Annual Report - Everonn Education - 2009-2010

EVERONN EDUCATION LIMITED

ANNUAL REPORT 2009-2010

DIRECTORS' REPORT

Your Directors have pleasure in presenting the Tenth Annual Report together
with the Audited Accounts of the Company for the year ended 31st March
2010.



I. CHANGE OF NAME:

During the year 2009-10, your company's name has changed from Everonn
Systems India Ltd to Everonn Education Ltd. The primary objective of the
change of name is to represent the objects of the company it pursues i.e
educational services.

II. FINANCIAL RESULTS: Rs. Lakhs
Financial Results
Particulars for the year as at

For the year ended
31st March 31-Mar-10 31-Mar-09

Total Revenue 21065.15 12137.94

Operating Profit 9598.40 5330.52

Depreciation 2378.34 1532.44

Interest 1032.20 518.18

Profit/(Loss) before tax 6264.72 3670.00

Provision for Taxation 1924.43 1285.78

Profit after Tax 4340.29 2384.22

Add:Profit brought 4715.69 2331.46
forward from previous year

Profit available for 9055.97 4715.69
appropriations

Appropriations:

Transfer to Debenture 1090.83 -
Redemption Reserve

Proposed Dividend 302.41 -

Tax on proposed 50.23 -
Dividend

Transfer to 434.03 -
General Reserve

Balance Carried to 7178.48 4715.69
Balance sheet

III. Results of operations:

The company's performance in the year 2009-10, continued its upward trend
and showed a healthy growth. The company earned as total revenue of
Rs.21065.15 lakhs in the year 2008-09. The revenue growth has been 74% over
the previous year. The operating profit for the year 2009-10 was Rs.9598.42
lakhs as against Rs.5720.62 lakhs for the year 2008-09. There is a
significant increase of 80% in the operating profit as compared to the last
fiscal. Net Profit has grown from Rs.2384.22 lakhs to Rs.4340.29, lakhs, a
growth over 82% over the previous year.

IV. Appropriations:

The Director's have recommended a final dividend of Rs. 2 per Equity Share
(20% on par value of Rs. 10/-) for the Financial year ended as on 31st
March, 2010, which on approval at the forthcoming Annual General Meeting,
will be paid to all those Equity Shareholders whose names appear in the
Register of Members as on 23rd July, 2010. The total proposed dividend
amount shall be Rs. 352.64 lakhs, including the dividend tax, for the
Financial Year 2009-10. Dividend (including dividend tax) as a percentage
of profit after tax is 8.12% as on March 31, 2010.

The register of members and share transfer books will remain closed from
24th July 2010 to 27th July 2010, (both days inclusive). The Annual General
meeting of the Company will be held on 27th July, 2010.

Transfer to Reserves:

The Company proposes to transfer Rs.434.03 lakhs to the General Reserve out
of the amount available for appropriations. An amount of Rs. 2462.79
(Previous year Rs.4715.69) has been proposed to be retained in the Profit
and Loss Account.

V. Utilisation of Public Issue Proceeds:

The Company has completed utilization of public issue proceeds. The details
are as follows:

SUMMARY
Particulars Amount in Lakhs

Summary of IPO Funds Received
& Utilised-Till 31st March
2010

Actual Funds Received
From IPO - 5,002,15
Less:Expenditure
As above

For Capital Expenditure, 4,437,28
Subsidiary Investments
and Brand building

For IPO Expenses 564.87 5,002.15

Balance available as on - (0.00)
31st Mar 2010

VI. OPERATING RESULTS AND BUSINESS OVERVIEW:

Instructional and Communication Technology [ICT]:

The company ties up with various state governments in India for providing
turnkey solutions to Government schools by setting up computer labs to
impart IT education, computer aided learning Computer Literacy and Teachers
Training Projects etc on Private-Public Partnership Mode. During the year,
the company has signed MOU's with Uttarpradesh State Government for
implementing computer education in 1099 schools in Uttarpradesh, with
Andhra Pradesh State Government for implementing computer education in 130
schools in the state, with Tripura State Government for implementing
computer education in 43 Schools in the state and with Maharashtra State
Government to implement computer education in 206 schools in the State.

The company is currently operating in 5862 schools as compared to 4442
schools in the year 2008-09 and the presence has increased to 14 states.
The revenue from ICT division is Rs. 6435.93 lakhs for the year 2009-10.

Virtual and Technology Enabled Learning Solutions [Vitels]:

The company provides Education and Training solutions through satellite
based Very Small Aperture Terminal [VSAT] technology. FY 2009-10 witnessed
a strong momentum in the growth of this division which is reflected by the
increase in the number of Everonn Learning centers, in 460 Schools, 767
Colleges and 11 Kompass centers. It has 14 studios in Chennai through which
the teachers deliver lectrures to students sitting in Everonn Learning
Centers. The company follows a student pay model in its Vitels segment. The
revenue from Vitels has grown up from Rs. 7425 lakhs in 2008-09 to
Rs.14629.33 in 2009-10.

VII. SUBSIDIARIES:

The Company has four subsidiaries. During the year, the Company
incorporated two wholly owned subsidiaries namely M/s Everonn Skill
Development Limited and Everonn Business Education Ltd. The details of the
subsidiaries are as follows:

Name of the Date of Owner- Activities
Subsidiary becoming ship
Subsidiary

EVERONN 06-11-2007 100% Dealing in technical
EDUCATIONAL and non-technical
RESOURCES educational aids for
SOLUTIONS students, teachers
LIMITED etc.

