The stock of education solutions provider Educomp Solutions and its chairman and managing director, Shantanu Prakash, had consistently been on the rise over the past three years. The company had also recently made it to the Forbes’ list of best small- and medium-sized companies. Not surprisingly, both investors and analysts were betting on the stock, primarily since its fortunes were tied to a booming education sector.
All that goes up, however, must come down, says Newton’s law. Prakash realised this the hard way when investors hammered his company’s stock for two-three days in a row last week on allegations that he had bloated the company’s topline.
A stock that had touched over Rs 5,000 per share and was falling on the back of a global financial meltdown would, perhaps, not have attracted so much press. The allegations were what compounded Educomp’s plight. Especially since, just a month ago, Satyam Computer Services founder and (now former) chairman Ramalinga Raju had admitted to falsifying accounts and the entire IT industry is now being looked upon with suspicion.
Prakash, though visibly disturbed, methodically went about clearing his and his company’s name. His MBA from IIM-Ahmedabad must have helped him keep his wits about him in this endeavour. First, he issued a five-page clarification with a point-by-point rebuttal of the “malicious” charges against his company. Then he visited media houses and simultaneously spoke to analysts.
He took other concrete steps too to convince investors that his company was “clean”. He filed a complaint with the Additional Commissioner of Police, Economic Offences Wing, Crime Branch (Delhi Police), “to identify the source of malicious emails alleging account manipulation”. Later, senior officials of Educomp Solutions met the Securities and Exchange Board of India (Sebi) in Mumbai and sought a probe by them into an alleged nexus between the recent slander campaign against the company and the unusual activity in the company’s stock.
“We have requested Sebi to probe this matter thoroughly and have also sought institutional remedies to help protect the shareholders’ interests from what seems to be a concerted attempt to damage the reputation of the company and drive down its stock price,” says Prakash, adding: “Educomp has proactively offered to submit itself to the peer review process that Sebi has announced recently. We will vigorously fight this campaign run by certain groups with vested interests.”
He also used the ‘Ads by Google’ media on the internet whereby users who spot these ads can click on a link which opens up a page on Educomp’s website which has all the clarifications addressing the “allegations in the malicious emails” about the company. When people search on Google using one of the advertiser’s keywords, the ad may appear next to the search results. These ads also appear on websites of newspapers and other media.
Also Read
Prakash founded Educomp in 1994, a few years after acquiring his MBA degree. Today, he’s also the founder and managing trustee of the Learning Leadership Foundation (LLF), an organisation dedicated to bringing the best practices in education to under-resourced schools. Moreover, he’s the co-founder and chairman of Lakshya Digital, a game development studio based out of New Delhi, and a charter member of TiE (The Indus Entrepreneurs), an organisation that connects entrepreneurs. “My vision has been to transform the teaching-learning process through the use of technology and best practices,” he asserts.
He has succeeded in doing so to quite an extent. Not only does the company have around 550 pre-schools today, it also has 11 high schools (five of which also have land owned by Educomp), and has trained around 300,000 teachers till date. The company serves over 19,000 schools and 9.4 million learners and educators across the world.
The ‘smartclass’ (content repository of thousands of highly-animated, lesson-specific, 3D and 2D multimedia modules built with an instructor-led design) and Edureach ICT (partnered with 13 states so far) divisions account for 80 per cent of the company’s current revenues.