project on education market

8/2/2019 Project on Education Market

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PREM GEORGE GANPAT

DEPT. OF MANAGEMENT (COMMERCE)

ST. XAVIERS COLLEGE (AUTONOMOUS)

ROOM NO. : 13 ROLL NO. : 135

TOPIC :

EDUCATION FORSALE


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ACKNOWLEDGEMENT

I sincerely thank St. Xaviers College forintroducing this section of project

presentation in our syllabus. Throughthis we gain job experience and gainimmense knowledge about the outerworld. Through internship we get wellequipped with working environmentand atmosphere.

I thank Prof.Tridib Bannerjee for guiding us through thisproject and taking the best out of us. I also thank Prof.SHIVAJI BANNERJEE for his project classes andassistance towards the completion of the project.

I also thank all my friends who helped and guided me to

complete my project more effectively and efficiently.


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DECLERATION

I Prem George Ganpat, hereby declare that thisproject is

an original piece of research work carried out by me underthe guidance and supervision of Mr. Francis Ganpat. Theinformation has been collected from genuine and authenticsource. This work has been submitted to partial fulfillmentfor the course of B.COM HONOURS taken up in ST.XAVIERS COLLEGE (AUTONOMOUS), Kolkata.


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INTRODUCTION

Indias education and training sector offers privateinstitutions an estimated US$40bn market, with a potential16% five-year Cagr. With 142 million of the 361 millionschool-age children not attending classes, the systemsshortcomings are well documented. However, the

opportunities for organised private-sector involvement donot enjoy such recognition. Turning education into aprofitable, high-growth business is a long-term investmenttheme. Corporate initiatives are beginning to address theneeds of Indias youth by tapping into the propensity of themiddle class to spend more on education. Education is asubstantial market when compared with the US$24bn thatthe government spends each year on defence, whichincludes revenue and capital expenditure. Further, theprivate-sector segment is nearly as big as the combinedannual budget for power, roads, airports, ports andtelecoms (based on the FY07-12 Five-Year Plan). Privatespend on education is also nearly five times the annualUnion Budgetary outlay for the segment. Overall,education accounts for 7% of Indias FY07 private-

consumption expenditure. In our view, the time for strongerprivate-sector participation in education has come, andlarge publicly listed companies will emerge. The biggestlisted entity in the education space has FY09CL revenuefrom the Indian market of under US$200m. The largest part


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of the pie is in the K-12 segment and its adjacent markets(tutoring, preschools), and private professional-coursecolleges (engineering, medical and business). A slew of

other areas, such as test preparation, preschools andvocational training, are each worth US$1-2bn.

Education in India is provided by thepublic sectoras wellas theprivate sector, with control and funding coming fromthree levels: federal, state, and local. TheNalandaUniversity was the oldest university-system of education inthe world. Western education became ingrained into Indiansociety with the establishment of the British Raj.

Education in India falls under the control of both the UnionGovernment and the states, with some responsibilities lyingwith the Union and the states having autonomy for others.The various articles of the Indian Constitutionprovide foreducation as a fundamental right. Most universities in Indiaare controlled by the Union or the State Government.

India has made progress in terms of increasingprimaryeducation attendance rate and expanding literacy toapproximately two thirds of the population. India'simproved education system is often cited as one of the maincontributors to the economic rise of India. Much of theprogress especially in Higher education, Scientific researchhas been credited to various public institutions. The privateeducation market in India is merely 5% although in terms

of value is estimated to be worth $40 billion in 2008 andwill increase to $68 billion by 2012.

However, India continues to face stern challenges. Despitegrowing investment in education, 25% of its population isstill illiterate; only 15% of Indian students reach high
http://en.wikipedia.org/wiki/Public_sectorhttp://en.wikipedia.org/wiki/Private_sectorhttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/State_governmenthttp://en.wikipedia.org/wiki/Nalanda_Universityhttp://en.wikipedia.org/wiki/Nalanda_Universityhttp://en.wikipedia.org/wiki/British_Rajhttp://en.wikipedia.org/wiki/Republic_of_Indiahttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/States_and_Territories_of_Indiahttp://en.wikipedia.org/wiki/Indian_Constitutionhttp://en.wikipedia.org/wiki/Primary_educationhttp://en.wikipedia.org/wiki/Primary_educationhttp://en.wikipedia.org/wiki/Literacy_in_Indiahttp://en.wikipedia.org/wiki/Economic_development_in_Indiahttp://en.wikipedia.org/wiki/Public_sectorhttp://en.wikipedia.org/wiki/Private_sectorhttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/State_governmenthttp://en.wikipedia.org/wiki/Nalanda_Universityhttp://en.wikipedia.org/wiki/Nalanda_Universityhttp://en.wikipedia.org/wiki/British_Rajhttp://en.wikipedia.org/wiki/Republic_of_Indiahttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/States_and_Territories_of_Indiahttp://en.wikipedia.org/wiki/Indian_Constitutionhttp://en.wikipedia.org/wiki/Primary_educationhttp://en.wikipedia.org/wiki/Primary_educationhttp://en.wikipedia.org/wiki/Literacy_in_Indiahttp://en.wikipedia.org/wiki/Economic_development_in_India


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school, and just 7%, of the 15% who make it to highschool, graduate. As of 2008, India's post-secondaryinstitutions offer only enough seats for 7% of India's

college-age population, 25% of teaching positionsnationwide are vacant, and 57% of college professors lackeither a master's or PhD degree.

As of 2011, there are 1522 degree-granting engineeringcolleges in India with an annual student intake of582,000, plus 1,244 polytechnics with an annual intake of265,000. However, these institutions face shortage offaculty and concerns have been raised over the quality ofeducation.


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OVERVIEWEducation has long been receiving the major wallet share ofthe Indian middle class. The education market is generallyregarded as the only market towards which Indians are notprice-sensitive because it has helped them reach theirpresent standard of living and promises better earnings andprospects for their children.

Indias education sector currently offers an estimatedUS$40 billion market, with a potential 16% five-yearCAGR. This spans the kindergarten through grade 12 (K-12) segment (US$20 billion), private professional colleges(US$7 billion) and tutoring (US$5 billion), vocationaltraining (US$1.4 billion), test preparation (US$1.7 billion),and preschools (US$1 billion).

The most attractive and scalable sectors in this group aretest preparation, K-12 and preschools. Parents increasinglyprefer private institutions in all domains due to the lowquality and poor infrastructure of government-owned and-aided institutions. While just 7% of the more than 1million schools in India are privately owned, they accountfor 40% of the countrys 219 million students enrolled.

