business in education september 2011
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Business in Education September 2011
© Indalytics Advisors l www.indalytics.com l businessineducation@indalytics.com 1
© 2011, Indalytics Advisors Private Limited | Indalytics.com | businessineducation@indalytics.com
INDALYTICS
ADVISORS BUSINESS IN EDUCATION
September 2011
Business in Education September 2011
© Indalytics Advisors l www.indalytics.com l businessineducation@indalytics.com 2
About Business in Education
Business in Education is a monthly report, which is focused on the supply side of education sector in India. The
report aimed at helping education services providers with the latest activities in the sector.
The report covers the trends, as well as the opportunities in the Indian education sector, which were highlighted in
media. It is designed for the individuals and organizations, which are in the education business, or are planning to
enter it. It is also helpful for various products and services providers to the sector.
In order to get free subscription to Business in Education, please mail us at businessineducation@indalytics.com
Business in Education September 2011
© Indalytics Advisors l www.indalytics.com l businessineducation@indalytics.com 3
Table of Contents
Activities of Major Players ............................................................................................................................................. 4
Companies are collaborating with government ........................................................................................................ 4
Institutes are also tying-up with other organizations ............................................................................................... 4
Increasing use of ICT ................................................................................................................................................. 5
Collaboration between foreign and Indian players ................................................................................................... 5
Companies going for fundraising and mergers ......................................................................................................... 5
Opportunities in the sector ........................................................................................................................................... 7
Opportunities in Public Private Partnerships ............................................................................................................ 7
Collaboration with foreign players ............................................................................................................................ 7
Other Prominent Trends in the Sector .......................................................................................................................... 9
B-schools revising their curriculum ........................................................................................................................... 9
Government taking steps to improve education level in the country ...................................................................... 9
Uniformity in K-12 ................................................................................................................................................. 9
Pre-school education might get formalized ........................................................................................................ 10
RTE Act expected to bring changes in the system .............................................................................................. 10
Changes in education loans ..................................................................................................................................... 10
Companies’ Score Card ................................................................................................................................................ 11
List of Organizations .................................................................................................................................................... 13
Business in Education September 2011
© Indalytics Advisors l www.indalytics.com l businessineducation@indalytics.com 4
Activities of Major Players
Companies are collaborating with
government
Many major players in the education sector are
exploring opportunities to work with the
government agencies in partnerships.
In one such move, Sterlite Technologies Limited –
provider of connectivity solutions for the power and
telecom industries– will be working with Bharat
Sanchar Nigam Limited (BSNL) to connect 120
universities across the country.
As a part of Ministry of Human Resource
Development (MHRD), ‘National Mission on
Education through Information and Communication
and Technology (ICT)’ program, Sterlite Technologies
Limited would lay down the network, which would
connect 12 universities, and would facilitate high
bandwidth data transmission for e-learning and
video-based learning. The objective of the program
is to make every university in the network to
function as an e-university. The total contract valued
at about INR48 crore.
Another company, CORE Projects & Technologies
Limited has bagged a contract from Gujarat
Government to implement Computer Aided Learning
(CAL) in 3,236 Primary Schools in the state. Total
value of the project is worth INR124 crore. CORE,
which is already present in 645 schools in Gujarat,
has got similar CAL & ICT contracts for 2,622 schools
in Haryana, 1,250 in Punjab, 947 in Maharashtra, 267
in Meghalaya, and 73 schools in Nagaland.
Institutes are also tying-up with other
organizations
In addition to the government, educational
institutions are also tying-up with other
organizations to help them in their educational
ventures.
Manipal Education and Bank of Baroda (BoB) have
come up with a unique banking school. The school
named the Baroda Manipal School of Banking
(BMSB) has been set up with an investment of INR30
crore to offer training to future employees of BoB
before they start working as probationary officers.
The school will act as another recruitment mode for
the bank, which hires approximately 2,000 officers
as well as 2000 clerks every year through the
probationary officers’ exams. The course would have
a fee of INR3 lakh, and would include a nine month
in campus training followed by a three month off
campus internship at any of the BoB branches. The
bank will take the job guarantee of the students
passing out of it and attaining the Postgraduate
Diploma in Banking and Finance by Manipal
University.
