4253 24 21 3148 2,174 5x in 4 years 14 1,544 9 852 6 FY11 FY12 FY13 FY14 FY15 FY11 FY12 FY13 FY14 FY15 MTS contribution to CLG • Large market with attractive growth 87% 79% opportunity; Increasing contribution from MTS 72% 63
Slide 35: CLG: Managed Training Services
CLG: Managed Training Services Delivering Efficiency and Effectiveness In Training 35
Slide 36: CLG: Taking MTS to Next Level Of Growth
CLG: Taking MTS to Next Level Of Growth Comprehensive Engagements Bid Process 4 Mgmt • Big ticket annuity Productivity 3 contracts • Pre-filter RFPs • Domain expertise Procurement 2 • Contracting Maturity • Grow global delivery capability Efficiency • Step up people • Improve Win Rates • High Capabi
Slide 37: Skills & Careers Group: Future Direction
Skills & Careers Group Future Direction
Slide 38: 2022 Projections: Huge Capacity Creation Required
2022 Projections: Huge Capacity Creation Required Total supply by 2022 @ current capacity 61.5 (2013-14) Addition to workforce 115 @ 12.8 million per year 11X 8x Reskilling / upskilling of 90% of existing 611 workforce (679 million) Reduction due to 48 ageing/ retirement * Source: McKinsey analysis;
Slide 39: Skill Gaps: Sectorial Employment & Growth Opportunities
-10 10 20 30 40 0 Building, 31 Construction & Real 17 Retail Beauty and 10 Wellness Transportation & 12 Logistics Furniture & 7 Furnishing Handlooms & 6 Handicrafts Sectors Tourism, Hospitality 6 & Travel 6 Textile & Clothing 5 Domestic Help Source: Sector wise Human Resource and Skill Requirements
Slide 40: Skill Gaps: Portfolio Expansion (Service Skills)
-10 10 20 30 40 0 Building, 31 Construction & Real 17 Retail Beauty and 10 Wellness Transportation & 12 Logistics Furniture & 7 Furnishing Handlooms & 6 Handicrafts Sectors Tourism, Hospitality 6 & Travel 6 Textile & Clothing 5 Domestic Help Source: Sector wise Human Resource and Skill Requirements
Slide 41: SNC: Business Transformation
SNC: Business Transformation Skills Technology New India Service Integrated Marketplace Intensive / One SNC Sector B2B/B2C with 360◦ Structure China Multi Skills business Partner Modal Ecosystem IT, IT, IFBI, India Imperia, China Non-IT Standalone Centre Everything Old Centre B2B, B2C Driven In hous
Slide 42: SNC: 360 Degree Partner Ecosystem
SNC: 360 Degree Partner Ecosystem Industry Demand Learner Needs • Certified Skills • Learn • Source to Hire • Get Certified • Skills Upgrade • Get/Change Job • Get Promoted B2B Engagement Multi Modal Marketplace Ecosystem Needs NIIT Managed Services • Brand Association • Reach Building a Comprehensi
Slide 43: Schools Learning Group: Future Direction
Schools Learning Group Future Direction
Slide 44: SLG: Focus Areas
SLG: Focus Areas • Defocussed from government schools Be a School business Service Private Schools • Exited capex driven business (B2B) models in private schools Service Govt. • No Nationally Dominant Schools (B2B) Player in private schools space with comprehensive Service Private product portfolio;
Slide 45: SLG: Current B2B Opportunity Set
SLG: Current B2B Opportunity Set CBSE 62% ICSE ~120K Private Schools NGSA: Share of Rev 12% 57% 2% IB 47% 47% 0.1% 40% State Boards 86% FY 1 1 FY 1 2 FY13 FY14 FY15 NGSA GSA Comprehensive product portfolio Revenue (Rs Mn) 951 668 Leadership position in white spaces (IT, 833 538 895 Math Lab, QS
Slide 46: SLG: Next Frontier For B2B Business
SLG: Next Frontier For B2B Business Assets • High capital intensity • High people dependence In School Service People • Diminished value of IP • Linear, non-scalable IP B2B Business Cloud IP • IP driven Remote Service • Asset light People • Technology intensive Services • Non linear, highly scalable
Slide 47: SLG: K-12 Opportunity Landscape
SLG: K-12 Opportunity Landscape • NIIT’s existing business targets a portion School Fee of the fee that parents pay to schools. Parental • Spending outside schools represents a Spending large portion of total spending related to Out of education and development for kids School Spend • A B2C player h
Slide 48: SLG: Grabbing the B2C Opportunity
SLG: Grabbing the B2C Opportunity Big Data based Leverage Existing Assets Adaptive Learning • Students in Private (1.5Mn) and Platform Government schools (2Mn) students serviced by SLG • NIIT Students/Alumni EDUTAINMENT • Schools IP • NIIT Brand USEFUL INFORMATION • Offline Reach SELF-PRACTICE SELF-
Slide 49: Overall: Future Direction
Overall Future Direction
Slide 50: Technology Enabled Shared Service Platform
Technology Enabled Shared Service Platform 50