An increase in GPRS use and the introduction of 3Gtechnology in India should also give a boost to conceptssuch as e-learning in the country. The e-learning market iscurrently estimated at US$21.5 million and is projected togrow to US$225 million by 2012. A few companies are


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also concentrating on management systems for schools andcolleges which help maintain attendance records, conductexaminations, and manage timetables, administration,

reports, and many other things. The publishing of textbooksand other books for children is a low-growth marketbecause of the high (70%) reusability of these books.

The Indian middle class is expected to expand significantly,from 300 million people today to 583 million people in2025. By 2025, about three-quarters of Indias urbaniteswill be part of the middle class, compared with slightly

more than one-tenth today. As Indians continue to climbthe economic ladder, the composition of their spending willlikely change significantly. Spending on education isexpected to grow by 11% over the next 20 years, to 9% ofthe household income. With the growth of the Indianmiddle class and the increase in its members spendingpower, there is expected to be a major supply-demand gap,which opens up many entrepreneurial opportunities in this

sector.


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PRESENT SCENARIO PRESCHOOLS: PLAY TIME

K12 (SCHOOLS)

HIGHER EDUCATION

COACHING CLASSES


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PRESCHOOLS: PLAY TIMEPlayschools, more popularly known as preschools,traditionally cater to the 1.5-6 years age group. Increasingawareness among parents about the benefits of a qualitypreschool education has been driving penetration levels andprice discovery in the segment Market to expand 3x to$1bn by 2012 In 2008 pre-school Market Total population1.15bnHHs with income>Rs200,000(8%) 91m2-4 yrs (6%)5.5m2-4 yrs enrolled (12%) 661,246Average spend (Rs pa)8,000Market size (Rs m) 11900Market size.

Major players KidZee the largest player at 34% oforganized market and 7% of total market.


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Preschools have a limited target area maximum of 2kmradius Any preschool, however strong the brand, ideallyhas a customer pull within a 2km radius (parents prefer to

send toddlers within a limited radius for safety/ comfortreasons).The segment caters only to customers who canafford annual fees of Rs20,000-45,000, which further limitsthe scope of the market. Tail wags the dog rental costs!Preschools are currently being run primarily on thefranchisee model, which has so far evolved largely on theback of two factors- 1.low cost of setting up a franchisee,2.housewife occupation that typically does not consider the

opportunity cost of lease rentals (schools are being set upon existing premises which otherwise also do not generatereturns).Franchisee Model.Considering the economics of the preschool business, leaserent forms the largest expense for running a preschool andcan eat into profitability of the business. Soaring rentalcosts mounting pressure on cost structures.

The unorganized neighbor With awareness levels still low,the unorganized market provides the same care but at amuch lower price. With more than 80% of the target marketstill with the trustworthy neighbor, it may take some timebefore organized players are able to establish theimportance of a quality preschool education. A non-regulated market low entry barriers the preschool marketis non-regulated and hence entails no regulatory barriers fornew entrants. Given the relatively low investment required,competition is intensifying in this segment. unorganizedneighbor Market.Franchisee has to pay a brand/franchisee fee (Rs60,000-5,00,000pa)some part of the revenues to the franchisor


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(~20% of total) in lieu of using the latters brand name andfor the handholding required to run a preschool. Except fora few preschool chains (Kangaroo Kids going in for JVs

with developers and Tree House with largely ownedschools),Assumptions: We have assumed a model premiseof 1200 sq. ft with rent at Rs70 per sq.ft.Only 60% of thetotal area can be used for classrooms and a minimum of 10-15sq.ft per student is considered optimal. The one-timecapex broadly comprises furniture and fittings cost andexcludes brand fee (we have assumed an average franchiseefee of Rs.2,00,000 ,which is renewable every three years

and amortized over a period of three years).We haveassumed three classes and two batches a day, whichtranslates into a maximum capacity of 20 students per class(thereby a maximum of 120 students per preschool) and anannual fee of Rs25,000.Economics of a preschool.The limited catchment area for a preschool implies limitedscalability per branch. A large section of the franchisees

being run on owned premises The model ignores leaserentals a major cost-head The business for a franchiseeruns the risk of becoming economically unviable in ascenario of high rentals . (it has been observed that whilefranchisees keep mushrooming, there has also been aconsiderable churn in existing franchisors under high rentalcosts).To improve economic viability of the model, somefranchisors are seen to be levering The existinginfrastructure beyond the 1.5-3 year age group forprogrammes like mother-toddlers(children aged between6-12 months) and activities like dance, music, potteryclasses, etc (children aged three years and above)Levering


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infrastructure beyond preschools to improve economicviability.Pre-schools are looking at revenue enhancement through

geographic expansion and scaling up to K-12 delivery,while partnering with large investors for infrastructuresupport.

Entry of Big Corporate :Many corporate houses have / are planning to set up theirown chain of pre-schools - Pre schools are viewed asattractive investment opportunities due to the growth

potential.For e.g. Alphakids set up by Camlin group and GlobeToters by Yash Birla Group

Joint Ventures with Builder :Increasingly preschools are forming joint ventures with

builders. Partnering with builders helps in impartingflexibility in the business against high lease rentals AEZgroup and Mothers s Pride entered into a JV for aPreschool.

Upgrade to K 12Preschool chains are moving up the value chain byupgrading to K-12 schools to ensure scalability forpreschool firm Kidzee, Euro Kids and Kangaroo Kids areupgrading to K-12 schools and a large majority of theirpreschool population is expected to be the potentialcustomers for K-12.


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Expansion to Tier I & Tier II CitiesDemand and affordability is increasing in small towns with

the growing awareness among people about the need tosend children to preschools Euro kids plan to add 1000 preschools in medium term with Tier II and Tier III cities asgrowth driver.

Leveraging Infrastructure foreconomic viabilityIn order to maximize space utilization, preschools are

leveraging the existing infrastructure to generate additionalrevenues.Additional programmes are being offered in the samepremise in order to allow higher utilization of theinfrastructure.

Organized preschool market in India

Player History Status Current

network

Business

model

Key

strengths


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Started in2003

Part of Zeegroup.ListedunderETCN

previously.CurrentlyListedcompanyby his ownname ZEELEARN.

697+ -pan India.Plans 1,000 inthenext two yrs

Franchiseemodel

OperationalZeeSchool40 + Mou20 signedup.Widest

foot print ofkidzeepreschool

1997 JVbetweenIndianExpress &

Egmont;2001 -EgmontInternationalHoldings,Denmarkbought backshares ofIndianExpress inJV; Egmont

exited EuroKids, nowan Indianprivate co.