TOPPERS 11-02-2008 100% To establish and run
TUTORIAL entrance examination
PRIVATE coaching institutes
LIMITED

EVERONN 25-02-2009 100% Creating and
INFRA- developing
STRUCTURE infrastructure for
LIMITED setting up of
educational institutions

AEG SKILL 18-03-2009 51% Activities for
UPDATE dissemination of
PRIVATE knowledge, literature,
LIMITED skill update, skill
development in all
educational training

EVERONN 03-04-2009 100% Designing, developing,
SKILL conducting, imparting,
DEVELOPMENT delivering and
LIMITED implementing various
skill development and
skill upgradation
training programs,
vocational skills,
employment
generating program

EVERONN 23-10-2009 100% To establish, setup and
BUSINESS run in any part of India,
EDUCATION business schools
LIMITED management institutes
wherein business and
management
education is imparted

VIII. CONSOLIDATED FINANCIAL STATEMENTS:

The Consolidated Financial Statements has been drawn up in accordance with
the applicable accounting standards, form part of the annual report. The
Company has applied to the Central Government under Section 212(8) of the
Companies Act, 1956 seeking exemption from attaching a copy of the Balance
Sheet, Profit and Loss Account of the Subsidiary companies along with the
report of the board of directors and that of the auditor's thereon required
to be attached under Section 212(1) of the Act, with the Company's accounts
and the said approval is awaited. Accordingly, the said documents are not
being attached with the Balance Sheet of the Company. A gist of the
financial performance of the subsidiaries is contained in the report. The
Company will make available these documents/details upon request by any
member of the Company or its subsidiaries, interested in obtaining the
same. These documents will also be available for inspection during business
hours at our Registered Office and respective offices of subsidiaries.

IX. DIRECTORS:

The Board of Directors of Everonn Education Limited comprises of Managing
Director, Mr. P. Kishore and six Directors, namely Ms. Susha John-Whole
Time Director, Mr. R. Sankaran, Dr. K.M. Marimuthu & Mr. Joe Thomas being
Non Executive and Independent Directors. During the year Mr. R. Kannan-
Whole Time Director & Dr. V.K. Vijayaraghavan-Non Executive and Independent
Director resigned from the Board of Directors of the Company. As per
Section 255 and 256 of the Companies Act, 1956 Mr. Joe Thomas is liable to
retire by rotation and, being eligible, he offers himself for re-
appointment at the ensuing Annual General Meeting. Brief resume of Mr. Joe
Thomas is provided in the annual report as stipulated under clause 49 of
the listing agreement with the Stock Exchanges.

X. AUDITORS:

M/s. P. Chandrasekar, Chartered Accountants, Chennai, are the Statutory
Auditors of the Company and holds office up to the ensuing Annual General
Meeting of the Company and being eligible, offer themselves for
reappointment.

XI. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO.:

Information pursuant to section 217 (1)(e) of the Companies Act, 1956 read
with the Company's (Disclosure of particulars in the report of the Board of
Directors) rules 1988 is provided hereunder.

(i) Conservation of Energy-The company has planned and installed equipments
in a manner that maximum energy is conserved

(ii) The company's business being IT education, every effort is made to
ensure that changes in technology are communicated throughout the
organization at every stage.

(iii) The foreign exchange earnings and outflows are detailed below:

Amount in 000s
Particulars Year Ended Year Ended
31.3.2010 31.3.2009

CIF Value of Imports 14305 2220

Expenditure in
Foreign Currency

Business Associate 35534 27805
Expenses

Travel and Conveyance 3022 5896

Professional Fees 811 719
Earnings in

Foreign Exchange 67148 14585
Testing Services

XIII. FIXED DEPOSITS:

Your Company has not accepted any public deposits during the year.

XIV. LISTING OF SHARES:

The Equity Shares of your Company have been listed on National Stock
Exchange Limited (NSE) and Bombay Stock Exchange Limited (BSE). The Listing
fee for the year 2009-10 has already been paid to BSE and NSE. The
custodial fees payable to depositories namely NSDL & CDSL has also been
remitted by the Company.

XV. CORPORATE GOVERNANCE REPORTS & MANAGEMENT DISCUSSION AND ANALYSIS:

The Company is committed to maintain high standards of Corporate Governance
and protecting Customers and Shareholders' interests. Towards this goal,
the Company has adopted high standards of governance principles, practices
and disclosure levels. A detailed note on the Company's philosophy on
Corporate Governance and the Management Discussion and Analysis report and
such other disclosures as are required to be made under the Listing
Agreement with the Stock Exchanges, are annexed and forms part of this
report. A Certificate from the Statutory Auditors of the Company in
relation to compliance with the provisions of the Clause 49 of the Listing
Agreement for the year ended 31st March, 2010, is attached to the Corporate
Governance Report.

XVI. DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 217 (2AA) of the Companies Act,
1956, with respect to Directors' Responsibility Statement, it is hereby
confirmed;

That the applicable accounting standards had been followed along with
proper explanation relating to material departures, if any;

That the selected accounting policies were applied consistently and
judgments and estimates that are reasonable and prudent were made so as to
give a true and fair view of the state of affairs of the Company at the end
of the financial year and of the profit of the Company for that period;

That the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of the
Company and for preventing and detecting fraud and other irregularities;

That the annual accounts were prepared for the financial year ended 31 st
March 2008 on a going concern basis.

XVII. STATUTORY DISCLOSURE:

None of the Directors of your Company is disqualified as per provision of
Section 274(1)(g) of the Companies Act, 1956. The Directors of the Company
have made necessary disclosures, as required under various provisions of
the Act and Clause 49 of the Listing Agreement.

