Flight of the phoenix: Veranda chief pins hopes on second innings

CHENNAI: From a tearing hurry to a measured stance – that defines angel investor Kalpathi S Suresh. The co-founder of Kalpathi Investments, AGS Cinemas & AGS Entertainment re-entered the education space by founding Veranda Learning Solutions in 2018, which went public last year. The company offers online and offline courses to help prepare students for competitive exams in India, such as SPSC, SSC, Banking and Insurance, RRB examination and CA and UPSC.

Suresh’s second innings was to fulfil the cherished goal of being an end-to-end education player. While the string of acquisitions – seven to be precise with more in the pipeline – may reveal the entrepreneur’s aggressive nature, his intent is clear – not to repeat the same mistakes done at SSI, a venture established in 1991, that eventually got sold in 2007.

“I am happy to make new mistakes but certainly not repeat the same ones,” says Suresh, in an interaction with DTNext, tracing the journey prior to his latest venture. He helmed the business of training and software development in the late 1990s and then made a significant acquisition (Albion Orion) in North America followed by an offshore JV with Nasdaq Global Holdings but 9/11 and the dotcom crash derailed plans. “Most software companies had a tough time. We had acquired Albion to move business offshore, but after the US assault on Afghanistan, things went downhill.” Disaster recovery became a critical concern. So city and country-level disaster recovery centres were set up in Chennai, Mumbai, London and Singapore.

“Two years after the dotcom bubble burst, a slowdown in the software training sector hit everybody – including NIIT and Aptech. I was travelling throughout the month just to assure stakeholders of SSI. Subsequently, SSI Education was merged into Aptech to rationalise costs as the education business was shrinking.” The late Rakesh Jhunjhunwala also helmed Aptech at one point in time. Likewise, the services business was merged into Scandent under the leadership of Ramesh Vangal. In 2007, SSI, which dabbled in realty also got sold.

His tryst with education space once again seemed to take off when negotiations to buy Educomp along with TA Associates, were on. But the Rs 900 crore offer fell through. Again with Aon (now Apollo Private Equity), a closure stage acquisition of the Chaitanya group of schools failed, as per reports.

“Veranda, sort of, exemplifies the way we used to learn – under the tree, coming, sitting, talking and discussing (kind of) learning that happens,” says Suresh, who is committed to the hybrid model.

Veranda Learning also acquired JK Shah Education in October 2022 for Rs 337.82 crore.

Every acquisition fills up some part of the vision to emerge as an end-to-end player in the sphere of education, he says. “We have closed 7 (acquisitions) in every space where we don’t exist – test prep, pre-schools – one of the businesses we have acquired provides services to schools, we want to go deep, we want to serve colleges and universities as we are negotiating if something can be acquired in that space. Hopefully, we would have completed substantially most of the acquisitions,” he notes.

Profitability and pedigree are the twin mainstays of the entity’s growth strategy as his formula for valuation has to be determined by profit and not revenues. “FY24 is where we are demonstrating how we can organically grow businesses – last year we did IPO, acquired companies this year, last year’s acquisitions are driving value – from an EBITDA loss last year, this year, we expect to deliver Rs 100 crore proforma positive EBITDA.”

Suresh is averse to using the word “edtech.” “We are an education company.” A bank or an insurance firm does not have tech suffixed, he says, while affirming that a brand like Infosys offering services is a technology company.

The runner (read 21 km on Sundays and 42 km once a month) for over 30 years is the first engineer in his family, who is a die-hard Rajini fan (already watched ‘Jailer’ twice). While succession planning is priority, he says internally the business, with 300 points of presence across brands, is pandemic proof, with an ability to switch on even if any other disruption of this magnitude arises.