The results for the financial year ended Dec 31, 1997 are impressive. Total revenues have increased by 23.83 per cent to Rs 202.20 crore. Khera says, `A multi-brand strategy coupled with tightoperations management is responsible for the buoyant performance'. Commensurately operating margins have risen from 17.47 per cent to 19.57 per cent. The company still garners 83 per cent (Rs 168.24 crore) of its revenues from this area. `In future, the computer education business is looking at maintaining a growth rate of around 20 per cent from increased enrollments and improved reach through the medium of Internet and vernacular language courses,' says Khera.

The Asset International, Arena multi-media and the business consulting division still only contribute 11 per cent (Rs 22.22 crore), 4 per cent (Rs 7.90 crore) and 2 per cent (Rs 3.82 crore) respectively. Khera says, `In the future Asset and Arena will be high growth areas with over 60 to 70 per cent growth in the next two years. This will be achieved through aggressive expansions and maturing of brands'. Incidentally Aptech has recently valued its three brands, Aptech Computer Education, Asset International and Arena Multimedia at Rs 271 after aninternal brand valuation exercise.

Due to the writing off of assets (computers) in a shorter period, the depreciation has risen from Rs 1.80 crore to Rs 5.06 crore. Aptech, Chairman, Atul Nishar says, `The management is not open to the idea of deferring tax '. Therefore the company has provided for higher taxation amounting to Rs 6.13 crore, an increase of 239.73 per cent. A 21.25 per cent increase in net profits to 20.62 crore from 17.01 crore is commendable. The replacement of high-cost debt with lower coupon debentures reduced interest costs by a marginal 1.04 per cent to Rs 8.04 crore.

But has the company created shareholder value? Using the formula (PAT + tax adjusted interest/average of total capital employed), the RoCE for the financial years 1995-96 and 1996-97 works out to a healthy 41.27 per cent and 34.52 per cent. With a debt equity of 1.20:1 and 0.91:1, the post-tax cost of debt for the last two years works out to 19.33 and 15.88 per cent. Now assuming a cost of equity of 22 per cent, theweighted average cost of capital for these years works out to 20.35 and 18.4 per cent. This amply proves that the company has comprehensively beaten its cost of capital and consistently provided high value to its shareholders. This has translated into a high EPS of Rs 30.46 and Rs 36.93 in these years respectively. But it has to be mentioned that Aptech sustains itself on cash fee paid upfront.

How would restructuring Aptech into seven SBU's (strategic business unit ) help? According to Khera, `the seven SBU's operate as separate divisions with the Division Heads being given full freedom to operate as independent CEO's and achieve their business goals and target. Moreover the SBU's have been created keeping the core competencies of Aptech in mind viz Training, Technology areas like Client-server, Internet , Multimedia and the wide network of Centres in India'.

How would Aptech meet its Rs 20 crore expansion plans in the next three years? Khera says, `This would be comfortably met through internal accrualsand debt'. Aptech has increased its authorised capital to Rs 11.16 crore with an announcement of a 1:1 bonus issue. Aptech managing director Ganesh Natarajan says, `The bonus offer reflects the confidence that the management has in the future growth and earnings of the company.'

At present Aptech's shareholding pattern is as follows : promoters: 43 per cent, FIIs: 18 per cent, FIs: 3 to 4 per cent, the rest of the equity is held by the public. It is obvious that the bonus issue is an attempt to increase the liquidity of the scrip at the bourses. An EPS of Rs 36.93 and a dividend per share of Rs 3 (last year Rs 1) works out to a very high dividend cover (EPS/dividend per share) of 12.3. So there is reason to believe that Aptech could have gone in for a higher pay-out.