XVIII. COMPLIANCE CERTIFICATE:

A Certificate from the auditors of the company regarding compliance of
conditions of Corporate Governance as stipulated under Clause 49 of the
Listing Agreement is attached to this report.

XIX. ACKNOWLEDGEMENT AND APPRECIATION:

Your Directors take this opportunity to express their deep sense of
appreciation of all the employees whose outstanding professionalism,
commitment and initiative has made the organization's growth and success
possible and continues to drive its progress.

Your Directors also would like to convey their appreciation for the support
and co-operation received during the year under review, from all the
Government Authorities, Regulators, Stock Exchanges, Shareholders, other
Stakeholders, Clients, Vendors, Partners, Bankers and other Business
Associates.

For and on Behalf of the Board
Place: Chennai P. Kishore
Date : May 19, 2010 Managing Director

MANAGEMENT DISCUSSION AND ANALYSIS:

Company Progress:

Everonn Education Limited is a company with a dream, to satisfy the
educational requirements of every eager learner across the globe. We aim to
be the answer to one's call for quality education. Founded 23 years ago,
Everonn Education Limited today is the largest VSAT education network in
the World. Everonn has a devoted team of close to 3000 professionals
including teachers, content developers and administrators working across
India.

Currently India is going through one of its finest times in the field of
education. The passing of the Right to Education Bill will have great
significance for India. The growth of Indian economy will achieve a double
digit growth rate. Keeping with the trend we are proud that our revenues
and profits have both grown. Everonn posted consolidated revenue of Rs.2935
million for the year ended 31st March 2010, against Rs. 1447 million in the
corresponding period in the previous year ended 31st March 2009, showing a
growth of 103%. The PAT has risen by 106% to Rs. 455 million as on 31st
March 2010 from Rs.221 million in FY09.

The EBITDA margins increased by 99% to Rs. 1010 million as compared to
Rs.512 of the previous year. The net worth of the company increased to
Rs.2582 million from Rs.2071 million. The consolidated EPS stands at
Rs.30.06 compared to Rs.14.87 in FY09.

ViTELS has recorded revenue of Rs.1418 million a 91 increase over FY09
(Rs.743 million). ICT schools under the PPP/Government segment stands at
5862 on 31st March 2010. The subsidiaries have also shown impressive
growth-Everonn Education Resources Solutions Limited-records revenue of
Rs.698 million for FY10 and Toppers Tutorial Private Limited records a
revenue of Rs. 131 million.

At present Everonn has 8,492 learning centres across the length and breadth
of India reaching out to more than 3 million students across 27 states.

Industry Overview:

India has the largest student population in the world with over 13.5cr
pupils in primary education followed by China at over 12.1 cr pupils at
this level. Educating such a large population is not only an expensive task
but also a very difficult one. This task is being handled primarily by the
government through its school infrastructure and large budgetary outlays.
India is home to the largest growth of potential consumers of education
services in the world. The Government spend is approximately at 3.7% of GDP
which is around $30bn and an $50bn annual spend on private education ($80bn
by 2012E) 14% CAG R over FY08-12E. This has created one of the largest
education networks of around 10 lakhs schools and 18000 higher education
institutes in India.

India's public spend on education amounts to approximately 5.2% of the
world's cumulative public spend, but the country is home to 20% of the
population in the target group which is highly disproportionate considering
the global distribution patterns of public education expenditure and
population. The role of private educational institutions have proliferated
rapidly over the past decades with K-12 segment estimated at US$ 20bn,
private professional colleges at US$ 7bn and tutoring at US$5bn. Out of 1
million existing schools, as many as 75000 schools are privately run. It is
pertinent to note that the private educational institutions dispense
education to around 40% of the total students enrolled in India (219 mn)
assuming that only 7% of the total schools are private. This is despite K12
(schools) being a focus area for the government as less than 10% of the
total public expenditure on education is assigned to higher and university
education. As a result, 77% of India's 18,000 HEls are private.

GOVERNMENT'S FOCUS ON EDUCATION:

The government intends to raise the general literacy rate in India in line
with which, it introduced the Right to Education Bill 2005. This Bill seeks
to guarantee free elementary education to every child between the age of 6
and 14 years. There has been significant growth in infrastructure, but the
implementation process has been slow and a huge gap still remains. The very
nature of this mission is to complete the task of improving the literacy
levels of India in a time-bound manner. The demand for upper primary school
would be greater than the demand for primary schools

In the last five years, the government has been focusing on the Education
Sector through increased fund allocations. This amount would be spent under
various schemes like the Sarva ShikshaAbhiyan (SSA), the Midday meal
scheme, Kasturba Gandhi Balika Vidyalaya and teacher's education.

The government has imposed an Education cess on income tax to fund its
various programs, which target to improve the quality and reach of
education in India. This cess is used to fund programs like the SSA. This
will go a long way in improving literacy levels in India and enhancing the
implementation and execution of various schemes undertaken by the
government to increase the reach and improve the quality of education in
India. Collection of Education cess will also help in providing subsidies
and aids to a large number of these institutions to improve accessibility
for the lower and middle class families to educate their children. For the
11th Five year Plan, the Centre has allocated a 6 times higher spend on
education.

BUDGET ALLOCATION-2010-11*:

Education which was mainly under States subjects has seen a substantial
increase in Central Government's intervention since 1987 when New Education
Policy was announced. Allocations are made to India's Human Development
Resources Ministry and two departments are Department of School Education &
Literacy and Department of Higher Education.

