market research india - coaching classes market in india 2009
TRANSCRIPT
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March2009
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ExecutiveSummary
Market
Coachingclass
market
in
India
is
highly
fragmented
and
regional
in
nature
CoachingclassmarketiworthUSD6.8bnin2008;expectedtogrowtoUSD12.6bnby2012
Marketisdividedintotwoparts Privatetuitionsmarketandentrancetestprepmarket
Privatetuitionsma esup75%o coac ingc assmar et ut as imite potentia tosca e ueto ig
dependenceonreputedlocalteachers
Entrance testprep
market
is
growing
as
this
segment
is
process
driven
and
easy
to
scale
up
, ,
teacherpupilratioinschoolsandincreasecompetitionatgraduationandpostgraduationlevel
Challenges:Personcentricbusiness,lackofgovernmentandfinancialsupportandchangein
entrancetest
pattern
Drivers&
Challenges
Trends
Coachinginstitutesarediversifyingintomainstreameducationandopeningpre schools,K12
schools,BSchoolsandvocationaltraining institutes
PE/VCfirmsalsoinvestingincoachinginstituteswiththecapacitytoscaleoperations
Demandforcorrespondencecoachingmaterialsalsoincreasing
FewplayerslikeMTEducarehavebeenabletoscaleupoperationsinfragmentedtuitionsegment
2COACHINGCLASSES INDIA.PPT
, . . . .
preparationspace
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Contents
Market
OverviewDrivers&Challen es
Trends
Com etition
KeyDevelopments
3COACHINGCLASSES INDIA.PPT
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Indianeducationsystemcomprisesofregulatedformalnetwork
andunregulatedinformalnetwork
IndianEducation
System
FormalEducationSystem InformalEducationSystem
Schools(K12)Professional
Colleges*Pre Schools
Vocational
Training
Multimedia
Coaching
Classes
Public Private Public Private inschools
andcolleges
Books
UnderthepurviewoftheMinistryofHumanResource
Development
;ICSE/CBSE/InternationalBoards
Highereducationcomprisesgraduate/diploma/
professionalcoursesregulatedbyUniversityGrants
Commision(UGC)andAllIndiaCouncilofTechnical
Education AICTE
InformalEducationsystemisfreeofanyregulations
Notgovernedbyanyregulatorybody
4COACHINGCLASSES INDIA.PPT
Note:*GraduateandPostgraduatecourses
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Coachingclassmarketishighlyfragmentedandregionalin
nature
Overview
Coachingclassesaccountsformajorshareof
theinformaleducationmarketinIndia
CoachingClass
Market
(2008
2012e)
15 PrivateTuitions12.6
EntranceTestPrepUSDmn
Coachingclassesareaprominentfeaturein
Indiathat
complements
the
mainstream
educationsystem
5
10
25%
6.825%7.9
74%
26%
9.2
73%
27%
10.8
72%
28%
.
growthpotential
Marketishighlyfragmentedandregionalor
localizedin
nature
Coachin ClassMarketBreaku 2008
0
2008 2009e 2010e 2011e 2012e
ompr seso twosegments:
PrivateTuitionstargetedprimarily at studentsin
Grade5 12
EntranceTestPreparationMarkettargetedat: 25%
EntranceTestPrepMarket
Graduatelevel(engineering,medical,BBAetc)
Postgraduationlevel(MBA,GMAT,GREetc)
75%
Tutoring
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Privatetuitionsaccountsfor75%ofthecoachingmarketandis
highlydependentonindividualteachers
Overview Teachingoutsidetheclassroomshasbecomeabig
businessinIndia
PrivateTuitions
Market
(2008
2012e)
9.110 +16%
USDbn
Privatetuitionsform75%ofthecoachingclass
market
Privatetuitionsaresubjectbasedandhighly
dependentonreputationofindividuallocalteachers
7.9
6.85.9
5.1
4
6
8
Marketishighlyfragmentedwithclassesoftenbeing
runbyindividualsfromresidentialpremises
Veryfew
players
(like
Mahesh
Tutorials)
have
been
ableto ainscaleinthismarketb ado tin a
0
2010e 2011e 2012e2008 2009e
PrivateTuitionsMarketBreaku 2008standardizedprocessdrivenapproach
Maximumpotentialforgainingscaleisinthegrade1012
coachingsegment,whichischaracterizedbystandardized
tests
administered
by
state
or
national
education
boards
23%
Grade58
Demandforonlinetutoringhaveincreasedwith
manyplayerslikeTutorVistaincreasingtheirservice
offeringsindomesticmarket77%
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EntranceTestPreparationMarketisgrowingrapidlyandis
fiercelycompetitive
Overview
Entrancetestpreparationmarketisprocessdriven
ascontentcanbestandardizedacrosscenters
EntranceTest
Prep
Market
(2008
2012e)
4
USDbn
GraduateEntranceTestPreparationmarket
Morethan
80%
of
the
total
test
preparation
market
Demandforcoachingcentersishighduetofierce
com etition amon students for hi her education
.
