K-12 schooling is highly regulated and no profit making entity is allowed to run K-12 school. Present promoters enter into the segment through circuitous route of management contracts and advances paid to schools. The decision was not correct in my view. In the latest filing promoters have specifically stated that they will not invest in any new venture in K-12 segment. This is the best that has come out today from the management. It amounts to accepting mistake by management.
Pre-school segment is profitable segment. It is good that management is leaving asset heavy K-12 segment. Losses are not very high- not even one year EBITA. Once this segment is exited, ROI shall increase. Further company shall have more surplus to expand more aggressively in pre-school segment.
(Disc: I am invested in the company for last 2 years. I added more recently.)
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