The Union Budget for 2010-2011 has identified the need to have a well,
regulated education system of a global standard. In Budget 2010-11 a total
of Rs. 42036 crore have been provided for allocation to Education. The
allocation for Department of School Education and Literacy is Rs. 31036
Crore and allocation for Department of Higher Education is Rs. 11000 Crore.
The above allocation is 15% higher than the previous year's allocation.
This includes an allocation of Rs.15,000 crore for Sarva Siksha Abhiyan
(SSA), the major flagship programme for universalisation of elementary
education and Rs. 9,300 crore for the national scheme of mid-day meals.

Plan allocations for School education have been increased by 16% to
Rs.31036 Crores. Apart from this states have also an access to Rs. 3675
Crore for elementary education under the 13th Finance Commission. Rs. 4675
Crore have been kept for Secondary Education, which includes Rs. 1385 Crore
on Navodaya Vidyalaya Samiti.

An allocation of Rs. 1300 Crore has been provided to Adult education.
Allocation to adult education has been more than doubled increasing it from
Rs. 450 crore to Rs. 1,300 crore. the major beneficiary being the recently
restructured and renamed Sakshar Bharat Programme.

With strong economic growth there is a greater urge to address the issues
on mass education. The government has correctly identified greater private
participation as a method to increase the efficiency of spending. This has
resulted in greater outsourcing by government to the private sector and
also most robust private models to participate directly in this sector.

Strengths:

As India's first education and training company to offer satellite-enabled
learning, Everonn is a pioneer in facilitating education using breakthrough
technologies. With its unwavering passion, Everonn has been on a constant
quest to be the first to capitalize on the latest in pedagogy and
technology as a tool to improve learning across the country. With dedicated
teams of market and education experts, the company has been on the
forefront of heralding the next advancement in learning, thus becoming a
distinctive player in bringing knowledge to students across geographical
and cultural borders.

Everonn's unrivalled reach in providing a blend of traditional and
digitized content to the schools, colleges and retail segments has helped
the company offer quality education to students even in the most remote
parts of India. The company's efforts has borne fruit in an extensive and
well-connected network of schools, colleges and retail training centers
that deliver best-inclass content through both conventional as well as
cutting-edge modes of learning. Everonn's firm foothold in the web-based
classes as well as the test preparatory guidance arenas has further
increased its ability to help change millions of students' lives.

Content:

Research is the result of advancing knowledge created in the past.

Content development backed by in depth research is a key area of specialty
at Everonn. Everonn's commitment to ensuring quality education to students
across the country is also reflected in the care taken to ensure that every
one of its strategic business units and subsidiaries receive the best
possible support in terms of content and technology. The subject experts at
Knowledge Resource Development & Research (KRDR), Everonn's content support
division, have been chosen specifically for their long years of academic
and industry-related experience. The unique and fresh content created by
these experts is constantly upgraded to provide only the best and most up-
to-date texts for students. The instructional material is generated after a
long process of research, which relies on best practices and proven
educational techniques. Our Content Development Team includes 6 Doctorates,
over 100 in house content developers and over 200 independent expert
contributors.

Leading and experienced educationalists, research associates, faculty,
content developers and animators form this team while Everonn's vision and
zeal to enable a better-educated society drive it.

Technology:

Education a powerful agency, which brings about the desired changes in the
economical, social and cultural existence of a nation is shaped and moulded
by the human personality called the teacher, who plays a pivotal role in
the system of education. One of the major concerns of Everonn is the
shortage of such qualified and dedicated personnel, something that we are
trying to address. This is a problem world over. Excellent educators are
generally restricted to the major metros thus leaving the rest of the
country less attended to. Fine quality education being restricted to only
certain pockets is unfair and must be seriously dealt with. This is
achieved by providing education and training solutions through the
satellite-based Very Small Aperture Terminal (VSAT) Technology, an area we
excel in and pioneered in India.

Everonn's core aim is to nurture excellence in the professional and
personal growth of geographically dispersed students by developing a unique
study culture amongst them. This is achieved by providing education and
training solutions through the satellite-based Very Small Aperture Terminal
(VSAT) Technology.

This Live and Interactive Learning and Training Platform has redefined
access to education in India. It enables students to have interactive
sessions with instructors and peers across the country, thus truly bridging
the urban-rural divide. Everonn is equipped with several state-of-art
studios/lecture halls from where expert teachers deliver classes using
presentations, video, audio and digital content to effectively communicate,
engage and interact with students in classes spread across geographical
locations. With VSAT, a single instructor can teach students across the
country without compromising on the quality of learning.

Everonn has the expertise to design wired and wireless knowledge and
training delivery platforms' to meet the educational needs and the
technological capabilities to stream relevant content simultaneously and
seamlessly through VSAT, Broadband and the 3G Spectrum (Mobile).

Services:

Leveraging the power of computers and using a blend of Internet, mobile and
satellite communication technologies, Everonn has taken quality and
affordable education to the reach of millions of students across the
country even in the most remote corners of India. Everonn aims at educating
the mass! Conducting classes in schools and colleges were computer
education was improbable idea; Everonn today reaches a wide cross segment
of learners. Right from providing infrastructure to providing schools with
proficient teachers, Everonn stands strong as a complete education solution
provider.

Occupying every space, from Kindergarten to the Business Schools and
beyond, Everonn targets at providing the educational needs of all age
groups. This elevates Everonn to a '360 degree education and training
solution provider status'. Currently centered in India, Everonn aspires to
take its business model and operations to the rest of the world.

OPPORTUNITIES:

Institutions have varying requirements and the private sector may be able
to offer innovative solutions that offer quality services and value for
money. An inefficient public education system, high socio-aspirational
value attached to education and increasing affordability have all converged
to drive demand for quality education (synonymous with private institutes).
The $50bn education market, estimated to expand to $80bn by 2012, portends
a great opportunity at hand for wealth creation.

