It’s back to school for several coaching institutes of the country. Many prep schools known to coach students for admission to business schools and the Indian Institutes of Technology (IITs) are now making a place for themselves in the business of mainstream education.
Leading institutes, including Triumphant Institute of Management Education (TIME), Career Launcher, Career Point and FIITJEE, are spreading their business in the field of primary and higher education. Recently, TIME picked up a stake in the spoken English coaching centre, Veta.
Manek N Daruvala, the founder director of TIME, says his company has experience in the sector so it is easier for them to expand in this segment. The Rs 200-crore company entered the pre-school segment with TIME Kids and now has 50 schools in six states — Andhra Pradesh, Tamil Nadu, Kerala, Karnataka, Maharashtra and Gujarat. By 2012, TIME plans to have over 100 pre-schools.
Apart from this, TIME also has co-educational, non-residential CBSE schools. As of now TIME School operates out of two locations in Hyderabad, its base. “TIME is constantly diversifying and entering into new areas. Acquiring majority stakes in Veta is a part of this expansion strategy,” says Daruvala adding, “Our expertise in content development and franchisee management will act as an important factor in our future acquisition plans.”
In the north, Career Launcher (CL), which forayed into the K-12 (kindergarten to 12) sector in 2005-06, has caught the attention of HDFC which invested Rs 50 crore in its Indus World School (IWS) early this year. Private equity firm Gaja Capital Partners, which invested $8.5 million (around Rs 40 crore) in IWS in 2007, is a co-investor. CL also runs the Indus World School of Business (IWSB). Currently, it is present in over 175 cities of India with more than 225 learning centres.
Career Launcher’s co-founder Satya Narayanan saw legacy players operating in a licence-sellers’ market and decided to meet the demand-supply gap at the K-12 level by launching his own brand of schools. IWS is present in over 18 locations across the country.
“We hope to have a couple of hundred schools in the next few years. It is a large play. We could be growing beyond a few thousands in different formats,” says Satya.
Satya says IWS will focus on an asset light, scalable model where investing in infrastructure would not be a necessity. It plans to expand and cater to about 10,000 students in the next few years. As of now, it has 5,000 students. IWSB, on the other hand, has one campus with over 400 students.
For Career Launcher, 12 per cent revenue comes from the K-12 and B-school, 55 per cent from test prep and 30 per cent from vocational programmes. In the next three years, vocational will be the largest revenue-generator for the company, followed by schools, test preparation and higher education. The company says expansion in these areas will help it generate ten times its current revenue. On its website CL mentions its revenue at Rs 90 crore (as of 2008).
For the Kota-based Career Point, which raised Rs 115 crore last year through an initial public offering, the next plan is to venture into universities, after setting up schools. Career Point, with a market capitalisation of Rs 451 crore, says since it is already in the education sector, it has an obvious advantage. “Students have already experienced our service, so it is comfortable for them to join our schools, rather than go to a new private institute. We understand the aspirations and expectations of students, so we can serve them better,” says Pramod Maheshwari, CEO, Career Point.
The company is setting up two universities — one in Rajasthan and another in Himachal Pradesh — that will have engineering, management and other streams, and would be operational from April 2012.
FIITJEE, an IIT-JEE coaching institute, will launch its first CBSE school in Bhopal in April 2012. “It makes logical sense for us to get into this segment as we have been handling the CBSE curriculum for the past eight years,” says Ajay Koul, vice president, Business Alliances, FIITJEE. He adds that though in the long term, FIITJEE might look at expanding in the college and university sector, at present the focus is on the K-12 segment.
Industry experts say that though these test preparation institutes are doing well in the K-12 segment where the demand is high, the real test will be in the higher education segment which is largely about brand play.