Private(50% stakeacquired byEducomp)

484-pan India.Plans to have1000+ schoolsin

next 3 yrs

50%publishing,50%preschools

(Franchiseemodel)

Plans tohave K12schools

Private 200 primarilyin SouthIndia

Franchiseemodel

-

Started in1989

Private 90 - primarily inNorth India

Franchiseemodel

Strongbrand inNorth India


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Started in1993

Private 60 - expandingpan India

JV model.Nicheplayerexpandingto a basic

modelthrough'Brainworks'andmall schoolsthrough'Kangaplay'

Strongbrand inwesternurbanareas.

Opting for amix of purefranchiseeand JVmodel forbettereconomics,qualitycontrol &attrition.Ready to

accessBillabongHighschools; 6operational

Started in2003

Private 55 - primarily inMaharastra..140+ in indiacurrently

Primarilyownedmodel

Highoperatingmargins duetoaccountingfor nominal

lease(promoterownsproperty) &abilityto competeon a pricewar

Started in2003

ListedunderEducomp

Plans to target250centers by end-

FY09

Franchiseemodel

8am to 8pm- includesday care


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K12 (SCHOOLS)

K12 market valued at USD 20 bn Expected to grow to USD30 bn Market. Majority of the market is dominated by theprivate unaided premium schools 30% of the institutes inK12 are privately owned LE Entry Route, Market entrymechanisms Cost and Cost entailed in the development ofan institution Revenues P Profit avenues available toplayers M Growing middle class with the ability to afford a

private education Fundamental Drivers SA Demographicadvantages Consumers preferring private to public schoolsGrowing opportunity for ICT services in K12 Low grossenrolment ratio (GER) and high dropout rates Lowpenetration of multimedia content in schools The Right ofChildren to Free and Compulsory Education Bill Increasein Public Private Partnerships (PPP) Private Schools

Adopting Hybrid Teaching Methods Government SarvaAbhiyan (SSA Shiksha) Initiatives Mid-day Meal SchemeMajor Expenditure on Elementary and SecondaryEducation Other Initiatives.

The K12 sector Kindergarten to 12th grade caters forstudents in the age group 3-19 years, with 219 million childrenenrolled across the country out of the 361 million who are eligible.All K12 institutions must be affiliated to an educationboard either central, such as the Indian Council of SecondaryEducation (ICSE)and the Central Board of SecondaryEducation(CBSE) or state; some schools have begun seekingaffiliations with international boards such as IGCSE (International


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General Certificate of Secondary Education) and IB(InternationalBaccalaureate from Geneva).The market is dominated bythe public sector, which represents 80% of the 1.25 million

schools; of the 950,000 public schools, only 8%accommodatechildren with special needs within regular classes. The publicsector also dominates the primary and middle school sub-segments, whereas 59%of secondary schools are in the privatesector. On average, private schools enroll morestudents(1,200 per school) than public schools and account for40% of the total number of students enrolled in K12.The size ofthe K12 industry is expected to increase from $24.5 billion

in 2008 to $50 billion in 2015 (with an estimated CAGR of 14%)

The demand

India has the largest population globally (and growing)in the K12 age group.39% of children of K12 age are not currently enrolledin school, meaning 142 million eligible children in India do not

receive an education.At the higher secondary level (grades 9-12) thisfigure rises to 68%.Inconsistent and relatively poor public sector.There is a preference for the private sector, fuelled by agrowing awareness of the importance of a quality education andan increasing ability and willingness to pay for it.

According to the National Council of EducationResearch & Training (NCERT),between 20,000 and 25,000quality schools are needed.A number of states allocate land for schoolsunsubsidized rates.


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Growing demand exists for PPPs to manage publicschool.


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HIGHER EDUCATION: TIME TO

DEGREE SHOP?

Our university system is, in many parts, in a state of

disrepair...In almost half the districts in the country, higher

education enrollments are abysmally low, almost two-third

of our universities and 90 per cent of our colleges are

rated as below average on quality parameters... I am

concerned that in many states university appointments,

including that of vice-chancellors, have been politicizedand have become subject to caste and communal

considerations, there are complaints of favoritism and

corruption.

Prime MinisterManmohan Singhin 2007India's higher education system is the third largest in theworld, afterChina and the United states. The main

governing body at the tertiary level is the University GrantsCommission (India), which enforces its standards, advisesthe government, and helps coordinate between the centreand the state. Accreditation for higher learning is overseenby 12 autonomous institutions established by the UniversityGrants Commission.

As of 2009, India has 20 central universities, 215 state

universities, 100 deemed universities, 5 institutionsestablished and functioning under the State Act, and 33institutes which are of national importance. Otherinstitutions include 16000 colleges, including 1800exclusive women's colleges, functioning under theseuniversities and institutions. The emphasis in the tertiary
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level of education lies on science and technology. Indianeducational institutions by 2004 consisted of a largenumber of technology institutes. Distance learning is also a

feature of the Indian higher education system.Some institutions of India, such as the Indian Institutes ofTechnology (IITs), have been globally acclaimed for theirstandard of undergraduate education in engineering. TheIITs enroll about 8000 students annually and the alumnihave contributed to both the growth of the private sectorand the public sectors of India. However the IIT's have nothad significant impact on fundamental scientific researchand innovation. Several other institutes of fundamentalresearch such as the Indian Association for the Cultivationof Science(IACS), Indian Institute of Science IISC), TataInstitute of Fundamental Research (TIFR), HarishchandraResearch Institute (HRI), are acclaimed for their standardof research in basic sciences and mathematics. However,India has failed to produce world class universities both in

the private sector (i.e. Harvard) or the public sector (i.e. UCBerkeley).[44]

