Business in education september 2011

Business in Education September 2011

INDALYTICS
ADVISORS BUSINESS IN EDUCATION

September 2011

© 2011, Indalytics Advisors Private Limited | Indalytics.com | businessineducation@indalytics.com

© Indalytics Advisors l www.indalytics.com l businessineducation@indalytics.com 1


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



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 Institutes are also tying-up with other
organizations

Companies are collaborating with
In addition to the government, educational
government
institutions are also tying-up with other
organizations to help them in their educational
ventures.
Many major players in the education sector are
exploring opportunities to work with the
government agencies in partnerships.
Manipal Education and Bank of Baroda (BoB) have
come up with a unique banking school. The school
named the Baroda Manipal School of Banking
In one such move, Sterlite Technologies Limited –
(BMSB) has been set up with an investment of INR30
provider of connectivity solutions for the power and
crore to offer training to future employees of BoB
telecom industries– will be working with Bharat
before they start working as probationary officers.
Sanchar Nigam Limited (BSNL) to connect 120
universities across the country.

The school will act as another recruitment mode for
the bank, which hires approximately 2,000 officers
As a part of Ministry of Human Resource
as well as 2000 clerks every year through the
Development (MHRD), ‘National Mission on
probationary officers’ exams. The course would have
Education through Information and Communication
a fee of INR3 lakh, and would include a nine month
and Technology (ICT)’ program, Sterlite Technologies
in campus training followed by a three month off
Limited would lay down the network, which would
campus internship at any of the BoB branches. The
connect 12 universities, and would facilitate high
bank will take the job guarantee of the students
bandwidth data transmission for e-learning and
passing out of it and attaining the Postgraduate
video-based learning. The objective of the program
Diploma in Banking and Finance by Manipal
is to make every university in the network to
University.
function as an e-university. The total contract valued
at about INR48 crore.

In another instance, Educomp Solution Limited has
also formed a joint venture with Sri Kanchi Kamakoti
Another company, CORE Projects & Technologies
Peetam to setup and manage 100 schools across the
Limited has bagged a contract from Gujarat
country. The schools will be known as Sri Kanchi
Government to implement Computer Aided Learning
Sankara Universal Academy and will come under the
(CAL) in 3,236 Primary Schools in the state. Total
patronage of Kanchi Sankaracharya Jayendra
value of the project is worth INR124 crore. CORE,
Saraswathi. As per the JV, Educomp will take care of
which is already present in 645 schools in Gujarat,
the setup and management, while the Kanchi Mutt
has got similar CAL & ICT contracts for 2,622 schools
will provide the land and philosophical learning.
in Haryana, 1,250 in Punjab, 947 in Maharashtra, 267
in Meghalaya, and 73 schools in Nagaland.



Increasing use of ICT 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.
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 Companies are exploring foreign markets. Chennai
has come up with its full and multi-touchscreen based Everonn Education Limited is planning to
interactive white boards in India. The full enter foreign countries, including Africa. The
touchscreen whiteboards, which support integration company, which is expected to achieve 22% of its
of Microsoft, Macintosh and Open source softwares, revenues from international operations in next two
can also be configured to the mobile phones of years, is eyeing Africa, after the Prime Minister’s
students for exchange of data. Smart technologies US$700 million aid for setting up institutions and
has appointed HCL Infosystems as its distributor in training programs across Africa, announced in May
India, and is selling its products through its 250 2011.
channel partners in the country.

Similarly, there are foreign players, which are
Another firm banking on ICT in education is London- expanding in India. Pearson Education Services is
headquartered global media group Pearson planning to expand its English language tests in
Education Services. The company has launched its Indian cities through partnerships. The company’s
VSAT based Engineering and Medical Prep Program, Pearson Test of English (PTE Academic) is a
‘EduriteONE’. The service will provide remote computer-based test designed for international
delivery of coaching for engineering and medical students, for testing their proficiency in the English
entrance exams to remote towns and semi-urban language. PTE Academic is already accepted by
centers across India, from its Bengalooru studio. The various overseas government departments and
company has started the service through one of its education institutions, such as the Harvard Business
schools, Gyansagar International School in Sohagpur, School and Yale University.
located in Madhya Pradesh.

