>CAREER POINT INFOSYSTEMS: IPO NOTE, Company Background, Business Model & Key Strengths (ADITYA BIRLA MONEY LIMITED)

Career Point Infosystems Ltd was incorporated as a public company on March 2000 by Pramod Maheswari, who has been in tutoring for competitive entrance exams since 1993 along with other promoters Mr. Om Prakash Maheswari and Mr. Nawal Kishore Maheswari. In FY02, the company started its operations via franchisee centres and from April 2006 onwards, it started to provide tutoring via company operated training centres as well.

CPIL is one of the leading tutorial service providers to high school and post high school students for various competitive entrance exams including All India Engineering Entrance Examination (AIEEE), Indian Institute of Technology – Joint Entrance Examination (IITJEE), All India Pre-Medical Test (AIPMT), Pre-Dental Test (PDT), etc., The company provides these services through four delivery platforms - company & franchisee operated centres, distance learning, synchro school programme and knowledge lab.

■ Under company operated centres, the course fees are based upon the selection of course, duration and geographical location of the centres. Basically, the company gets fees in lumpsum and/or on installments basis depending upon the course opted by the student. On an average, the company charges `31,000/ student/course.

■ In franchisee centres, the company enters into a 3-4 years agreement with franchisees and the company receives upfront fee and subsequently a certain percentage of the gross fees earned from the enrollment of students. Going forward, the franchisee centres are expected to come down as the company is likely to concentrate more on its own centres. As of 31st July, it has presence through 33 training centres, of which, 17 are company owned and the rest 16 are franchisees centres, spread across 13 states. Recently, CPIL forayed into formal education space through Education Consultancy and Management Services (ECAMS) segment. Through this entry, the company will serve K- 12 and higher education segment for private & government schools, colleges and universities. Under this ECAMS, the company will provide necessary management services which includes, laying strategic plans, HR management services, administrative services, advisory services and IT related services.

Key Strengths
■ Qualified and Experienced faculty team – Currently, the company has a team of 231 faculty members, in which, most of them are graduates from Indian Institute of Technology (IIT), National Institute of Technology (NIT) and other colleges in India. So the faculty members are well equipped with subject knowledge to guide and tutor students. Apart from this, the company has an ongoing in-house faculty training facility, where they undergo training on coaching skills & methodologies and subject matter up gradation in relevant courses

■ Brand power and geographical presence – CPIL enjoys the strong brand recognition as the established tutorial player in competitive exams space for engineering and medical stream. Presently, it has presence in 13 states (including franchisee centres) which provides access to major markets in northern and eastern India. Its Kota centre attracts students even from overseas countries like Singapore and Middle East, which reflects the brand image.

To read the full report: CAREER POINT INFOSYSTEMS

>MOTOGAZE: What seasonality? Demand grows unabated…

■ No signs of demand slowdown
The Indian automotive industry is witnessing a trend of volume growth, which has been defying all seasonality trends of the past. This is reflecting the structural change in consumer patterns driven by the strong economic performance adding strength to the income levels of the urban as well as rural customers. The volume growth of the industry till date has been around 26% with the passenger car segment growing ~34% and commercial vehicle (CV) segment growing at ~45% leading the way. The robust growth across the segment has led to demand surpassing supply in all major segments with suppliers facing acute capacity shortages. The surprising and heartening trend can be ascertained from the fact that despite the OEMs having raised prices in response to higher commodity prices and newer emission norms, demand growth has not been deterred.

■ Supply side shortages limit growth ceiling
Auto OEMs have seen a loss of probable sales due to supply related
slippages in castings, bearing, fuel injection pumps, etc. Ancillary
manufacturers have undertaken the process of capacity expansion, which
would come on stream by the second half of next fiscal. Pre-festive
purchases have been high in anticipation of a demand outburst in the
coming months, which would lead to further shortages of supply. The
OEMs have tried to increase dealer inventory to face these issues though
this has not been very fruitful due to continuous demand.

■ Raw material prices easing
Rubber prices have seen a decline from their earlier higher levels beyond
` 85/kg to ` 165/kg since the festive season of Onam in Kerala that saw
increased supply of natural rubber reducing the price arbitrage between
domestic prices and international prices (Bangkok prices). The tyre
industry would get some respite. This is due to the change in the existing
inverted duty structure in which the finished tyre attracts half the duty at
~10% in comparison to natural rubber, which is a raw material. This
would further help in maintaining price balances between domestic and
international markets. Aluminium prices, on the other hand, have seen a
hardening of ~6.5% since Q1FY11, thereby providing another possible
cause for concern in the coming quarters for OEMs.