Besides top rated universities which provide highlycompetitive world class education to their pupils, India isalso home to many universities which have been foundedwith the sole objective of making easy money. Regulatoryauthorities like UGC and AICTE have been trying very

hard to extirpate the menace of private universities whichare running courses without any affiliation or recognition.Indian Government has failed to check on these educationshops, which are run by big businessmen & politicians.Many private colleges and universities do not fulfill the
http://en.wikipedia.org/wiki/Indian_Institutes_of_Technologyhttp://en.wikipedia.org/wiki/Indian_Institutes_of_Technologyhttp://en.wikipedia.org/wiki/Indian_Association_for_the_Cultivation_of_Sciencehttp://en.wikipedia.org/wiki/Indian_Association_for_the_Cultivation_of_Sciencehttp://en.wikipedia.org/wiki/Indian_Institute_of_Sciencehttp://en.wikipedia.org/wiki/Tata_Institute_of_Fundamental_Researchhttp://en.wikipedia.org/wiki/Tata_Institute_of_Fundamental_Researchhttp://en.wikipedia.org/wiki/Harvard_Universityhttp://en.wikipedia.org/wiki/UC_Berkeleyhttp://en.wikipedia.org/wiki/UC_Berkeleyhttp://en.wikipedia.org/wiki/Education_in_India#cite_note-times-43http://en.wikipedia.org/wiki/Indian_Institutes_of_Technologyhttp://en.wikipedia.org/wiki/Indian_Institutes_of_Technologyhttp://en.wikipedia.org/wiki/Indian_Association_for_the_Cultivation_of_Sciencehttp://en.wikipedia.org/wiki/Indian_Association_for_the_Cultivation_of_Sciencehttp://en.wikipedia.org/wiki/Indian_Institute_of_Sciencehttp://en.wikipedia.org/wiki/Tata_Institute_of_Fundamental_Researchhttp://en.wikipedia.org/wiki/Tata_Institute_of_Fundamental_Researchhttp://en.wikipedia.org/wiki/Harvard_Universityhttp://en.wikipedia.org/wiki/UC_Berkeleyhttp://en.wikipedia.org/wiki/UC_Berkeleyhttp://en.wikipedia.org/wiki/Education_in_India#cite_note-times-43


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required criterion by the Government and central bodies( UGC, AICTE, MCI, BCI etc.) and take students for a ride.For example, many institutions in India continue to run

unaccredited courses as there is no legislation strongenough to ensure legal action against them. Qualityassurance mechanism has failed to stop misrepresentationsand malpractices in higher education. At the same timeregulatory bodies have been accused of corruption,specifically in the case of deemed-universities. In thiscontext of lack of solid quality assurance mechanism,institutions need to step-up and set higher standards of self-

regulation.

Government of India is aware of the plight of highereducation sector and has been trying to bring reforms;however, 15 bills are still awaiting discussion and approvalin the Parliament. One of the most talked about bill isForeign Universities Bill, which is supposed to facilitateentry of foreign universities to establish campuses in India.

The bill is still under discussion and even if it gets passed,its feasibility and effectiveness is questionable as it missesthe context, diversity and segment of international foreigninstitutions interested in India. One of the approaches tomake internationalization of Indian higher educationeffective is to develop a coherent and comprehensive policywhich aims at infusing excellence, bringing institutional

diversity and aids in capacity building.Three Indian universities were listed in the Times HigherEducation list of the worlds top 200 universities IndianInstitutes of Technology, Indian Institutes of Management,and Jawaharlal Nehru University in 2005 and 2006. Six
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Indian Institutes of Technology and the Birla Institute ofTechnology and Science Pilani were listed among the top20 science and technology schools in Asia by Asia

week. The Indian School of Business situatedin Hyderabad was ranked number 12 in global MBArankings by the Financial Times of London in 2010 whilethe All India Institute of Medical Sciences has beenrecognized as a global leader in medical research andtreatment.

The continuing growth of the middle class in India(approximately 200 million people) has led to increaseddemand for higher education that cannot be met by theIndian Higher Education system. The tertiary educationparticipation rate in India is 11 %, and the government aimsto increase this by 15% in 2015. The population isincreasing but there has not been a corresponding growth inprovision of education. Although the Indian government isplanning to establish new universities and colleges in the

near future, these will not be enough to provide places forall students who seek higher education. Consequentlyincreasing numbers of Indian students are seeking highereducation opportunities internationally. Historically therewas a strong preference in India for studying in the US &UK, but gradually more Indian students are becominginterested in Australia. This paper argues that Australian

education institutions need to consider engaging moreclosely with India, both to promote and raise the profile ofAustralian education in the short term, and also to positionthem for the future when the regulatory framework forforeign education providers in India is clarified.
http://en.wikipedia.org/wiki/Birla_Institute_of_Technology_and_Sciencehttp://en.wikipedia.org/wiki/Birla_Institute_of_Technology_and_Sciencehttp://en.wikipedia.org/wiki/Asiaweekhttp://en.wikipedia.org/wiki/Asiaweekhttp://en.wikipedia.org/wiki/Indian_School_of_Businesshttp://en.wikipedia.org/wiki/Hyderabad,_Andhra_Pradeshhttp://en.wikipedia.org/wiki/Financial_Timeshttp://en.wikipedia.org/wiki/All_India_Institute_of_Medical_Scienceshttp://en.wikipedia.org/wiki/Birla_Institute_of_Technology_and_Sciencehttp://en.wikipedia.org/wiki/Birla_Institute_of_Technology_and_Sciencehttp://en.wikipedia.org/wiki/Asiaweekhttp://en.wikipedia.org/wiki/Asiaweekhttp://en.wikipedia.org/wiki/Indian_School_of_Businesshttp://en.wikipedia.org/wiki/Hyderabad,_Andhra_Pradeshhttp://en.wikipedia.org/wiki/Financial_Timeshttp://en.wikipedia.org/wiki/All_India_Institute_of_Medical_Sciences


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India is a huge country with a population of over onebillion people, and numerous links with Australia(according to Indiastat.com, the population of India was

1,132,893,211and growing daily, in May 2008). It shareswith Australia a history of British colonisation, and themany consequences of that colonial experience, includingEnglish language use, systems of government, education,law and public transport modeled on the English systems,and an enthusiasm for cricket. Australia and India sharenumerous academic, cultural, media, scientific,government, NGO and commercial links, and the

connections are increasing. The introduction to a directoryof the Australia India links, published in 1995, stated theaccelerated liberalization of the Indian economy since July1991 has been a major factor behind the strengtheningbilateral ties between the two countries. ChristopherKremmer, who worked in India as the South Asiacorrespondent for the ABC, and lived there for 10 years

from 1990, has written and spoken about outsidersperceptions of India. He spoke at the AustralianInternational Education Conference in Melbourne in 2007about the unrecognized changes that occurred in Indiathrough the nineties. He said that most of the foreignjournalists he knew in India only spoke and wrote about thenegative things in India the terrorist attacks, thehijackings, the communal riots, the assassination of PrimeMinister Rajiv Gandhi, etc. However, he said that thelonger he lived in India, and became part of an Indianfamily through marrying an Indian woman, his perceptionschanged. Where colleagues saw only doom and gloom Istarted to see tremendous resilience. While the violence


