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  • The Curious Case of Tree House Education - Print View - Livemint

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    Hardik Shah
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    Tree House Education saw its cash reserves drop significantly from Rs. 151 crore to Rs. 22 crore between September 2015 and March 2016 despite reducing borrowings. Revenue growth decelerated from 28% to 5% over the same period due to weak student enrollment and fee reductions. Receivables increased from Rs. 27 crore to Rs. 57 crore over this time frame as the company changed its bad debt policy and wrote off a significant amount. These adverse trends led Zee Learn to reconsider its proposed merger with Tree House Education.

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    Treehouse Report

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    Tree House Education saw its cash reserves drop significantly from Rs. 151 crore to Rs. 22 crore between September 2015 and March 2016 despite reducing borrowings. Revenue growth decelerated from 28% to 5% over the same period due to weak student enrollment and fee reductions. Receivables increased from Rs. 27 crore to Rs. 57 crore over this time frame as the company changed its bad debt policy and wrote off a significant amount. These adverse trends led Zee Learn to reconsider its proposed merger with Tree House Education.

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    © All Rights Reserved
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    10 views1 page

    The Curious Case of Tree House Education - Print View - Livemint

    Uploaded by

    Hardik Shah
    Tree House Education saw its cash reserves drop significantly from Rs. 151 crore to Rs. 22 crore between September 2015 and March 2016 despite reducing borrowings. Revenue growth decelerated from 28% to 5% over the same period due to weak student enrollment and fee reductions. Receivables increased from Rs. 27 crore to Rs. 57 crore over this time frame as the company changed its bad debt policy and wrote off a significant amount. These adverse trends led Zee Learn to reconsider its proposed merger with Tree House Education.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 1

    05/11/2016

    ThecuriouscaseofTreeHouseEducationPrintViewLivemint

    Print Close
    Fri,Jun032016.0403AMIST

    ThecuriouscaseofTreeHouseEducation
    Goingbythenavailablepublicinformation(financialstillSeptember2015),TreeHousewasperceivedtobeinabetterposition
    SharesofTreeHouseEducationandAccessoriesLtdfellon
    ThursdayafterZeeLearnLtdsaiditisputtingonholdtheproposalto
    mergetheformerwithitself.ZeeLearndecidedtoreevaluatethe
    dealafterTreeHousesMarchquarterresults.Ithasreconstituted
    themergerevaluationcommitteewhichwillsuggestwaystosalvage
    thedeal.
    WhentheproposalwasfirstannouncedinDecember2015,Zee
    Learnwasfelttohavecutagooddeal.Goingbythenavailable
    publicinformation(financialstillSeptember2015),TreeHousewas
    perceivedtobeinabetterposition.Somuchsothatadomestic
    brokeragefirmevensuspendedcoverageonTreeHousecitinga
    rawdealforminorityshareholders.Whatchangedinthelastfour
    months?Plenty,itseems.
    AttheendofSeptember2015,TreeHousehadcashand
    cashequivalentsofabout`151crore.Thatdroppedby`129
    croreto`22crorebyMarchthisyear.

    Firstisthedepletionofcash.AttheendofSeptember2015,Tree
    Househadcashandcashequivalentsofabout`151crore.That
    droppedby`129croreto`22crorebyMarchthisyear.Duringthe
    period,borrowings(longandshorttermcombined)haveseena
    reductionofupto`79crore.Butthisdoesnotfullymakeupforthe
    reductionincash.Thecompanyhasbeenexpanding.Buttheinvestmentcouldhavebeensupportedbyoperatingprofits,whichwere
    decenttilltheDecemberquarterend.
    Thesecondisdecelerationingrowthrates.Revenuegrowthfellfrom28%inQ1to15%inQ2to5%inQ3toa46%dropinthelastquarter.
    Revenuesinthelasttwoquarterswereimpactedbyweakenrolmentsandreductioninfee.Profitabilitytoowashitduetoriseinexpansion
    ledcostsintheNationalCapitalRegion.
    Third,thereceivablesandwriteoffs.InDecember2015,TreeHouseclaimeditmanagedtohalvethereceivablesfromSeptemberto`27
    crore.ButtheMarchquarterresultsshowedareversalintrendasreceivablesstoodat`57crore.Asthecompanychangeditsbaddebt
    policy,itwroteoffasignificantamountlastquarter.
    TheseadversetrendsmayhaveforcedZeeLearntoreconsideritsmergerdecision.Butwhatisperplexingisthedramaticturnoffortunesat
    TreeHouse.Forlong,TreeHouseinvestorsbelievedthattheearningsfromoperatingschoolswillbesufficienttofundcapitalexpenditure,
    makingitaselfsustainablemodel.Asitexitedphysicalschoolbuildings,thefirmwasexpectedtobecomedebtfree.Butitwasnotableto
    achieveeitheroftheseobjectives,despiteopeningofnewcentresandgeographicalexpansion.Andnowitisfacingtheignominyofa
    prospectivesuitorbackingout.

    http://www.livemint.com/Money/6mdhqmn3P6WutVD8O6FUbO/ThecuriouscaseofTreeHouseEducation.html?facet=print

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