■ Industry outlook
The consistent performance till now has raised expectations regarding
volume growth possibilities during the coming months of the festive
season, which is expected to be the strongest for the industry. The
industry is expected to grow at a CAGR of 13-15% in FY10-12E aided by
boisterous economic activity, favourable demographics and higher
income levels. The major concerns would be raw material prices, capacity
constraints and any untoward interest rate movement that could lead to a
reduction in profitability in spite of such volume growth. With the industry
lining up new capacities and anticipating future growth possibilities to
meet the stronger demand scenario of the domestic market, the outlook
continues to remain bright.

To read the full report: MOTOGAZE

>TELECOM SECTOR: Revival in GSM subscriber addition…

Subscriber growth continued unabated in the telecom industry. The industry added 13.5 million GSM subscribers in August 2010 –highest since April 2010. Though net adds declined in metros, it was more than compensated in all other circles. Highest traction was seen in C Circles, which added 2.0 million subscribers against just 0.9 million in July 2010. Metros recorded MoM growth of 2.3% while A and B circles grew by 3.1% each and C circles by 3.2%. BSNL and Uninor put up an impressive show. Uninor had highest ever net adds at 2.2 million subscribers while BSNL added 2.3 million subscribers. Subscriber addition for Bharti Airtel was down at 2.0 million subscribers – lowest in several quarters. Idea, Vodafone and Aircel maintained their monthly run rate in subscriber addition at 2.0 million, 2.3 million and 1.6 million, respectively.

■ Airtel – Decline in net adds
Bharti added 2.0 million subscribers as compared to the past seven month’s average of 2.9 million. Net adds for Bharti declined for the second straight month. Share in net adds also fell to 15.0% from 22.6% last month. Total subscriber base for Bharti Airtel stands at 141.3 million, with a market share of 30.4% among GSM players.

■ Uninor – Impressive show
Uninor posted its highest ever net adds at 2.2 million subscribers with strong addition coming from Tamil Nadu, Andhra Pradesh, UP (E), UP (W) and Bihar. Share in net adds for August stood at 16.4%.

■ BSNL – Reviving growth
BSNL added 2.3 million subscribers in August 2010. This is very impressive looking at its past four month average of 1.1 million subscribers. The company recorded robust net adds in Haryana,
Rajasthan and Orissa.

■ New launches
Amid the intense competition, the industry witnessed several new launches by various operators in this month. Videocon launched services in Himachal Pradesh, Andhra Pradesh, Karnataka, Maharashtra, Rajasthan, Bihar, Orissa and West Bengal. The subscriber base for Videocon stands at 3.7 million, up from 2.8 million in July. Aircel launched services in Gujarat, Punjab and Haryana with an impressive net addition of 96,248 subscribers in Punjab. Aircel added 1.6 million subscribers in line with its monthly run rate. Even Loop Mobile launched services in Haryana, Kolkata, Madhya Pradesh, Orissa, Punjab and Rajasthan, while STel ventured into the North East. The subscriber base for Loop Mobile stood at 3.0 million while STel increased to 1.5 million.

T0 read the full report: TELECOM SECTOR

>BANKING SECTOR: Basel III – been there; done that

■ Basel Committee on Banking Supervision (BCBS) announces Basel III capital requirements.

■ The new framework requires 50-200% higher tier I capital than that required under basel II

■ Indian banks would not require much capital for transition to Basel III norms as they comply with most of the norms even as of now
■ However, a faster credit growth would mean that Indian banks may be required to keep significantly higher tier I capital if the RBI wishes so

Basel III norms require 50-200% higher capital than Basel II
The Group of Governors and Heads of Supervision, the oversight body of BCBS announced Basel III capital norms on September 12, 2010. Under Basel III, the tier I capital requirement would go up by 50-200% over period of next nine years for banks globally. The full-fledged implementation of the norms will start from 2015 and will go on till 2019.

The tier I capital would be sum-total of common tier I capital, capital conservation buffer and counter cyclical buffer (optional).

To read the full report: BANKING SECTOR