In another instance, Educomp Solution Limited has
also formed a joint venture with Sri Kanchi Kamakoti
Peetam to setup and manage 100 schools across the
country. The schools will be known as Sri Kanchi
Sankara Universal Academy and will come under the
patronage of Kanchi Sankaracharya Jayendra
Saraswathi. As per the JV, Educomp will take care of
the setup and management, while the Kanchi Mutt
will provide the land and philosophical learning.
Business in Education September 2011
© Indalytics Advisors l www.indalytics.com l businessineducation@indalytics.com 5
Increasing use of ICT
One of the most active areas in the education sector
is the ICT, which has witnessed a lot of action in the
month of August. Canadian firm Smart Technologies
has come up with its full and multi-touchscreen
interactive white boards in India. The full
touchscreen whiteboards, which support integration
of Microsoft, Macintosh and Open source softwares,
can also be configured to the mobile phones of
students for exchange of data. Smart technologies
has appointed HCL Infosystems as its distributor in
India, and is selling its products through its 250
channel partners in the country.
Another firm banking on ICT in education is London-
headquartered global media group Pearson
Education Services. The company has launched its
VSAT based Engineering and Medical Prep Program,
‘EduriteONE’. The service will provide remote
delivery of coaching for engineering and medical
entrance exams to remote towns and semi-urban
centers across India, from its Bengalooru studio. The
company has started the service through one of its
schools, Gyansagar International School in Sohagpur,
located in Madhya Pradesh.
Collaboration between foreign and
Indian players
Many Indian education companies are collaborating
with their foreign counterparts to attain synergies.
This has resulted in education outsourcing emerged
as a new trend in the sector. University of Science
Malaysia (USM) has outsourced the entire process
of education to KLE Group of Institutions. KLE Group
has setup a college on a 10-acre campus in Belgaum,
which will impart medical education exclusively to
Malaysian students. The college will run on the
curriculum of 5-year MD course as per USM syllabus.
Further, the students will also be selected directly by
USM. The concept has emerged to tackle the issues
faced by USM in opening a college in Malaysia due to
tougher rules and dearth of teachers.
Companies are exploring foreign markets. Chennai
based Everonn Education Limited is planning to
enter foreign countries, including Africa. The
company, which is expected to achieve 22% of its
revenues from international operations in next two
years, is eyeing Africa, after the Prime Minister’s
US$700 million aid for setting up institutions and
training programs across Africa, announced in May
2011.
Similarly, there are foreign players, which are
expanding in India. Pearson Education Services is
planning to expand its English language tests in
Indian cities through partnerships. The company’s
Pearson Test of English (PTE Academic) is a
computer-based test designed for international
students, for testing their proficiency in the English
language. PTE Academic is already accepted by
various overseas government departments and
education institutions, such as the Harvard Business
School and Yale University.
Companies going for fundraising and
mergers
In order to fuel their expansion plans, companies are
going for fundraising. Educational services provider
Tree House Education and Accessories Limited,
which has 223 pre-schools under its brand name
"Tree House" across 33 cities in India, went for an
IPO in the month of August 2011. The IPO, which had
a price band of INR135 — INR153 a share, got
subscribed 1.85 times, and finally opened at a price
of INR132.40 on August 26.
Business in Education September 2011
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The company is planning to use the proceeds for
expansion of pre-school business; acquisition of
office space; procurement of exclusivity rights to
provide educational services; construction of
infrastructure for educational complexes in
Rajasthan and Gujarat; and repayment of a debt of
INR28.5 crores. Tree House is also backed by PE
players Matrix Partners and FC Advisors (Mauritius)
Ltd.
Similarly, Everonn Education Limited, is planning to
raise debt for investing approximately INR150 crore
CAPEX in the present fiscal. The company is expected
to invest the amount in its ‘iSchool’ model. Everonn
is planning to increase its revenues by 50% during
the present fiscal year.
Companies are also taking the path of inorganic
growth and going for mergers. Education content
provider Repro India has acquired printing operation
of Macmillan. The company is focusing on content
creation, aggregation and dissemination in the
Indian education sector. The acquisition is expected
to add approximately INR250 crore in five years to
Repro’s top line.
Business in Education September 2011
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Opportunities in the sector
Opportunities in Public Private
Partnerships
Increasing focus by the center as well as state
governments on the educational development has
generated opportunities for the players in the
sector. The government of Madhya Pradesh is
floating tenders to invite private players to set up
computer labs and other infrastructure in various
schools.
