Business in education september 2011

Business in Education September 2011

© Indalytics Advisors l www.indalytics.com l [email protected] 1

© 2011, Indalytics Advisors Private Limited | Indalytics.com | [email protected]

INDALYTICS

ADVISORS BUSINESS IN EDUCATION

September 2011



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 [email protected]



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



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.



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.



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.



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.



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.



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.



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.



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%



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%



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

Facebook

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



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 [email protected]

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[email protected]

Publication Volume: 11-009

Publication Date – September 2011

© 2011 Indalytics Advisors Private Limited

For further information, please contact [email protected]

Business in education september 2011

Education

education business

manipal education

indian education sector

education level

education loans

education services providers

indian players

foreign players