While inefficiencies in the public education system and price discovery
have created a substantial opportunity in the private education space in
india, there is a dearth of players across segments offering scale. We
believe this is the key reason for the sector to have attracted limited
capital.

Therefore the Opportunities for the new initiatives are rising across the
gamut of public/private partnerships, with ICT (Instructional &
Communication Technology) at schools an early success story. Policy
planners are beginning to emphasise PPP and we think this could create
revenue-generating models for the private sector.

We see numerous opportunities, including:

* Relocate or build new schools, colleges, universities or job centres and
provide facilities management for the new buildings/campuses. Projects
might involve land swaps or enable the private sector provider to generate
a third party revenue stream from the extant infrastructure.

* Build facilities for education institutions with the potential for third-
party income generation, such as sports or academic/conference facilities.

* Refurbish existing assets and/or provide facilities management.

* Provide information systems that ensure the continued availability of
hardware and software over a period of time, or allocate to the private
sector some administrative functions. There may be opportunities for third-
party income generation by selling excess capacity.

DIVISION OR PRODUCT WISE PERFORMANCE:

Instructional & Communication Technology (ICT):

The company ties up with various state governments in India for providing
turnkey solutions to Government schools by setting up computer labs to
impart IT education, computer aided learning Computer Literacy and Teachers
Training Projects etc. on Private-Public Partnership Mode. During the year,
the company has signed MOU's with Uttarpradesh State Government for
implementing computer education in 1099 schools in Uttarpradesh, with
Andhra Pradesh State Government for implementing computer education in 130
schools in the state, with Tripura State Government for implementing
computer education in 43 Schools in the state and with Maharashtra State
Government to implement computer education in 206 schools in the State.

The company is currently operating in 5862 schools as compared to 4442
schools in the year 2008-09 and the presence has increased to 14 states.
The revenue from ICT division is Rs. 6435.93 lakhs for the year 2009-10.

Virtual and Technology Enabled Learning Solutions [ViTELS]:

The company provides Education and Training solutions through satellite
based Very Small Aperture Terminal [VSAT] technology. FY 2009-10 witnessed
a strong momentum in the growth of this division which is reflected by the
increase in the number of Everonn Learning centers, in 460 Schools, 767
Colleges and 11 Kompass centers. It has 14 studios in Chennai through which
the teachers deliver lectrures to students sitting in Everonn Learning
Centers across geographies. The company follows a student pay model in its
ViTELS segment. The revenue from ViTELS have grown up from Rs 7425 lakhs in
2008-09 to Rs. 14629.33 in 2009-10.

ViTELS-iSchool:

iSchool model is an initiative by the Company which aims at making
education a lively and pleasurable experience. ischool arms teachers with
the power to help students grasp complex concepts with absolute ease while
providing students a whole new perspective on learning.

The iSchool model features digitized courseware mapped to curriculum,
Setting up the Infrastructure and Technology, providing maintenance
support, educating teachers and management on technology usage and special
interactive sessions through VSAT.

iSchool continued its success streak with 460 new schools signing up in the
FY10 reaching the overall presence to 1017 schools. The Company has signed
up with major educational institutions like Delhi Public School, OP Jindal,
Kendriya Vidyalaya, Montford School, Hiranandani Foundation School, Jawahar
Navodaya Vidhyalaya Schools. The company has also made an achievement by
signing up with one school with 55 class rooms.

ViTELS-Colleges:

The College's business of Everonn also known as Everonn Learning Academy
(ELA), an initiative of the company which aims to be the preferred choice
for students aspiring for careers in IT, ITES, Management,

Banking and Financial Services as well as many more verticals. ELA offers
programs that range from skill enhancement courses to job-oriented and
industrysponsored through Everonn's online interactive learning (VSAT)
platform and a blend of traditional and modern teaching methodologies. ELA
sets up Hi-Tech classrooms in colleges where a blended mode of education
delivery is executed, which includes VSAT training, Internet-based
personalized learning and direct expert coaching at Colleges and
Universities.

The momentum of growth was in the peak with an addition of 767 colleges in
the FY10 reaching the overall presence to 1567 colleges. The Company has
partnered with Rajiv Gandhi Health University at Bangalore, the biggest
university in India and its affiliates of over 650 colleges. The Company
has entered into an arrangement with Manonmaniam Sundaranar University and
Periyar Maniammai University to take distance education to the remotest
part of India. The Company has roped in an agreement with Annamalai
University and signed a Memorandum of Understanding (MOU) with Ministry of
Micro, Small and Medium Enterprises (MSME, Government of India).

ViTELS-Retail:

Retail division also known as Everonn Kompass aims at redefining access to
quality education by setting up Virtual and Interactive Learning classroom
networks across India to deliver quality yet affordable education. Everonn
Kompass is set to change the face of training in India through its network
of futuristic virtual classrooms across major cities in India and will lead
the initiative to bridge the digital divide.

During the year FY 2010 11 centers have been added reaching the overall
presence to 46 centers. New Corporate Partners like Wipro, Bank of America,
L&T Infotech etc has been added this year. The Company has administered
over 2,00,000 tests (academic & IT) in the calendar year 2009. It has tied
up with Middlesex University UK, University of Buckingham UK, Vichita State
University, US and Wollongong University, Australia for our Admission
Counseling Services (ACS).

