The Aditya Birla Group is in talks with struggling infrastructure financier Infrastructure Leasing and Financial Services Ltd (IL&FS) to buy out its education and training arm, IL&FS Education and Technology Services (IETS), according to two people aware of the development who did not want to be named as the discussions are in their preliminary stages.
IETS, a fully owned subsidiary of IL&FS, operates computer labs in government schools under the build-own-operate (BOO) model. According to the 2018 annual report of IL&FS, IETS manages 16,000 schools in 11 states. It also offers vocational skills training to youth funded by governments and corporates, the latter through individual corporate social responsibility programmes. The company trained nearly 300,000 candidates last year and was the biggest such trainer under the Pradhan Mantri Kaushal Vikas Yojana, the government’s skill development programme.
IETS is present in 17 countries in the Middle East and North Africa and South and South East Asia. The company said in its annual report that it had received growing interest from foreign governments and private sector companies in these countries for the IETS portfolio. In its 2017 annual report, IETS disclosed that for the year ended 2017, IETS reported revenue of ₹427 crore and net profit of ₹20 crore. The company’s total debt stood at ₹606.83 crore, the document said.
The Aditya Birla Group runs a gamut of learning, development and skill training programmes under separate businesses and as part of the Aditya Birla Skills Foundation, a not-for-profit organization that offers vocational education and skills training to job-seekers and runs multi-skills training centres at several locations. The company has been attempting to enter the for-profit education space for a while. One of the two people mentioned above said that the group had approached IL&FS two years ago as well, expressing interest in buying the latter’s education business.
In 2014, the group was reportedly in talks with debt-laden Educomp Solutions, a diversified education services provider, to buy out its schools business. Neither of these attempts succeeded for the Aditya Birla Group. Educomp is undergoing bankruptcy proceedings at the National Company Law Tribunal (NCLT). A spokesperson for Aditya Birla said that the group does not comment on market speculation as a matter of policy. An IL&FS spokesperson did not respond to emailed queries till the time of going to press.
For IL&FS, with close to ₹90,000 crore in debt, the group is ready to sell assets and has identified 25 projects that are fit to be offloaded, mostly in the roads sector. Company executives have said in the past that prospective buyers have been identified for some of these assets. However, the group is waiting to shore up capital and recapitalize subsidiaries to a stronger footing to prevent a fire sale. A final decision if and when this capital raising is possible is likely to be taken at the annual general meeting to be held in Mumbai on Saturday.
Source: Mint