2.9
2.4
2.01.7
1
2
3
professionalcourses
Thetestprepmarketforentryintoagraduationcourseis
dominatedby
the
engineering
courses,
followed
by
the
medicalstudies EntranceTestPre Breaku 2008
0
2010e2008 2009e 2012e2011e
PostGraduateEntranceTestPreparationMarket
PostgraduatecoachingdominatedbyMBAaspirants
Majorityofthetestsareheldatnationalleveland
a titudebased
6%
Others*MBA
7%
CivilServices
3%
Easytoscaleduetolowerdependenceonparticular
facultyandhigherfocusonstandardizedcontentand
studymaterial59%25%
EngineeringMedical
7COACHINGCLASSES INDIA.PPT
Note:* OthersincludeentrancetestpreparationforGRE/GMAT/SAT,MCA,HotelManagement
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Contents
Market
OverviewDrivers&Challen es
Trends
Com etition
KeyDevelopments
8COACHINGCLASSES INDIA.PPT
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Driversandchallenges
Challenges
Highpropensitytospendon
education
Growthindoubleincomenuclear
erson centr c us ness
Changeinentrancetestpattern
families
Highteacherpupilratioinschool
ac o governmen an nanc a
institutionssupport
ncreasecompe ona gra ua ean postgraduatelevel
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Educationalspendisoneofthelargestitemofhousehold
expenditureforIndianmiddleclassfamilies
Highpropensity
to
spend
on
education
Impact
Indianfamilies,especiallythemiddleclass,givehighimportancetoeducation
Coachingclassesandprivatetuitionsareanormandfiercecompetitionatalllevelsofeducation
pressurizesparentstoenrolchildreninclassestoensuretheydonotmissout
Despitethesignificantlyhighfeescomparedtoformaleducationinstitutes,parentsaremore
thanwilling
to
send
the
child
to
coaching
institutes
Educationisthesecondhighestexpenditureinmiddleclasshouseholdsafterfoodandgrocery
24.5%Food&Grocery8.9%Education
8.3%Entertainment7.7%Mobile
Phones
4.3%TransportationHighest
share
of
discretionary
4.3%Stationary4.2%PersonalCare
3.7%Communication3.2%Healthcare3.1%Footwear3.0%Toys&Gifts
2.8%A arels
spen
2.3%LoanPayment2.2%Cable&Internet2.2%HouseholdHelp
1.5%Homecare1.3%Rent&Utilities1.3%Jewellery
10COACHINGCLASSES INDIA.PPT
.