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attracted all the media attention, a slow reform process wasgoing on throughout India, and the foreign journalistsmissed the story. Kremmer emphasized that there have

been great and far-reaching changes in India since the earlynineties, and India is misunderstood by many peopleoutside it. One of these changes that has occurred in recentdecades has been the growth of the economy and thegrowth of the middle class. There are many visible signs ofthis growing Middle Class the modern shopping malls incities, the satellite TVs in villages, and the proliferation, inurban and rural India, of mobile phones. As the middle

class grows, so does the demand for higher education. InIndia there are traditions in which education and learningare highly valued. In traditional Indian culture, people werecategorised into hereditary caste groups which werehierarchically valued. Traditionally, the most importantcaste groups were the brahmans, and the main occupationof brahmans was as priests. As priests, brahmans were the

educated people in the society. Like medieval monks inEurope, brahmans were the holders of religious teachingand knowledge, and passed this teaching and knowledgedown over generations. In traditional Indian culture ahighly respected figure was the guru, or teacher; often aBrahman, and traditionally a religious or spiritual teacher.In the Indian Islamic traditions education was also valued,and many Muslim rulers were patrons of learning. Duringthe period of English colonial rule in India, the languagesand systems of learning and knowledge that had beenpassed down in Sanskrit, Arabic, Persian and otherlanguages were undervalued, and English was prioritised.No single act of British policy has had a more lasting


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influence on the evolution of modern Indian thought thanthe decision in 1835 to use governmental funds to supporteducation in the English language and to adopt the

curriculum prevalent in English schools. During theBritish colonial period in India, because brahmans had ahistory and traditions of learning, many of them took upopportunities to learn English language and Englisheducation. Consequently a large number of educatedIndians were brahmans, and many joined the Indian CivilService and Indian universities. After independence in 1947opposition to the caste system was a significant concern for

some Indian leaders, notably Ambedkar, and successivegovernments attempted to improve the position of people inlower castes. Reforms included implementing a reservationsystem in Higher Education, in which a number of places atuniversities are reserved for students from lower castes.By law, a certain portion of seats were reserved for theScheduled Castes. By policy, different state governments

endowed scholarships for children from disadvantagedhomes. Where they could they took advantage, spawningan entire generation of first-generation learners. Therewere also many more Scheduled Caste students atuniversity than ever before. These reforms have led togreater participation in higher education, and greatercompetition for university positions. Since the early 1990sthe Indian economy has opened and grown, to the extentthat a recent report predicted that India would become theworlds fourth most powerful country by 2012; asmeasured by a combination of economic, military andtechnological strength. However, despite education beingvalued generally in Indiansociety, access to higher


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education is limited. There are not enough universities orother higher education institutions to meet the demands ofthe huge, growing population. The population is increasing,

the economy is growing, the middle class is expanding, andthe IT industry in particular is thriving, but there has notbeen a corresponding growth in provision of education. AsPhilip Altbach, the professor of higher education anddirector of the Center for International Higher Education inthe Lynch School of Education at Boston College writesIndia has significant advantages in the twenty-first centuryknowledge race. It has a large higher education sector the

third largest in the world in student numbers, after Chinaand the United States. It uses English as a primary languageof higher education and research. It has a long academictradition. Academic freedom is respected. Yet, theweaknesses far outweigh the strengths. India educatesapproximately 10 percent of its young people in highereducation, still a rather low number by international

standards. Altbach also points out that there are relativelyfew high quality higher education institutions in India the world-class institutions are mainly limited to theIndian Institutes of Technology (IITs), the Indian Institutesof Management (IIMs) and perhaps a few others such as theAll India Institute of Medical Sciences and the TataInstitute of Fundamental Research. These institutions,combined, enroll well under 1 percent of the studentpopulation. There is clearly a need for an increase in theprovision of high quality higher education in India. InIndia, as well as an increasing demand for higher educationgenerally, there is a growing demand for foreign degreesand an increase in the provision of private higher education.


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As the public higher education system has been unable toprovide enough places for the demand, there has been agrowth in a range of private higher education providers. A

significant number of reputed private institutions wereaccorded the status of deemed universities, therebypermitting them to confer degrees, and private providersbecame important actors in widening access to higherlearning and training in India. Professor SudhanshuBhushan, Senior Fellow and Head of the Higher EducationUnit at the National Institute of Educational Planning andAdministration, India, has outlined in a report a number of

rationales for allowing foreign education institutions to beestablished in India. These are: to improve human resourcedevelopment; to upgrade the quality of Indian highereducation by internationalizing some specialized researchareas; to minimise brain drain; to promote competitiveness;and to attract foreign investment in education. It has beensuggested that if there were more foreign educational

institutions in India this might help to curb the flow ofstudents and graduates to the West. Though Bhushanpresents numerous reasons for allowing the establishmentof foreign educational institutions in India, he observes thatthere is no clear regulatory framework. Althoughregulations exist for entry and operation of foreign highereducation providers in India, there is no legislation tooversee the implementation of these regulations.Consequently private higher education in India has grownoutside of a clear legislative framework, and foreigneducation providers have had to fit within this unregulatedcontext. Despite this, a number of foreign highereducation providers have established operations in India.


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These have been mainly institutions from the US, the UKand Canada, but also include France. Some examples of thekinds of collaboration are: Entrepreneurship and

Management Processes International (EMPI), Delhi, offersforeign degree programs in collaboration with FrancesEcole Superieur du Management et Commerce, the USFordham and Wharton School of Business, and the UKUniversity of Brighton. The Dina Institute of HotelManagement, Pune, offers degrees in co-operation with theUK University of Middlesex. The Institute of InternationalManagement and Technology in Kolkata offers degrees in

partnership with the UK Oxford Brookes University; andthe Rizvi College of Hotel Management, Mumbai offersdegrees in partnership with the American Hotel LodgingAssociation. The majority of the courses offered by foreignhigher education providers are in management, withapproximately 80% in business and hotel management.Bhushan notes that there are a range of collaborative and

partnership arrangements between foreign and Indianeducational institutions, but no foreign institutions have sofar opened a branch campus in India. He suggests that thisis because the absence of the regulatory framework makesthe environment legally ambiguous. Several papersdelivered at the Australian International EducationConference 2007 provided information about India as amarket for International Education. One presented detailedinformation about the Indian market and projections for thefuture, drawing on IDPs recent research. This paperpresented projected calculations of numbers of internationalstudents, globally and in Australia, and predicted stronggrowth in the markets in South Asia, the Middle East and


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South America, in the period up to 2025. The growth in theSouth Asia market for international education is projectedas 4.7%. According to these projected figures, in 2025 there

will be a total of 428,000 international students from SouthAsia, and based on market share figures for the last 7 years,Australia will receive 77,000 of these. In Australia in 2025,according to these projections, there will be 86,000 studentsfrom China, 55,900 students from India, 18,000 fromIndonesia and 15,000 students from Malaysia these willbe the 4 main countries from which international studentswill come to Australia. According to the IDP authors, the