The government has also announced INR1,300 crore
plan to overhaul primary education in the state. It
will be investing INR250 crore to employ teachers to
improve the student-to-teacher ratio from 45:1 to
30:1, and INR336 crore for building girls’ hostels in
201 backward blocks of the state.
Government of Tamil Nadu, under the Sarva
Shiksha Abhiyan and the Rastriya Madhyamik
Shiksha Abhiyan, is bringing many new changes in
the state education. It will be spending INR1,082.71
crore on infrastructure development in schools. The
government will also be appointing 21,487 teaching
and non-teaching staff, and creating posts for 16,549
part-time teachers for physical education, painting
and vocational education.
Tamil Nadu is also advocating the need of ICT in
schools. According to the Chief Minister J.
Jayalalitha, schools’ textbooks will be computerized.
Further, the knowledge will be disseminated through
computers in classrooms which, in turn will be linked
to the main servers at the schools.
In another ICT initiative by the central government,
the Consortium for Educational Communication
(CEC) is planning to come up with 20 new education
specific television channels by February 2012. The
channels will be dedicated to education, and cover
e-learning by broadcasting audio-visual lectures. This
will provide opportunities to media content
producers to offer their services to CEC.
Another interesting opportunity has been indicated
by the government of Rajasthan, which is launching
an education specific social networking site, on the
line of Facebook. The portal will help students with
tips and expert comments on subjects such as
physics, chemistry and mathematics. Besides this,
the portal will have other functionalities of a social
networking site, which will help students to open up
their individual accounts, add friends, upload
photographs, and connect to others on related
topics.
Collaboration with foreign players
Many Indian higher education institutions are
looking for collaboration with foreign universities. As
the Indian education system is getting globalized,
many universities and colleges are collaborating with
their foreign counterparts for curriculum and
student exchange. Collaboration helps Indian
institutions in enhancing their brand value, as well as
the quality of the curriculum.
The biggest collaboration opportunity that Indian
educational institutions are eying at present is the
increasing number of universities and education
facility centers in the gulf countries. Places such as
Abu Dhabi, Bahrain, Dubai and Qatar are investing
heavily in education. As they are attracting foreign
investment and talent, this has provided Indian
educational institutions and service providers, an
opportunity to help the gulf countries develop their
system.
Business in Education September 2011
© Indalytics Advisors l www.indalytics.com l businessineducation@indalytics.com 8
Australia, on the other hand is losing its status as a
preferred education destination. A strong Australian
dollar has resulted in a drop in student visa
applications from India. A decrease of 63% has been
witnessed in the number of student visa applications
from India to Australia between July 2010 and June
2011, as compared to the same period in the
previous year. As present, there are more than 300
collaborations between Australian and Indian
universities for sharing of knowledge and expertise.
While Australia is becoming a less preferred
destination, 11 US colleges and universities are
expected to have partnership programs with India.
As a part of US President Barack Obama’s and Indian
Prime Minister Manmohan Singh’s 21st Century
Knowledge Initiative, the 11 US institutions will
conduct various activities and will work on
prospective partnerships with their Indian
counterparts. The initiative will provide US$10
million in combined funding for facilitation of
networking and development of junior faculties
among the universities.
After the initiative, the Indira Gandhi National Open
University (IGNOU) Community College initiative is
exploring partnership opportunities with the US
Community College system.
Business in Education September 2011
© Indalytics Advisors l www.indalytics.com l businessineducation@indalytics.com 9
Other Prominent Trends in the
Sector
B-schools revising their curriculum
Many major B-schools in India are reviewing their
curriculum and are taking feedback from the
recruiters to alter the subjects. After the global
financial crisis, all major B-schools across the world
have started giving more emphasis to ethical
practices at workplaces. In India, all the Indian
Institute of Management and other major B-Schools
such as SP Jain Institute of Management &
Research, and Symbiosis Institute of Business
Management have changed, or are in the process of
changing their curriculum. B-schools are also laying
importance on the industry internship, and are
making adequate changes in the curriculum so that
the students get the opportunity to learn more at
work. Indian School of Business (ISB) is likely to
extend the duration of its one-year residential Post
Graduate Program in Management (PGPM), by
including six-month internship.
Besides their regular programs, B-schools are also
revising the curriculum of their executive education
programs, to make them more in sync with the
industry requirements. Corporates are now asking
for a quantifiable return on investment on the
money they are spending on their employees’
executive education programs. As a result, B-schools
are now coming up with special curriculum, which
are inclined toward the specific needs of students,
and can help them in relating their learning at B-
schools to their work. ISB has come up with a new
system by creating an organization structure, which
focuses on industry verticals such as manufacturing,
oil and gas, and financial services.