Furnishing 10.0%0.6%Others
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Workingparentsandhighteacherpupilratioisdrivingthe
coachinginstitutesmarket
DoubleincomenuclearfamiliesaregrowinginurbanIndiaasboththeparentsareengagedin
providingfortheirchildrensfuture
Growthin
double
income
nuclear
families
Impact
Withbothparentsworking,childrenstartattendingcoachingcentersataveryearlystagefor
educationalguidance
Doubleincome
makes
it
easy
for
parents
to
fund
childs
coaching
requirements
TeacherpupilratioforPrimaryeducationatnationallevelhasincreasedfrom1:43in1999
Highteacherpupilratioinschool Impact
2000to1:46in20042005
RatiofortheUpperPrimaryreducedfrom1:38in19992000to1:35in20042005
TeacherpupilratioishighinIndiacomparedtoothercountrieslikeUSandUK
Highratio
has
anegative
impact
on
the
quality
of
education
in
schools
thereby
increasing
the
demandforprivatecoaching
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Cutthroatcompetitionputtingpressureonstudentstojoin
coachingclassesforentrancetestpreparation
Competitionatgraduateandpostgraduatelevelincreasingeveryyear
About400,000studentsgaveIITJEEexamin2008andonlytop8,600wereacceptedfor
Increasingcompetition
at
graduate
and
post
graduate
level
Impact
admission
NumberofCATaspirantshaveincreasedby19%from20032008whilenumberof seatsin
IIMshas
increased
by
merely
3%
in
the
same
period
Morethan300,000MBAaspirantsgaveCATin2008
um ero asp ran sareexpec e o ncreasea era eo nnex years
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Changeintestformatsinvolveshugeinvestmentswhilelackof
recognitionfromgovernmentisanotherchallenge
Anychangeinentrancetestpatternwouldinvolvehugeinvestmentsbythecoachinginstitute
IIMsplanningtoconductCATexamonlineinthenearfuture
Changein
entrance
test
pattern Impact
Coachinginstitutesarealreadyinvestingheavilyininfrastructuresetupbyprovidingdigital
contenttothestudents
Coachinginstitutesaretyingupwithserviceprovidersintheonlinebusiness
TimeinstituteplanstoinvestaboutINR50 60mntoincludecomputerlabstestmanagementsystems
acrossallcenters
IMSbeingmarketleaderinGMATcoachingalreadyhassignificantonlinepresence
Governmentandfinancialinstitutionslikebanksprovidefinancialsupporttothestudentsfor
takingadmissionsintheformaleducationsystemlikecollegesanduniversities
Coachingclassesarenotrecognizedbyanygovernmentbodyandthereforefinancialsupportis
notava a e ora m ss on ncoac ng nst tutes,w c avecons era yexpens ve ees
Further,thelackofanystandardsoraccreditationhasledtowiderangeofqualitylevels
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KeyTrends
Coaching
institutes
enter
mainstreameducation PE/VC
firms
showing
interest
in
educationsector
Trends
Demandforcorrespondencecoachingmaterialsincreasing
Increasingdemandforonlinetutoringindomesticmarket
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Coachinginstitutesarediversifyingintomainstreameducation
CareerLauncher:OpenedIndusWorldSchoolofBusinessinNoidain2008.Planstoadoptsome
IndustrialTrainingInstitutes(ITIs)andtieupwithengineeringcollegestoofferfinishingschools
Coachinginstitutes
enter
mainstream
education
Coachinginstitutes
arediversifyingbyorgra ua ngeng neers
IMS: IMSalongwithJamshedpurbasedXLRIsetupthePraxisBusinessSchoolinKolkatain2007
MTEducare:
Opened
10
owned
pre
schools
in
Mumbai
under
the
brand
name
Little
Tigers
T.I.M.E.: OpenedplayschoolinHyderabadandplanstoopenplayschoolsin70citieswherethey
shiftingfocusto
mainstream
education
a rea y avepresence. . . . .a sop ans ose up sc oo s
VidyalankarCoachingInstitute: OpenedengineeringcollegeinWadalain2000.Planstoopen
anotherengineeringcollegeinPanvel
Professional Vocational
Institute PlaySchools K12Tuitions Colleges Bschools training
CareerLauncher
IMS
T.I.M.E.
VidyalankarCoachingInstitute
Alread resent
17COACHINGCLASSES INDIA.PPT
FuturePlans
C hi k i h bili l i i i
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Coachingmarketwithabilitytoscaleupattractingprivateequityinvestors
PrivateequityplayersarebullishoneducationsectorinIndia
Focushasshiftedfromexportfocussed educationcompaniestotrainingandcoaching
Increasedfocus
of
PE/VC
firms
Privateequityfirms
areseeinghuge
institutesthattargetdomesticmarket
Privateequityplayersinvestingincoachinginstituteswithscalablebusinessmodel
opportunityinthe
unregulated
coachingindustry
USDmn
.
