The Hindu Business Line : Pearson on prowl for acquisitions

The world's leading educational and professional publisher, Pearson Education, part of the Pearson Group that owns such strong brands as The Financial Times and Penguin, apart from a 50 per cent stake in The Economist, is looking for acquisitions in India.

"We are bullish about the Indian market. We had talks with a couple of publishers here, but nothing turned out to be a potential buy," says Mr Subroto Mozumdar, President and Chief Executive Officer, Pearson Education, to Business Line. The company, headquartered in Delhi, has a development centre in Chennai.

"Pearson wants to be a company that is perceived by everybody outside as being brave, imaginative and decent," says Mr Mozumdar. So, the target for takeover "should sit well with the rest of our list," he insists. "It should have core educational values."

Pearson Education is a conglomerate of many publishing companies such as Addison-Wesley, Longman, Prentice Hall, Allyn & Bacon and Benjamin Cummings. It entered the Indian market in 1997 on its own, after having worked through joint ventures till then. Pearson owns over 30 per cent stake in Orient Longman.

"We first started operations for Addison-Wesley here, and at that time our core strategy was to bring out low-priced college text books. We concentrated on the computer science market here." Today? "We are possibly the largest college book-publishing company," says Mozumdar. And the school division is also growing at a rapid pace. The company uses the Pearson Longman brand for schoolbooks; for college education, it is Pearson Education and Prentice Hall.

Pearson Power is another brand, for management books. "A brand we completely developed in India for the Indian market and very successful," he informs. "So far, Pearson Power has published about 70 titles."

India operations, though contributing negligibly to Pearson's global kitty, have been profitable. At 25-30 per cent, growth rate in India is the fastest, says Mr Mozumdar. "In fact, it's better than China. We also consider India a major source of content."

He cites, as example, "around 20,000 lecturers and professors, in and around Chennai, who can be potential authors." And the company's development centre here is leveraging this. "Engineering, science and maths are the areas where we have a strong author base. These are the areas that can travel easily to anywhere across the globe."

The company also plans to export books published in India, authored by Indians, to other countries. "We are just beginning to export our first batch of high-end college text books to South-East Asia," says Mr Mozumdar.

He feels volumes are big in the Indian market. But the unit price is so low that the price differential in textbooks, vis-à-vis the US, is 20-25 times. "If I price my books high, either people will not buy them or they will get pirated," reasons Mr Mozumdar. Another worry is the high dealer margin. "It's anywhere between 30 and 35 per cent. Once foreign retailers come in, our books may become even cheaper. That'll ultimately benefit the student community here," he hopes.

The company is also keen on the translation market. "We are looking at the translation market, not for technical and engineering education subjects, but in humanities and social sciences," informs Mr Mozumdar. "The company released a book in Hindi on anthropology. Though a tiny market, it's fine with us. We are also looking at Tamil, Telugu and Bengali markets."

The company also outsources jobs through vendors in India. "Last year, Pearson did about $35 million worth of outsourcing in India, out of which about $15 million was composition, typesetting and digitisation; basically, all content-related work. The remaining $20 million was software and back-office system support."

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