Going by the plans of the country’s largest digital education company, Educomp, it looks like the economic slowdown has caught up with the ‘recession-proof’ education sector.

Educomp Chairman and Managing Director Shantanu Prakash said the company, which has seven or eight major subsidiaries running a host of businesses, right from pre-schools to smart classes, plans to remain cautious with its expansion plans over the next few quarters.

“Right now, given that the cost of debt is very high, it makes no sense to launch new projects. We are continuing with our existing business plans. We find this year may be the year of consolidation for the company,” he said. Educomp, which recently raised $155 million from global investors and the International Finance Corporation, has no plans of raising more money in the near future.

“There is so much demand for education and the demand is not going anywhere. So we can be patient as well,” Prakash added.

The company, which suffered its share of controversies, including an investigation by the Ministry of Corporate Affairs in 2009 and raids by taxmen, has come under the scanner once again on the company’s corporate governance practices following a report by investment bank Espirito Santo that flagged off concerns regarding the independence of EduSmart’s auditor and the resignation of four company secretaries.

Prakash explained, “In India, when you operate a business, the regulatory agencies definitely have a right to know what is going on. And they will know. By itself, that doesn’t meant something is wrong.”

He added that the governance issues raised by Espirito Santo stand resolved.

With regard to investments by foreign institutional investors, Prakash said they currently stand at around 30 per cent. “FIIs have invested more than Indian domestic firms. However, in the last one to one-and-a-half years FII holdings have come down steeply and domestic holdings have gone up sharply. Still, FII investments are higher.”

> aesha.datta@thehindu.co.in