17.5
50
0
2006 2007
Date Investor Target %Stake AmountUSD
July2008 Lightspeed
Venture
Partners
&
Sequioa
Capital Tutor
Vista n.a 18.0
mn
August2007 HelixInvestmentAdvisors MTEducarePvtLtd 30% 12.0mn
October2007 GajaCapital CareerLaunchers n.a 8.3mn
December2006 LightspeedVenturePartners&SequioaCapital TutorVista n.a 10.8mn
18COACHINGCLASSES INDIA.PPT
November
2000 Intel
capital Career
Launchers n.a 10.0
mn
D d f lt ti d li th d h li t t i
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Demandforalternativedeliverymethodssuchasonlinetutoringandcorrespondencecoachingmaterialspickingup
Playersinonlinetuitionmarkethasprimarilyfocusedonexportmarket
IndianteachersprovidetutoringservicesatafractionofthecostincountriesliketheUnitedStates,UKand
Demandfor
online
tutoring
increasing
in
domestic
market
Onlinetutoring
gainsacceptanceino er uropeancoun r es
DemandforonlinetutorshasgrowninIndiawiththeincreaseinbroadbandpenetration
Playerslike
Tutor
Vista
are
looking
at
providing
coaching
through
online
media
in
the
domestic
market
Indiaasbroadband
penetration
increase
mn40
18
610
20
30
40 InternetSubscribers
Demandforcorrespondencecoachingmaterialincreasing
0
200920082007
materials
Coachinginstitutearealsoprovingselfstudymaterialsalongwithonlineassessmentand
support
Corres ondence coachin materials hel the coachin institutes in reducin ca ital costs
Fiercecompetition
increasingdemand
forcorrespondence
coachingmaterials
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Contents
Market
OverviewDrivers&Challen es
Trends
Com etition
KeyDevelopments
20COACHINGCLASSES INDIA.PPT
P i t t iti k t i hi hl f t d ith li it d
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Privatetuitionsmarketishighlyfragmentedwithlimitedorganizedplayers
MTEducare
Pvt
Ltd
Overview: Startedin1988andcurrentlyhas153centersand1,200teachers.Copeofoperations
limitedtoMaharashtrawithsmallpresenceinSouthIndia,GujaratandonecenterinDubai.
BusinessModel:MTEducareisprimarilyin subjectbasedtutoringacrossschoolandcollegelevel.
The
company
follows
both
owned
and
franchisee
based
model Financials:RecordedrevenuesofINR355mnandplanstoincreasetoINR1500mnby2010
ExpansionPlans:MTEducareplanstogroworganicallywithinMaharashtraandinorganically
outsidethestateinthetuitionssegment.Companyplanstoexpanditsnationalfootprintwith
centersinGujarat,SouthIndiaandNorthIndia.Companyhasalsoenteredmainstreameducation
byopening
10
owned
preschools
in
Mumbai
and
plan
to
scale
up
through
franchisee
route
er eyp ayers n r va e u onmar e nc u ngon ne u ors
Institute History Currentnetwork BusinessFocus
ChateGroup Startedin1989 89centers Privatetuitionsforschools.Alsopresentintestprepmarket
Sukh
Sagar
Institute Started
in
1976 24
centers Coaching
for
Commerce
Stream.
Specialized
in
CA/CS
coachingGrowingStars Startedin2001 online ChargesUSD1520/hr.~60tutors.
learninghour.com Startedin2006 online In2007,Educompacquired76%stake
Onlinetutoringforschoolandtestprep.
Onlinetutorin forcolle eand raduatelevel ro ramsinover30sub ects
21COACHINGCLASSES INDIA.PPT
Tutorvista Startedin2005 online
Employsover
600
tutors.
Charges
US$99/month
for
unlimited
tutoring
E t t t k t i i l d i t l lik
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EntrancetestprepmarketisincludeprominentplayerslikeCareerLauncher,FIITJEE..
CareerLauncher
Overview: Startedin1995,currentlyhas135coachingcenters.CareerLauncherstartedwithMBA
coachingandnowalsotrainstudentsforIITJEE,NLSandBBAexams
BusinessModel:.About70%ofthecentersaresetupthroughfranchiseemodel
Financials:TurnoverincreasedfromINR80mnin2001toINR900mnin2007
ExpansionPlans: Itplanstosetup125playschools,150K12schoolsand25vocationaltraining
centres. It also lans to o en centers in Sin a ore China Ja an Korea Indonesia Thailand Taiwan
andtheUSbyinvestingaboutINR2bninthenext35years.