ViTELS-Web Products:

Everonn's classontheweb.com [COTW] is an exhaustive curriculum-based
eLearning portal that caters to all the academic needs of students with a
focus on helping them enhance their performance at school. The largest
virtual school in existence, www.classontheweb.com includes a comprehensive
digital repository offering superior-quality content in Mathematics,
Physics, Chemistry, Biology, Social Sciences, English Grammar, Business
Studies, Economics and Accountancy. The portal has been designed especially
for students of Classes VI to XII and includes numerous visuals and
animations to help increase student understanding and retention.
www.schooljobs.in and www.collegeiobs.co.in are Everonn's solution to the
growing demands for exclusive recruitment portals catering to educational
institutions. Offering exhaustive databases of both teaching and
administrative talents, these portals make it comfortable for schools and
colleges to choose the desired candidates at ease.

Global Institute of Teacher's Training (GITT):

GITT, a new venture set by the company focuses on providing world-class
training for teachers, principals and other educational professionals
across life stages to ensure a higher standard of quality in the education
industry. The Comprehensive courses and content will provide segment
specific guidance to make candidates the best in their chosen field. From
pre-school teachers to principals, GITT has designed target specific
courses in affiliation with expert associations. During the year the
company has set up Teacher training Institute and Principal training
institute and had partnered with experts like Macmillan Publishers India
Ltd for Train the Trainer programme and Australian Academy for Mentoring &
Coaching [AAMC]. The Company has also signed a Memorandum of Understanding
with IAM-London, CIEUniversity of Cambridge-UK and Edexcel-UK to bring
courses on Administrative management for Principals and Diploma and
certificate course for teachers and trainers.

Preschool:

The Company marked its foray into the pre-school segment by inaugurating
their first pre-school under the brand Kinderstand. Kinderstand is a unique
brand of pre-school from Everonn Education Limited that focuses on offering
comprehensive full-day care for children between the ages of 2 and 8 years.
With the central emphasis being on providing all-day care for children
while enabling a comprehensive introduction to the formal education system,
Kinderstand aims to meet some of the most indispensable needs of working
mothers. In the first year of operation we have added 6 centers including
our first preschool in Chennai.

Everonn Educational Resources Solutions Ltd (EduRes):

Everonn's efforts to create a network of world-class educational
institutions across the nation has brought the company into contact with a
number of national and international vendors of resources as varied as
sports equipment to the latest digital and IT technology. With Everonn's
commitment to ensuring excellence in education, Everonn Education
Resources, or Edures, focuses on providing best-in-class resources to
schools and colleges by leveraging the company's relationship with various
vendors. Through this wholly owned subsidiary, Everonn makes it possible
for educational institutions across the nation to receive the best deals
for excellent resources, making the learning process all the more easier
for Indian students. Edures is growing at a fast momentum with a presence
of around 1500 schools in India The Company has recorded a total revenue of
69.79 crores in FY 2010 and the net profit for the year stood at 3.15
crores.

Toppers Tutorial Pvt Ltd:

Toppers Tutorial aims at imparting world class training programme, tailor-
made to meet the demands of students who are aspiring for IIT-JEE and other
Engineering Entrance Exams. Toppers Tutorial has to its credit a team of
outstanding and dedicated faculty members, State-of-the-art infrastructure,
VSAT technology and winning methodology that provides comprehensive and
systematic guidance to students who aspire for nothing but the best. The
Company has recorded a total revenue of 13.05 crores in FY 2010 and the net
profit for the year stood at 1.06 crores.

Skill Development:

Everonn Skill Development Ltd was incorporated in the year 2009 as a wholly
owned subsidiary which is focused on imparting industry relevant skills to
youth to make them industry-ready and skilled personnel using quality
content and practices.

The Company has signed a Memorandum of Understanding (MOU) with Canadian
College, Vancouver to partner with Everonn to deliver their content using
VSAT technology and to share their vocational content with us.

The Company through their new venture, Global Institute of Gaming and
Animation (GIGA) has forayed into gaming and animation segment. The Company
has also partnered with Maximus (Autodesk adoption partner) for offering
full fledged animation degree and diploma courses. The Company has signed
an MOU with TAFE, Australia for TAFE certified courses in Indian market.

The Company has entered into an agreement with National Apprentice and
Industrial Training Authority (NAITA), Sri lanka to work together for skill
development initiatives in Sri Lanka. The relationship is for a range of
services including creating educational and training content of global
relevance, designing and executing learning initiatives, setting up
infrastructure, training of trainers, etc.

The Company has collaborated with IIEMS, an international training
organization of American Heart Association (AHA) and International Chapter
of International Trauma Life Support Inc for conducting certificate courses
in Nursing, AHA & ITLS courses in partner colleges of the Company. IIEMS
would provide their technical know-how and other services.

Everonn Business Education Limited (EBEL):

Everonn has initiated the process of setting up business schools through
its subsidiary Everonn Business Education Ltd. The subsidiary company has
tied up with Manonmaniam Sundaranar University, Periyar Maniammai
University, Asia Pacific International College, Australia and AAML
University, Australia for setting up premier business school. The governing
body for setting up business school project comprises of industry and
academic stalwarts

The Company has also acquired 65 locations of ICFAI National College and
rebranded it as Indigrow Institute of Professional Studies (IIPS) in which
the classes will start by July 2010. The Company has started its own
business school under the brand Global School of Business (GSB), Chennai.

THREATS & RISKS:

* The Company's performance depends largely on the government policies on
education and allocation of budgets towards education. Any adverse change
in the government policies towards education and reduction in the
allocation of government budget will materially affect the performance of
the Company.

* Delay in payments from Governments will adversely affect cash flow which
has an impact on our working capital requirements. The company has taken
effective steps to follow up for payments with the governments to minimize
the time taken to receive the same.