Government taking steps to improve
education level in the country
The Government of India has taken an initiative
toward improving the level of education across the
country. Prime Minister Manmohan Singh has
announced of a commission which will be headed by
an eminent educationist, and will be assisted by
experts from the fields of higher, technical, medical,
secondary, elementary, vocational and other sectors
of education. The commission, which will suggest
ways to the Government to improve all levels of
education, will also have inputs from the reports of
the National Knowledge Commission, the Yashpal
Committee and the Valiathan Committee. However,
experts feel that the commission should also include
foreign experts, as the sector is now collaborating
with many foreign bodies due to the globalization of
education.
Uniformity in K-12
The government is also planning to bring uniformity
in the pattern of education till class XII across the
country, in order to increase the quality of
education, primarily at the secondary and higher
secondary levels. The panel, constituted by the
government to suggest policy changes for education
in the XII five-year plan has advocated
universalisation of secondary education by 2017.
The panel has also asked for integration of the
10+2+3 pattern of education of various states into
one. The panel has stated that variation in patterns
at state level is causing hindrance in meeting the
goal of providing quality education. Further the
panel has also suggested making the teaching
methods of science and mathematics in schools
more job-oriented. It also suggested that the
students should have the option to choose their
electives at class IX itself, rather than class XI.
Business in Education September 2011
© Indalytics Advisors l www.indalytics.com l businessineducation@indalytics.com 10
According to the XI five-year-plan, a sum of
INR269,873 crore was allocated for the ministry of
human resource development. Out of this,
INR1,84,930 crore (69%) was allocated for the
department of school education and literacy, and
the remaining for the department of higher
education.
Pre-school education might get formalized
Government of India is also planning to formalize
the pre-school education system in the country.
However, the education will be imparted without
the levying the burden of school bags and books on
children. According to the Human Resource
Development Minister, Kapil Sibal, though the
preschool education might be formalized, the pre-
school age group (4 – 6 years) will not come under
the Right to Education, which means the education
would not be compulsory.
RTE Act expected to bring changes in the system
As many state governments are implementing the
Right to Education (RTE) Act, schoolteachers might
now have to work for 45 hours a week, including
preparation, as specified in the act. Schools now will
also have to rework on the number of hours and
teachers, in order to abide by the act. The number of
hours specified by the act are 800 (200 days a year)
for classes I to V and 1,000 (220 days a year) for
classes VI to VIII.
The act also specifies the minimum number of
required teachers. For classes I – V, minimum
number of teachers should be two if the number of
students doesn't exceed 60, three for 61 to 90
students, four for 91 to 120 students and five for 121
to 200. Further, for classes VI – VIII, schools will have
to employ at least one teacher each for science,
mathematics, social studies and language subjects
for the three classes. The schools will have to
maintain the teacher-student at 1:45. Also, for
schools having more than 100 students per class,
there needs to be a full-time head teacher,
supported by part-time instructors for subjects such
as art education, physical education and work
education.
Changes in education loans
Education loans are also expected to witness some
changes in coming future. Indian Banks' Association,
which is working along the lines of the education
loan scheme in the UK, is expected to allow
extended repayment period of up to 15 years for
education loans, against the present 5 — 7 years.
The step is expected to be beneficial for both the
banks, as well as the borrowers. Banks are expected
to witness decrease in loan defaults, with the
introduction of extended repayment periods. This in
turn will also lead to the decrease in provisions,
which the banks make for these loans. On the
students’ side, it will help those students, who enroll
in private colleges, and are not able to get god job
placements from their colleges.
The new scheme will have a maximum loan limit of
INR10 lakh for studies in India and INR20 lakh for
studies abroad. Further, there will be no margin
money for loans up to INR4 lakh. For the loans above
INR4 lakh, margin money will be 5% for studies in
India and 15% for studies abroad. Also, parents will
have co-obligation but no security for loans up to
INR4 lakh. For loan amount of INR4 lakh — INR7.5
lakh, collateral will be in form of a suitable third-
party guarantee. And for loans above INR7.5 lakh,
parents having co-obligation will have to provide
tangible collateral security along with assignment of
future income of the student for payment of
installments.