India market will continue to grow India will surpassChina in total population, and the number of 15 19 yearolds in India will continue to grow. The tertiary educationparticipation rate in India is 11 %, and the government aimsto increase this by 15% in 2015. There is a growingdemand for higher education in India, and domesticprovision cannot keep up with the demand. The Indian

government is planning to establish new universities andcolleges, but these will not be enough to meet the demand.The Indian 11th Five Year plan requires an additionalseven million new places in higher education by 2012 and atotal of 16 million additional places in higher education by2020. There are already many private higher educationproviders in India, such as Manipal University, NIIT, Birla,the Jaypee Institute, the Vedanta University, and manywealthy business groups in India are investing in education some with a background in education, others withbusiness backgrounds in other sectors (such as Birla). Thehigher education sector in India had 9.84 millionenrolments in 2006, and with a burgeoning middle class of


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approximately 200 million people, there is a strong demandfor higher education places which the public educationsystem cannot meet. Since changes in government

legislation in the mid 1980s there has been an enormousincrease in Australias international education industry.There has been a significant increase in internationalstudents coming to Australia, and Australian educationalinstitutions establishing international locations. Despite thehistory of links between Australia and India, the numbersof Indian students studying in Australia, while growing, isnot as large as the number from China. A comparison of

international students in the US and Australia in 2002-03showed that in the US, students from India were the largestnumber (74,603), followed by students from China, Korea,Japan, and others; whereas in Australia the largest numberof students was from Singapore (29,956), followed byHong Kong, Malaysia, China, Indonesia, and India (8,390).However by 2006 the number of Indian students in

Australia had increased significantly; the largest numberwas from China (90,287), and the second largest group wasfrom India (39,166). A significant proportion of Indianstudents in Australia are studying at post-graduate level approximately 60%. Many of them do a first degree inIndia, then enroll in a post graduate course in Australia.In the past there was a strong preference for studying in theUS & UK, but gradually more Indian students arebecoming interested in Australia, and some students haveheard of the Group of Eight universities. Since the attackon the US on September 11, 2001 it has been more difficultfor Indian students to get visas to the US, and Australia ischeaper, so more Indian students are choosing to study in


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Australia The small number of studies of Indian students inAustralia is not necessarily conclusive or consistent. Astudy by Sameena Ahmad, at the University of Melbourne,

found that the most influential factors for students inchoosing a university in Australia were the ranking andreputation of the university, the universitys researchinterest, and course content and suitability. Other factorswere recommendation by family or friends, interaction withthe universitys marketing personnel, cost and location.Another study by Michiel Baas, a post graduateinternational student from the University of Amsterdam

who was based at the Monash Asia Institute in MonashUniversity as a research fellow in 2005, has a differentperspective. Baas suggests that many Indian students aremore focussed on gaining permanent residence (PR) inAustralia than in their studies. Baas refers to a study byBob Birrell, of Monash University, that looked at thenumbers of international students who, after they

completed their studies, gained permanent residence inAustralia. Birrell found that of the international studentswho completed courses in Australia in 2003, 71 % of theIndian students obtained a permanent residence visa. Baasreports that this was consistent with his research amongIndian students in Melbourne, and suggests that the mostimportant reason why many Indian students come toAustralia is because they are attracted by the option ofapplying for PR after graduation. This suggestion thatmany Indian students are motivated by a desire to gainpermanent residence in Australia was confirmed by anumber of presenters at the Australian InternationalEducation Conference (AIEC) in 2007. Racquel Shroff,


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who works for IDP, now in Australia but for many years inIndia, presented a paper that focussed on the implicationsof the changes in regulations governing the General Skilled

Migration (GSM) program. She pointed out that prior to2001, international students who wanted to apply for PRhad to leave Australia and apply from overseas; in 2001 therules of the GSM program changed to allow internationalstudents to stay in Australia and apply for PR. Anotherchange in 2001 was that the requirement for workexperience in Australia was waived. With those changes inregulations the Australian government effectively began

encouraging international students to apply for PR,particularly those who had skills in demand those listedon the Migration Occupation Demand List (MODL).Another presenter at the AIEC, Eleanor Berry, who worksas a Careers counsellor at the University of South Australia,also stated that Indian students are coming to Australia forPR. It is clear that there are links between international

students and migration, and it seems that Australiangovernment policy is to encourage international studentswith skills in demand to apply for permanent residence.However the studies referred to above are not consistent:Ahmads study does not mention PR as a priority for Indianstudents, whereas the study by Baas suggests it is animportant consideration for many Indian students. Thisindicates that Indian students are not a homogenous group,and while some might be focussed on PR, and thereforewill not necessarily be focused on a high quality education,others are concerned with the ranking, reputation andtherefore quality of the university they attend. It also seemsclear that the numbers of students from India studying in


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Australia will increase in future. What remains uncertain iswhere they will choose to study within Australia, and thiswill depend on a range of factors, including the profile and

marketing of Australian educational institutions in India.An IDP study noted that in 2000 over a third of theinternational students in Australian universities werestudying off-shore. Many of these were enrolled in distanceeducation programs, but a significant number were alsoenrolled in campuses overseas. Setting up a campus offshore involves risks, but several have done so. MonashUniversity has campuses in Malaysia and South Africa;

RMIT University has a campus in Vietnam; WollongongUniversity has a campus in Dubai; and Curtin Universityhas campuses in Singapore and Sarawak. Establishing anoverseas campus is an expensive exercise, but one whichMonash Vice-Chancellor Richard Larkins is commited to.He was quoted recently as saying, in response to a questionabout Monashs Malaysia campus, that Asia is central to

Australias future, and unless local universities tap in, theyrisk falling behind new and improving universities acrossthe region. It allows us to build collaborations with localuniversities, industry and government in a way that you justcant do by remote control, he says. How shouldAustralian educational institutions raise their profile andbecome more engaged in India? There are several modelsof collaboration between Indian and foreign highereducational institutions that Bhushan identifies. Theseinclude joint course design; credit transfer; twinningarrangements; collaboration through distance learning;student and faculty exchanges; and academic fusion. Credittransfer is where part of a program is completed in India


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and credited to a foreign institution where the rest of theprogram is undertaken. Twinning arrangements vary, butgenerally involve a student studying part of a degree at an