* Delay in the Schedule of Implementation of government project might have
an adverse impact on our profitability. The cost overruns due to delay in
payments from governments could adversely affect the Company's operating
results. The company has taken steps to mitigate the risk by factoring the
additional cost which may be incurred due to payment delays, into the price
of the product/service offered by the Company.

* The Company faces risks and uncertainties associated with the
implementation of its government projects. Delay in the Schedule of
Implementation of government project might have an adverse impact on our
profitability.

* The Company is exposed to the risk related to default in payment by
Schools/Colleges.

* The company is dependent on a number of key managerial personnel and the
Company's sustained growth depends upon its ability to attract and retain
skilled manpower. Our inability to attract or retain such persons could
adversely affect the performance of the company.

* The company's business involves installation of a large number of
Computer Systems and other electronic equipments across various
geographies. Such electronic equipments are prone to hardware/software
malfunction, virus attacks, hacking and technological obsolescence. If any
such events occur, we run the risk of disruption of our operations.

* The upfront capital expenditure in building up school projects is quite
heavy. The Company's funding anticipated from banks/financial institutions
to be deployed towards the cost of the project will not become available in
a timely manner. While the revenue received is over the period of contract.

* The Company's business model is exposed to the risk of piracy and misuse
of Content developed by us. The same is distributed through VSATs to
various Educational Institutions that we serve and is exposed to piracy. In
case our Content gets pirated, we run a risk of loss of revenue, because of
the infringement of copyrights on the part of our Customers.

Internal control systems and their adequacy:

The Company maintains a system of internal controls designed to provide a
high degree of assurance regarding the effectiveness and efficiency of
operations, the reliability of financial controls and compliance with laws
and regulations. The Company has proper and adequate system of internal
controls to safeguard the company's assets against loss from unauthorized
use and ensure proper authorization of financial transactions. The Company
has strong budgetary control system to monitor all expenditures against
approved budgets on an ongoing basis.

The Company has an internal audit function, which is empowered to examine
the adequacy and compliance with policies, plans and statutory
requirements. It is also responsible for assessing and improving the
effectiveness of management control and governance process.

The management duly considers and takes appropriate action on the
recommendations made by the statutory auditors, internal auditors and
independent Audit Committee of the Board of Directors.

HUMAN RESOURCES DEVELOPMENT:

Everonn's talent management systems are well aligned with its meritocratic
and performance-driven business culture. We are increasingly hiring
employees who are not only competent but whose personalities and beliefs
reflect those of the organization, thereby resulting in a pool that is
efficient and committed, productive and passionate.

Leadership development remains a high priority area and some of the things
we have been doing include formulation of personalized development plans
linked to succession planning and career elevations. A quick partial
listing of our other efforts relate to development and usage of talent
inventories, skill-based job rotations and internal transfers, structured
incentive compensation programs and attractive work-life balance
initiatives.

With our work processes aptly designed to acquire, develop and retain
talent, we clearly seek to differentiate ourselves from the rest by
delivering a unique and compelling employee experience-oriented towards
creating enormous economic and social value. We are determined to help our
employees succeed whilst remaining committed to the group's vision,
business strategy and organizational values.

FINANCIAL PERFORMANCE:

OVERVIEW:

The Company during the year under review has earned a total income
aggregated Rs. 21142.01 Lakhs in fiscal 2010 as compared to Rs. 12,528.05
lakhs registering a growth of 68%. In fiscal 2010 the company's profit
after taxes aggregated to Rs. 4340.29 Lakhs as compared to Rs.2384.22 lakhs
in the previous fiscal 2009, a growth of 82%.

In fiscal 2010, the Company's consolidated total income aggregated Rs.
29,396.71 lakhs as compared to 14,858.75 lakhs in fiscal 2009, recording a
growth of 98%. The Company's consolidated profit before taxes aggregated
Rs.6581.56 in fiscal 2010 as compared to Rs.3407.68 in fiscal 2009, growth
of 93%.

RESULTS OF OPERATION:

The following table gives an overview of the Operating financial results of
the company:

Rs. in Lakhs
PARTICULARS 31-Mar-10 31-Mar-09

TOTAL INCOME 21142.01 12,528.05

TOTAL EXPENDITURE 14877.28 8,858.05

PROFIT BEFORE TAX 6264.72 3,670.01

TAX 1924.43 1,285.78

PROFIT AFTER TAX 4340.29 2,384.23

EARNINGS PER SHARE 28.70 16.06
(Basic)

The summary of
Consolidated
Accounts of the
Company is given
below:

TOTAL INCOME 29396.71 14858.75

TOTAL EXPENDITURE 22815.15 11451.07

PROFIT BEFORE TAX 6581.56 3407.68

TAX 2036.96 1199.35

PROFIT AFTER TAX 4544.60 2208.33

EARNINGS PER SHARE 30.06 14.87
(Basic)

INCOME:

The Company's revenues consist mainly of income from implementation of
computer education in Government Schools and from implementation of
technology enabled learning solutions in various private schools and
colleges.

The total income of the Company has registered a growth of 68 % in fiscal
2010 as compared to fiscal 2009. The increase in the total income of the
company is on account of increase in the number of schools and colleges in
ViTELS division as compared to the last fiscal. The above table shows
upward growth trend (increased by 98%) with respect to Vitels division for
the Fiscal 2010 as compared to Fiscal 2009.