Business in Education September 2011
© Indalytics Advisors l www.indalytics.com l businessineducation@indalytics.com 11
Companies’ Score Card
Operating
Margin
Q1-2012
(%)
Net Margin
Q1-2012
(%)
Debt-
Equity
Ratio
Q1-2012
(%)
EPS
Q1-2012
(INR)
Price-
Equity
Ratio
August 31,
2011
Market
Price
change
August
2011 (%)
Computer
Software
Training Aptech Ltd. 43.2% 41.5% 0.0% 6.81 99.42 -10.3%
Computer
Software
Training BITS Ltd. 25.0% 10.0% 0.5% N.A. N.A. -1.8%
Computer
Software
Training NIIT Ltd. -4.0% -6.2% 60.0% -0.60 42.71 -14.8%
ERP for
Educational
Institutions
Software
Technology
Group
International
Ltd. N.A. N.A. 112.7% -0.40 N.A. -9.6%
ICT
Solutions
Birla Shloka
Edutech Ltd. 3.6% 2.8% 6.8% 0.70 4.44 -24.0%
ICT
Solutions
Compucom
Software Ltd. 30.4% 23.9% 52.5% N.A. 8.45 -11.0%
ICT
Solutions
CORE
Education
and
Technologies
Ltd. 39.2% 23.8% 81.9% 3.64 23.85 0.4%
ICT
Solutions
Edserv
Softsyst Ltd. 42.6% 27.3% 12.2% 4.65 4.05 -13.7%
ICT
Solutions
Educomp
Solutions Ltd. 41.5% 23.4% 41.3% 4.54 5.08 -37.9%
Business in Education September 2011
© Indalytics Advisors l www.indalytics.com l businessineducation@indalytics.com 12
Operating
Margin
Q1-2012
(%)
Net Margin
Q1-2012
(%)
Debt-
Equity
Ratio
Q1-2012
(%)
EPS
Q1-2012
(INR)
Price-
Equity
Ratio
August 31,
2011
Market
Price
change
August
2011 (%)
ICT
Solutions
Everonn
Education
Ltd. 37.1% 16.4% 39.2% 5.75 10.97 -22.5%
IT Education
Comp-U-
Learn Tech
India Ltd. 15.4% 6.7% 2.8% 0.11 11.94 -8.0%
IT Education
Jetking
Infotrain Ltd. 17.3% 11.5% 0.0% 1.67 7.04 -15.6%
School
Education
Tree House
Education &
Accessories
Ltd. N.A. N.A. 38.0% N.A. N.A. 8.2%
School
Education Zee Learn Ltd. -4.6% -5.2% 83.2% N.A. N.A. -9.5%
Tuitions
Career Point
Infosystems
Ltd. 40.0% 29.5% 0.0% 2.56 17.07 -14.5%
Business in Education September 2011
© Indalytics Advisors l www.indalytics.com l businessineducation@indalytics.com 13
List of Organizations
Bank of Baroda
Baroda Manipal School of Banking
Bharat Sanchar Nigam Limited
CORE Projects & Technologies Limited
Educomp Solution Limited
Everonn Education Limited
Everonn Education Limited
FC Advisors
Harvard Business School
HCL Infosystems
Indian Institute of Management
Indian School of Business
Indira Gandhi National Open University
KLE Group of Institutions
Macmillan
Manipal Education
Matrix Partners
Pearson Education Services
Repro India
Smart Technologies
SP Jain Institute of Management &
Research
Sterlite Technologies Limited
Symbiosis Institute of Business
Management
Tree House Education and Accessories
Limited
University of Science Malaysia
Yale University
Business in Education September 2011
© Indalytics Advisors l www.indalytics.com l businessineducation@indalytics.com 14
Disclaimer
The information contained in this report is of a general nature and is not intended to address any particular
individual or entity’s circumstances. Although proper care has been taken to provide accurate and timely
information, there can be no guarantee that such information is accurate as of the date it is received or that it will
continue to be accurate in the future. Indalytics Advisors Private Limited does not guarantee that the information
contained in this report is authentic and reliable. No one should act upon such information without appropriate
professional advice after a thorough examination of the particular situation.
In order to get free subscription to Business in Education, please mail us at businessineducation@indalytics.com
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business@indalytics.com
Publication Volume: 11-009
Publication Date – September 2011
© 2011 Indalytics Advisors Private Limited
For further information, please contact businessineducation@indalytics.com
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