NIIT Learning Systems Ltd

Dear Shareholders,

It is with great pride and a sense of responsibility that I present to you the second annual report for NIIT Learning Systems Limited (NLSL). Over the past year, the Company further solidified its position as one of the leaders in the Managed Training Services (MTS) market. The financial year 2023-24, which is its first year as an independent company, was marked by resilience, innovation, and a continued commitment to delivering exceptional value to its stakeholders.

A Year of Consolidation and Growth

The demerger completed during the year was a pivotal strategic move for the business, enabling the business to sharpen its focus on the Learning Outsourcing market. This transition has allowed the Company to operate with greater agility, clarity, and commitment to its core business of empowering global enterprises through innovative learning solutions. During the year, the economic landscape continued to present challenges, with persistent inflation, geopolitical tensions, and technological disruptions impacting business environments globally. However, NLSL rose to the occasion, demonstrating the strength of its business model and the trust clients place in its people and services.

Our financial performance for the year was robust, even as customers experienced sharp compression in their spending on training. The Company recorded a 14% year-on-year increase in revenue, reaching Rs. 15,535 million. The growth was driven by both the expansion of its customer base and increasing share of wallet from existing customers. Notably, the Company added 11 new MTS customers during the year, while maintaining a 100% renewal rate with existing customers. This underscores the tremendous value that the business delivers for its customers through its services that align talent to businesses. On the profitability front, EBITDA grew by 19% to Rs. 3,762 million, with margins improving by 106 basis points to 24.2%. This was achieved through a disciplined approach to cost management and a sharp focus on operational efficiency, even as the Company continued to invest in growth initiatives. The net profit grew by 11% to Rs. 2,132 million, resulting in EPS of Rs. 15.8.

Innovation and Strategic Investments

Innovation continues to be a cornerstone of the strategy at NLSL. During the year, the Company continued to make investments in advanced technologies, particularly in automation and Generative AI (GenAI). These technologies are transforming the way the Company delivers training, enabling it to offer more personalized, efficient, and effective learning experiences. The early success of AI-assisted training pilots with several customers is a promising indicator of the potential these technologies hold for the future.

The Company believes that GenAI represents a game-changing opportunity to revolutionize the corporate learning landscape. By integrating GenAI into its learning solutions, the Company is enhancing the customization and scalability of training programs, aligning them with individual learner needs and business goals. The teams are actively working on several initiatives that leverage GenAI to increase internal productivity, accelerate content development, simulate real-world scenarios, and provide instant, contextually relevant feedback. These advancements not only improve learning outcomes but also position NLSL at the forefront of the next wave of innovation in the learning industry.

Commitment to ESG

At NLSL, our commitment to Environmental, Social, and Governance (ESG) principles is deeply embedded in the business strategy.

The Company prioritizes ethical business practices, innovation, and sustainability to positively impact society and the environment. This year, the Company made significant strides in its ESG journey, including increasing its reliance on sustainable energy, with 30% of our primary office's energy needs now met by in-house solar power, and achieving 100% wastewater recycling. The Company also invested in green technology training initiatives and contributed to community development through scholarships and literacy programs.

The strategic investment in EIT InnoEnergy, during the year further underscores commitment to sustainability and the global energy transition. By partnering with Europe's top impact investor in cleantech, we are positioning ourselves to play an important role in the upskilling and reskilling efforts needed to achieve global decarbonization goals. This partnership not only expands market reach but also aligns the Company with one of the most significant opportunities of the century—the transition to Net Zero.

The Company remains dedicated to diversity and employee well-being. The Company has a diverse workforce representing 39 nationalities with over 45% women NIITians. These efforts underscore our commitment to building a responsible and sustainable future.

Future Outlook

Looking forward, the outlook for the business remains positive. The global corporate training market is expected to continue its growth trajectory, with spending projected to reach $460 billion by 2027. NLSL, as one of the top global players, is uniquely positioned to capitalize on this expanding market. Our commitment to innovation, particularly in the areas of AI and technology-driven learning solutions, will be a key driver of future success.

The Company will continue to explore opportunities for organic and inorganic growth, leveraging its strong balance sheet to pursue strategic acquisitions that enhance capabilities and expand market reach.

In conclusion, I want to extend my deepest gratitude to our shareholders, customers, and employees for their unwavering support and trust in NLSL. As we reflect on our achievements over the past two years, we are filled with optimism for the future. The successful demerger has not only strengthened our operational focus but has also imbued our organization with a renewed sense of purpose and ambition. As we look ahead, I am confident that NLSL will continue to deliver sustainable value to all our stakeholders, driving growth and innovation in the years to come.

Thank you for your continued trust and confidence in NIIT Learning Systems Limited.