FIITJEELtd
Overview: Startedin1992andcurrentlyhasabout35centers
BusinessModel:FIITJEEfocusisonengineeringtestpreparation.Theinstitutehasabout300faculty
members.FIITJEEadoptedfranchiseemodelforexpansion
ExpansionPlans:Theinstituteenvisagescreatinginternationalstandardboardingschool,public
school,promotingapublishinghouse,deliveringthecontentwithdifferentapproachandconcept
besideresidentialandnonresidentialIITJEETrainingCentreofExcellenceandEngineeringEntrance
ExamTrainin Centreacrossthecountr
22COACHINGCLASSES INDIA.PPT
IMS d T I M E ith th bilit t l ti
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..IMSandT.I.M.E.withtheabilitytoscaleoperationsacrossIndia
IMS
Overview: IMSstartedin1977andistheleaderintestprepspacewithtotal185centers.IMS
startedwithCATcoachingandnowalsotrainsstudentsinGREandGMATexams
BusinessModel:Outofthe185centers,135areinpartnershipand50ownedcenters.Mostofthe
keymetrosarelocatedinmetros
Financials:IMSrevenuesinFY08wereaboutINR1,000mn.Segmentwiserevenuecontribution
Classroom(80%),Correspondence(10%),TestSeries(5%)andConsulting(5%)
ExpansionPlans:IMSstartedaBschoolunderthebrandnamePraxisin2007inKolkatawitha
capacityof160seats.Inthenextfiveyears,IMSplanstosetupthreemorebusinessschoolsinnon
metrosbuthighgrowthareassuchasChandigarhandGurgoan.
. . . .
Overview:T.I.M.E.startedin1992inHyderabadandcurrentlyhas175centersin87cities.
BusinessModel:T.I.M.E.instituteisstructuredoncorporatemodelwithbothownedandfranchisee
Financials:T.I.M.E.reportedturnoverofaboutINR1500mnin200607andwitnessedgrowthat
CAGRofover60%in5years
ExpansionPlans:TimehasopenedplayschoolinHyderabadandplanstoopenplayschoolsin70cities
23COACHINGCLASSES INDIA.PPT
w eret eya rea y avepresence. mea sop anstosetup sc oo s
Many other players are also scaling up their operations in
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Manyotherplayersarealsoscalinguptheiroperationsinentrancetestprepmarket
Otherkey
players
in
entrance
test
preparation
market
Institute HistoryCurrent
networkBusinessFocus
AakashInstitute Startedin198836centers
(AcrossIndia)
Admissionofstudentstocoursesonbasisofscreeningtest/percentage
of
marks
BrilliantTutorials Late1970s 10
Focusonengineering,medical,IAS,GATE testpreparationmarket
Nofranchisees.Movingawayfromcorrespondence focusedtoclassroom
focused
BansalClasses Startedin1985 3(Kota) Focusonengineeringtestpreparationmarket
FeesrangefromRs30,00060,000annually.About8,000enrollannually
Focusontestprepmarketforgraduate,postgraduateandforeign
education
ChanakyaIASAcademy Startedin1993 1(Delhi) FocusonIASexampreparation
About900studentsperintake
ProfessionalTutorials Started
in
1993 60+
Focusongraduateandpostgraduateentrancetest
pera es
roug
ranc sees
Rau'sStudyCircle Startedin1953 2(Delhi,Jaipur) FocusonIASexampreparation
About500studentsperintake
Focusongraduateentrancetestpreparationmarketandsomepost
24COACHINGCLASSES INDIA.PPT
Coaches~9,000
students
annually
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Contents
Market
OverviewDrivers&Challen es
Trends
Com etition
KeyDevelopments
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KeyDevelopments
Date Development April2008 Thecommonadmissiontest(CAT)togoonlinefrom2009.TheIndianInstituteofManagements(IIMs)issuedapre
qualificationbidinvitingserviceproviders,ITfirmsspecializinginassessmentandtestingservices,forcomputerizationoftheCATexam.
March2008 HumanResourceDevelopmentMinisterhasplanned8newIITsand7newIIMsundertheFive YearPlan.The8IITswillbesetupinAndhraPradesh,Rajasthan,Bihar,Himachal,Orissa,MadhyaPradesh,GujaratandPunjab atacostofINR7600mn
each.
The
7
new
IIMs
to
come
up
in
Meghalaya,
Tamil
Nadu,
J&K,
Jharkhand,
Chattisgarh,
Uttarakhand,
Haryana,
which
will
costINR2500mneach.
January2008 TheDistrictConsumerDisputesForumI(Chandigarh)hasdirectedallprivatecoachinginstitutestorefundaproportionateee os u en sw o eave ecourse e ore scomp e on. e orum asa so rec e ns u esno oc arge ees n
advance.
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