EXPENDITURE:

The summary of the expenditure is given below:

Rs. in Lakhs
EXPENDITURE 31-Mar-10 31-Mar-09

Manpower 3147.48 2541.66

Education and training 6101.50 2915.45
expenses

Administration and other 2217.73 1350.31
expenses

Interest and finance 1032.20 518.39
charges

Depreciation & amortisation 2378.34 1532.44

Total Expenditure 14877.28 8858.04

Manpower cost consists of compensation of all employees that includes
salaries which have fixed and variable components, contribution to
provident fund and gratuity fund. The total employee cost for fiscal 2009
was Rs.3147.48 lakhs, an increase of 23.83% over the total employee cost of
Rs. 2541.66 lakhs for fiscal 2009.

Employee cost as a percentage of total income was 14.88 % in fiscal 2010 as
against 20.28% in fiscal 2009.

The education and training expenses for fiscal 2010 was Rs.6101.50 lakhs,
an increase of 109.28% over the expenses for fiscal 2009. The addition of
460 number of schools and 767 colleges during the fiscal 2010 has led to
corresponding increase in the education & training expenses. Education and
training expenses as a percentage of total income was 28.86% in fiscal 2010
as against 23.27% in fiscal 2009.

The administration and other expenses for the fiscal 2010 have increased
considerably by 64.24% due to increased points of presence to various
states in the country. The administration and other expenses as a
percentage of total income was 10.49% in fiscal 2010 as against 10.78% in
fiscal 2009.

Interest and finance charges have increased from Rs.518.39 lakhs in fiscal
2009 to Rs.1032.20 lakhs in fiscal 2010 on account of term loan and over
draft facilities availed from banks. Interest and finance charges as a
percentage of total income were 4.88% in fiscal 2010 as against 4.14% in
fiscal 2009.

Depreciation cost has increased from Rs.1532.44 lakhs in fiscal 2009 to
Rs.2378.34 lakhs fiscal 2010 on account of increase in the gross addition
to the fixed assets.

FINANCIAL POSITION:

SHARE CAPITAL:

The Authorised Capital of the Company stood at Rs. 20 Crores during the
fiscal 2009. There is no change in the paid up capital of the Company
during the year which also stood at Rs. 15.12 Crores as on March 31, 2010.

RESERVES AND SURPLUS:

The share premium account during the year stood at Rs.143.76 Crores as on
March 2010. The details of share premium account are given below. The
following table gives the summary of securities premium account.

Securities Premium Account Rs. in Lakhs
31-Mar-10 31-Mar-09

Securities Premium Account 14376.03 5,637.22

Add:Amount Received in - 9,011.96
issue of Equity Shares

14376.03 14, 649.18

Less:Amount Utilised for - -
issue of Bonus Shares

Less:Share issue expenes - 273.15
adjusted

Total 14376.03 14,376.03

The Company has transferred Rs.434.03 lakhs to general reserves. The amount
in capital reserve stood at 765.13 lakhs. The Company during the year has
also transferred Rs. 1090.83 lakhs to debenture redemption reserve account
towards redemption of debentures.

SECURED AND UNSECURED LOANS:

During the fiscal 2010, the secured and unsecured Loan has gone up by
Rs.3576.56 lakhs as the company has issued Non convertible debentures worth
Rs. 1418 lakhs on a private placement basis to media players. The company
has also availed term loan from Reliance Capital Ltd. for the purchase of
the office building and CISCO Ltd. to the tune of 2646.60 lakhs

FIXED ASSETS:

Total addition to Gross block for the fiscal 2010 is Rs.7428.95 lakhs
(excluding capital work in progress). The main additions to assets were
made as detailed below

Land = Rs. 334.00 lakhs

Plant & Machinery = Rs. 2794.20 lakhs

Building = Rs. 1578.00 lakhs

Furniture & Fixtures = Rs. 1997.16 lakhs

Knowledge Resource/ = Rs. 198.66 lakhs
content & Software

Software = Rs. 342.97 lakhs

The increase in gross block of fixed assets is mainly due to increase in
the number of schools and colleges and also the increase in points of
presence during the year.

Investments:

The details of investments for the fiscal 2010 are given below.

Investments Rs. in Lakhs
31-Mar-10 31-Mar-09

Subsidiary Investments:

Toppers Tutorials Pvt Ltd 700.00 50.00
Everonn Educational
Resources Solutions Ltd 410.00 10.00

Everonn Infrastructure 5.00 5.00
Limited

AEG Skill Update 0.51 0.51
Private Limited

Everonn Skill 305.00 -
Development limited

Everonn Business 5.00 -
Education Limited

DT Media and 107.28 -
Entertainment Pvt Limited

Mutual Funds

Investment in Mutual Funds 2,345.82

Equity Shares

Investment in IOB Shares 0.12 0.12

Total Investments 1532.91 2,411.45

The Company has invested in four wholly owned subsidiary company to the
tune of Rs. 1355 lakhs. Apart from the above, the company has invested
Rs.107.28 lakhs in DT Media Entertainment Pvt Ltd during the fiscal 2010.

Net Current Assets/Changes in Working Capital:

Given below are the net Current assets details for the fiscal 2010 & 2009:

NET CURRENT ASSETS Rs. in Lakhs
31-Mar-10 31-Mar-09

CURRENT ASSETS,
LOANS & ADVANCES

Sundry debtors 11292.55 6214.98

Cash and bank balances 3848.30 4015.91

Loans and advances 5901.36 7621.41

17,852.30

LESS:CURRENT 2862.62 4,116.05
LIABILITIES &
PROVISIONS

NET CURRENT ASSETS 18179.59 13,736.25

Sundry Debtors balance has gone up by Rs. 11292.55 lakhs during the fiscal
2010 as compared to previous fiscal 2009. This is mainly due to receivables
from various state Governments for ICT Projects coupled with increase in

revenue from Vitels division.