English Classes to Aid Aptech as Sales Decline: Corporate India

Aptech Ltd. (APTR), an Indian IT training company backed by billionaire Rakesh Jhunjhunwala, will start teaching English to students in Africa and Latin America as it seeks to stem five successive quarters of falling sales.

The company, which trains people to write computer programs, will add at least 50 centers in Brazil, Mexico and other Latin American nations in the next five years, and about 25 centers in Africa, that will combine teaching English with lessons in writing software code, Chief Executive Officer Ninad Karpe said in a telephone interview yesterday from Mumbai.

Aptech partners with Microsoft Corp. to use its educational content in teaching modules. It is also betting it can charge students more for combination courses, according to Karpe. The expansion on these two continents will bolster its efforts to become a larger player in emerging markets, he said.

“These are unexplored markets where the growth potential is high,” said Karpe. “We leverage our strengths to keep increasing our presence, revenue and profitability.”

Aptech’s profit, including of its units, fell 84 percent to 97.2 million rupees in the six months ended Sept. 30, while sales, excluding dividend income, declined 11 percent to 838.9 million rupees, according to earnings posted on its website.

The company brought the accounting policy at one of its subsidiaries in line with its own in July 2011 and this change resulted in a decline in annual revenue, it said in a report.

Shares of Aptech, based in Mumbai, advanced 2.3 percent in 2012, compared with a 26 percent gain in the benchmark BSE India Sensitive Index. (SENSEX) The stock fell 1.1 percent to 67.65 rupees at the close of trading in Mumbai.

Jhunjhunwala, through his company and family, controls 34.96 percent of Aptech, according to data compiled by Bloomberg.

Language Barrier

Expanding in Africa and Latin America won’t be easy, according to Shaukat Ali, an analyst at Quantum Securities Pvt.

“In Africa the main concern remains social unrest and political turmoil,” said Ali. And in Latin America “the issue is whether these products are viable in that locality or not because they are Spanish speaking people.”

Karpe said the demand for learning English in Africa and Latin America is “very high.”

Last year Aptech conducted a trial of the model of providing combined courses at its center in Bangalore. The company has been leveraging the 2009 acquisition of First English, which operates centers teaching the language.

“Rather than develop content, we took over an existing company with content and network,” said Karpe. The trial of the combination model was “satisfactory,” he said.

English Advantage

Aptech plans to collaborate with local companies in French- speaking countries in Africa and Spanish-speaking Latin American nations, Karpe said.

“Combination offer is in very high demand especially in these countries,” Karpe said. “All these people are realizing they need to know English because with the spread of the Internet, they have to learn English to be part of the globalized world.”

Set up in 1986, Aptech has focused on expanding its business overseas in the last four years with students completing their 12th grade as its target market, Karpe said.

It operates about 1,300 centers in more than 40 countries that teach people to write software codes, create animation including in 3-D and the special effects used in making movies and television programs, as well as train people to be cabin crews of airlines and for the hospitality industry, according to its website.

Aptech has said its goal is for the international business to contribute half its revenue from individual training by 2014, up from 45 percent in the year ended March 31, 2012, according to its annual report. It already has teaching centers in Nigeria and Brazil, apart from China, the Asia-Pacific region, Russia and the Middle East.

The company is counting on expanding in Africa and Latin America to help achieve that target.

“We are confident because we already have had some presence for sometime,” Karpe said. “We have the skill and the expertise to go into these markets.”

To contact the reporter on this story: Ganesh Nagarajan in Chennai at gnagarajan1@bloomberg.net

To contact the editor responsible for this story: Sam Nagarajan at samnagarajan@bloomberg.net

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