ISB set to break even this year

To create corpus to drive research led style of teaching

The Indian School of Business (ISB) is expected to achieve financial break even in the current financial year.

The management school, which has become the biggest business school in India in a relatively short time of three years, is also mulling the creation of a corpus to fund its future research initiatives.

According to sources in ISB, the school has recorded revenues of between Rs 65 crore and Rs 70 crore for the last financial year ending March 31, 2004, which would represent a 60 per cent growth over the previous year.

ISB, which has invested close to Rs 220 crore in its campus on the outskirts of Hyderabad, is carrying an accumulated loss of Rs 30 crore in its books which is expected to be wiped off in the next three years.

Ajit Rangnekar, deputy dean at ISB, was not willing to divulge financial numbers and pointed out that the school had a different business model as compared to other business schools in India.

"Our DNA is that of a research led management school. We do not believe in making a surplus and have modelled the school on the likes of leading global management schools like Wharton, Kellogg, Stanford and Harvard. These schools are always running on deficit which does not mean that they are financially unhealthy but yet pursue a research led management curriculum," Rangnekar said.

The school which has borrowings of approximately Rs 130 crore is understood to be actively pursuing the creation of a corpus to drive its research led style of teaching management to students.

"We are looking at creating a corpus. A final shape to our thinking in terms of the size of the corpus and how we are going to raise it will be crystallised in the next couple of months," he said.

ISB, has according to sources from time-to-time swapped high cost debt with fresh borrowings from the market at sub-prime lending rates. ISB has been carrying the same quantum of debt on its balance sheet since March 2003 and has managed to reduce the average cost of funds to around nine per cent.

Additionally, to ensure that there is no wastage of funds, ISB is learnt to have gone slow on a number of infrastructure related projects which are not core to its operations.

"We have enough capacity in terms of infrastructure but have decided to go slow on certain projects like the proposed 'students village' which is typically peripheral infrastructure," Rangnekar said.

This apart, ISB has started to focus on the 'executive education' segment as a revenue driver in the coming years.

The school has, according to sources, seen revenues from its executive education programme go up and touch close to Rs 25 crore for the last financial year ending March 31, 2004.