Indian institution, and then transferring and completing thedegree at a university in another country. For example,Ansal Institute of Technology at Gurgaon, Haryana offersdegrees in association with three different universities inthe US; and Daly College, Indore and Loyola College,Chennai offer degrees in partnership with a university inthe UK. One model which is slightly different from thoselisted by Bhushan is that which Deakin University has

pioneered in India; setting up an office in India which canfacilitate a range of activities. Deakin Universityestablished an office in New Delhi in 1996, and beganmanaging recruitment from India from that office in 2000.Australian universities generally recruit in India througheducation agents, and the Deakin New Delhi office wasinvolved in providing support for these agents, as well as

marketing and market intelligence. Gradually it began toalso work in building a media presence for Deakin in India,developing strategic business and institutionalcollaboration. The demands on the office grew, and thereare now additional staff in the New Delhi office fromvarious different Deakin faculties. Australias profile wasraised positively in India with the Indian Premier League(IPL) cricket matches from April June 2008. A number ofAustralian cricket players played with Indian teams, andreports indicate that the Australians related well to theirIndian team mates. Australias image generally in Indiawas also lifted by the fact that Australian cricket playerShane Warne was the captain and coach of the Rajasthan


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Royals, the team that won the IPL trophy. If Australianeducational institutions were able to associate themselveswith cricket or cricket players they might be able to build

on the good will established towards Australia through theIPL cricket series. Australian cricket players are widelyknown and admired in India, and Brett Lee in particular ispopular not only because of his cricket talent but because ofhis hit song collaboration with the famous Indian playbacksinger Asha Bhosle. In the longer term, if Australianeducational institutions have established offices in Indiathey will be in a much better position to monitor the

developments of the regulatory framework for foreigneducation providers in India. This is an issue that the Indiangovernment wants to address an Indian newspaper articlein 2006 stated The ministry of commerce has issued aconsultation paper titled Higher Education in India andGATS: An Opportunity for comments from stakeholders.The paper seeks to explore the opening up of higher

education to foreign players for tapping the trade potentialin education services under the WTO regime. It attempts toinitiate a debate on how the country should allow foreigneducation providers in the sector. Sometime in future theregulatory framework will be clarified, and if Australianeducational institutions already have a base in India theywill be in an advantageous position to then consider furtheroptions. Future options could include twinningarrangements and other forms of collaboration, and couldinclude the establishment of campuses in India. The growthin the Indian economy and the Indian middle class, and theincreased demand for higher education with not enoughhigher education places within India provides opportunities


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for Australian higher education interests, to further developthe provision of higher education to Indian students byAustralian educational institutions. It is both in Australias

and Indias In conclusion, there is a large and growingdemand in India for higher education, and projectionssuggest that in future Indian students will be the secondlargest group of international students in Australia. TheIndian government is committed to increasing the numberof higher education places available, but cannot meet thedemand; and in particular there is a shortage of high qualityeducation institutions. It is considering options for allowing

foreign higher education institutions to establish campusesin India. Australian educational institutions should developopportunities for higher education collaboration by openingoffices in India, to raise the profile of Australian highereducation, and position themselves for future transnationaleducation opportunities.

COACHING CLASSES:


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non-formal market

The $6.4bn coaching class market is growing at ~15% yoyled by a dearth of quality institutions in India and cut-throatcompetition for entry into professional colleges. Notably,80% of the market lies in subject-based tutoring in schoolsand colleges and thus is highly dependent on localbrand-teachers. Despite its non-regulated nature, people-centric models make scalability onerous in the space and

cap value creation. Mahesh Tutorials is the only player tohave achieved a relatively higher scale (revenues of~Rs700m) on the back of some process-driven effort.While the Grad and Post-Grad test prep market ($1.2bn)offers limited scalability as it is more content-driven,FIITJEE, Bansal Classes, IMS, TIME and Career Launcherhave achieved scale within the segment and are extending

their presence across segments to expand the addressablemarket.

SegmentRevenues($ m)

FY08E

Revenues($ m)

FY12E

Growthdriver Key risks

keyplayer s

View


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CoachingClasses 64 % ofnon -formalMarket

Caters tothree distinctSubsegmentsTuitions -$51bnGraduationTest Prep-$1bnPostGraduationTestPrep -$216m

6 ,4 00 11,200 Poor qualityof teachingin existingeducationsystem Shortage of

quality formaleducationinstitutes -increasingcompetitionfor admissionsat grad andpost grad level

A person-centricbusiness;scaledifficult toachieve

unlessbusinessbe comesprocess -drive n

Agarwalclasses SinhalClasses ChateClasses

JK Shah SukhSagarBrillianceKarlaShukla MaheshTutorial FIITJE E BansalClasses CareerLauncher TIME CareerForum IMS

Scalability is achallenge in80 % of th e market(tuitions).It is less of achallenge in

smaller sub-segmentswherecoach in g isdependent moreon content ratherthanindividual brandteacher

THE QUALITY CONUNDRUM: GENESIS OF

COACHING CLASS MARKET

Indias already inadequate education system is being

further stretched due to its increasing population. So muchso that a $6.4bn segment (64% of the total nonformal IES;next only to K12 and HE) coaching classes hassprouted around formal IES. The market is rapidly growingas the Indian education system lays heavy emphasis onmarks scored in an exam. A shortage of quality HEIs isfurther fuelling growth. This is evident in the fact that the

number of seats in Indian IIMs (Indian Institutes ofManagement) has increased merely 3% (2003-2008) butthe number of CAT aspirants has shown a CAGR of 19%in the same period.


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We have segmented the market into three broad categories subject/ concept-based tuitions catering to K12 and HEsegments (estimated at $5.1bn), Graduation test preparationmarket ($1.1bn) and Post Graduation test prep market(~$220m). While we expect some pockets to grow faster,we estimate 15% CAGR for the segment over FY08-12.

Interestingly, players are also looking to provide coachingthrough online media a model quite popular in the globalmarkets, especially developed ones. However, the modelwould take time to evolve in India given the negligiblebroadband connectivity (< 1%).

The coaching class market is typically fragmented and

regional in nature as a big chunk, i.e. tuitions (6th-12thgrades and tertiary level), is subject-based and thus highlypeople-driven with high dependence on a local brand-teacher. However, pockets like grad and post grad testprep are more process-driven as content assumes higher


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relevance than teachers, and content can be standardizedacross centers.

Tuitions market low scalabilityAt $5.1bn, the tuitions market forms 80% of the coachingclass opportunity and is inherently difficult to scale. Ahighly fragmented market, the business is personcentric andindividual teachers attached to schools/ colleges are muchin demand. For exams held on a national level (10th, 12thand university exams at tertiary level), our interactions withindustry players throw up instances of students moving

encase to another coaching class, to follow the brand-teacher who has joined a particular institute. Thus, crowd-pulling ability in this segment rests with brand teachers(especially attached to schools/ colleges) and not brand-institutes. This, in turn, translates into lack of stability andscalability for coaching classes.

Subject-based tuitions the largest in coaching class

marketTotalstudents(m)

% takingcoaching

Studentsenrolled(m)

Average feepa (Rs)

Market ($m)

School subjecttutoring (6th-12th)

90 22 19.8 10,000 4,950

Tertiary education 11 5 0.55 10,000 138


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Total subject basedtuition market

20.35 5,088

By reducing their overdependence on individual teachers

(more than one teacher Teaching one subject) and adoptinga more process-driven approach, a few players havemanaged to gather relative scale. MT Educare (brandname Mahesh Tutorial), a renowned name inMaharashtra, has managed to reach revenues of ~Rs700m.However, we believe the company would find it difficult toscale-up Further in this particular business as despite beingone of the largest players, it holds Only 3% share of thestates total tuitions market.

Grad Test Prep market medium scalability

At $1bn, the Grad Test Prep market accounts for 17% ofthe coaching class Opportunity. The test prep market forentry into a graduation course is dominated by theengineering segment (IIT-JEE, AIEEE and CET market

together form 60% of the segment), followed by the nextmost-coveted profession of medical services (~23%).In the past, the eligibility criteria for a few HE professionalcourses have been seen to change with new political partiesassuming office. For example, admissions to these coursescould be based on the score/ marks secured in 12th gradeexams or aspirants could have to take AIEEE and CET

entrance tests depending on the preference of theincumbent state government. This presents a key risk tocoaching class players operating within the segment aswhen admissions are based on the merit list of 12th grade,coaching for AIEEE and CET is rendered redundant. On


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the other hand, IIT-JEE market players do not face this riskas entrance exams are always conducted on a national level.

Grad Test Prep Market

Most segments in the market have entrance tests that areconducted on a national level, which means that players canscale up to an extent. Further, the tests are based onapplication of concepts and with test preparationworksheets and materials forming the study curriculum,

dependence on brand-teacher is relatively lower.

Graduation test prep market IIT-JEE market

dominate

Totalstudents

% beingcoached

Studentsenrolled

Averagefee (Rs)

Marketsize ($ m)


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IIT- JEE 400,000 95 45,000 45,000 428

AIEEE 600,000 50 300,000 20,000 150

CET 120,000 90 108,000 20,000 54

CLAT 25,000 50 12,500 4,000 1.25Medicalexams

500,000 80 400,000 25,000 250

SAT 5,000 50 2,500 30,000 2

CA 250,000 80 200,000 12,600 63

Post Grad Test prep market scalable but small

At $200m, the Post Grad Test prep market is relativelyeasier to scale but forms only ~3% of the coaching classopportunity. Apart from being held at a national level, theentrance tests of these courses are more aptitude-based.Thus, this category of coaching classes has relatively lower


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dependence on individuals, and higher focus onstandardized content and study material (a keydifferentiator). With ~300,000 applicants every year, the

market is dominated by CAT aspirants (market at $90m).

Post Grad Test Prep Market

Totalstudents

% takingcoaching

Studentsenrolled

Averagefee (Rs)

Market

size ($m)

CAT 300000 80 240000 15000 90CET 600000 50 300000 10000 75GATE 168000 80 134400 8000 27GMAT 15000 80 12000 20000 6GRE 40000 95 38000 8000 8

IELTS 100000 90 90000 3000 7TOEFL 60000 90 54000 3000 4Total after gradtest prep market 868,400 216

One of the largest markets in the post grad test prep space,the CAT is expected to go online in 2009 (IIMsadministering and conducting the tests have invited bids forIT-infrastructure providers). Notably, the change in thetest-taking mode should not affect operations of theexisting players IF the content remains unchanged. Theincumbent leaders in the MBA test prep space IMS,


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Career Launcher and TIME have a cumulative 60% shareof the market. With 300,000 students appearing for the testevery year, Delhi (40,000 aspirants) is the largest market

followed by Bangalore (30,000) and Mumbai (15,000).

The CAT Fight:

The number of seats in Indian IIMs (Indian Institute

of Management) has increased merely 3% (2003-2008) butthe number of CAT aspirants has shown a CAGR of 19%in the same period! Hence, the acceptance ratio (admittedto applicants ratio) has been declining and this serves thecause of coaching classes targeted at this group.

Key players in the coaching classes segment

Key players History StatusCurrentnetwork

Revenue Rsm Business Model

MSStarted in1977 Private 185 1000

Strong focus on MBA testprep,diversifying into CertificationProgrammes, Publications,LanguageTraining & Formal Education

CAREERLAUNCHER

Started in1995 Private 135 900

Strong focus on MBA test prep,diversifying into preschools, K12

schools, HE institutes, vocationaltraining to providing coaching andcounseling at all levels

T.I.M.EStarted in1992 Private 150 1000

Focus on MBA/ Engg/ MCA entranctests

CAREER FORUMStarted in1989 Private 57 120

Focus on Post Graduate (MBA testprep)

MAHESHTUTORIALS

Started in1988 Private 168 430

Focus on 10th,12th grades (Scienceand Commerce streams), AIEEE,Engg/ Medical, CET, CA


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FIITJEEStarted in1992 Private 35 1200 Focus on IIT-JEE entrance test

IQ: LOW

A non-regulated space, the $6.4bn coaching class market isone of the largest opportunities within the IES (followingK12 and HE) and is expected to witness 15% CAGR till2012. Yet, we see limited value creation potential in thespace as scalability is a challenge in 80% of the market(tuitions). In the remaining 20% of the market offeringcoaching for aptitude-based entrance exams to engineering/professional courses, players find it relatively easier to

attain scalability.While the coaching class market remains largely regionaland highly fragmented, the Post Graduation test prepsegment has seen emergence of a few national chains namely IMS (revenues of Rs1bn), Career Launcher(Rs900m), Career Forum (Rs900m) and TIME (Rs1bn).Players like Mahesh Tutorial in the tuitions market

(Rs700m) and FIITJEE (Rs1.2bn) in the IIT Grad Test prepmarket have managed to establish scale to some extent.Interestingly, the space has seen some PE activity includingby Helix Investments ($12m for a 30% stake in MaheshTutorials), Gaja Capital ($8.3m in Career Launcher), andLightspeed Venture Partners and Sequioa Capital ($30m in


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Tutor Vista in three rounds). We believe scalability can beimproved by companies that manage to create strongprocess-driven model by reducing dependency on brand

teachers, or by formulating strategies to retain brand-teachers (strong incentives such as ESOPs or revenueshare).

project on education market

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