Companies going for fundraising and
Collaboration between foreign and mergers
Indian players
In order to fuel their expansion plans, companies are
Many Indian education companies are collaborating going for fundraising. Educational services provider
with their foreign counterparts to attain synergies. Tree House Education and Accessories Limited,
This has resulted in education outsourcing emerged which has 223 pre-schools under its brand name
as a new trend in the sector. University of Science "Tree House" across 33 cities in India, went for an
Malaysia (USM) has outsourced the entire process IPO in the month of August 2011. The IPO, which had
of education to KLE Group of Institutions. KLE Group a price band of INR135 — INR153 a share, got
has setup a college on a 10-acre campus in Belgaum, subscribed 1.85 times, and finally opened at a price
which will impart medical education exclusively to of INR132.40 on August 26.
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



The company is planning to use the proceeds for Companies are also taking the path of inorganic
expansion of pre-school business; acquisition of growth and going for mergers. Education content
office space; procurement of exclusivity rights to provider Repro India has acquired printing operation
provide educational services; construction of of Macmillan. The company is focusing on content
infrastructure for educational complexes in creation, aggregation and dissemination in the
Rajasthan and Gujarat; and repayment of a debt of Indian education sector. The acquisition is expected
INR28.5 crores. Tree House is also backed by PE to add approximately INR250 crore in five years to
players Matrix Partners and FC Advisors (Mauritius) Repro’s top line.
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.



Opportunities in the sector (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
Opportunities in Public Private
will provide opportunities to media content
Partnerships producers to offer their services to CEC.

Increasing focus by the center as well as state Another interesting opportunity has been indicated
governments on the educational development has by the government of Rajasthan, which is launching
generated opportunities for the players in the an education specific social networking site, on the
sector. The government of Madhya Pradesh is line of Facebook. The portal will help students with
floating tenders to invite private players to set up tips and expert comments on subjects such as
computer labs and other infrastructure in various physics, chemistry and mathematics. Besides this,
schools. the portal will have other functionalities of a social
networking site, which will help students to open up
their individual accounts, add friends, upload
The government has also announced INR1,300 crore photographs, and connect to others on related
plan to overhaul primary education in the state. It topics.
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. Collaboration with foreign players

Government of Tamil Nadu, under the Sarva Many Indian higher education institutions are
Shiksha Abhiyan and the Rastriya Madhyamik looking for collaboration with foreign universities. As
Shiksha Abhiyan, is bringing many new changes in the Indian education system is getting globalized,
the state education. It will be spending INR1,082.71 many universities and colleges are collaborating with
crore on infrastructure development in schools. The their foreign counterparts for curriculum and
government will also be appointing 21,487 teaching student exchange. Collaboration helps Indian
and non-teaching staff, and creating posts for 16,549 institutions in enhancing their brand value, as well as
part-time teachers for physical education, painting the quality of the curriculum.
and vocational education.

The biggest collaboration opportunity that Indian
Tamil Nadu is also advocating the need of ICT in educational institutions are eying at present is the
schools. According to the Chief Minister J. increasing number of universities and education
Jayalalitha, schools’ textbooks will be computerized. facility centers in the gulf countries. Places such as
Further, the knowledge will be disseminated through Abu Dhabi, Bahrain, Dubai and Qatar are investing
computers in classrooms which, in turn will be linked heavily in education. As they are attracting foreign
to the main servers at the schools. investment and talent, this has provided Indian
educational institutions and service providers, an
opportunity to help the gulf countries develop their
In another ICT initiative by the central government, system.
the Consortium for Educational Communication



Australia, on the other hand is losing its status as a While Australia is becoming a less preferred
preferred education destination. A strong Australian destination, 11 US colleges and universities are
dollar has resulted in a drop in student visa expected to have partnership programs with India.
applications from India. A decrease of 63% has been As a part of US President Barack Obama’s and Indian
witnessed in the number of student visa applications Prime Minister Manmohan Singh’s 21st Century
from India to Australia between July 2010 and June Knowledge Initiative, the 11 US institutions will
2011, as compared to the same period in the conduct various activities and will work on
previous year. As present, there are more than 300 prospective partnerships with their Indian
collaborations between Australian and Indian counterparts. The initiative will provide US$10
universities for sharing of knowledge and expertise. 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 Government taking steps to improve
Sector education level in the country

B-schools revising their curriculum The Government of India has taken an initiative
toward improving the level of education across the
country. Prime Minister Manmohan Singh has
Many major B-schools in India are reviewing their announced of a commission which will be headed by
curriculum and are taking feedback from the an eminent educationist, and will be assisted by
recruiters to alter the subjects. After the global experts from the fields of higher, technical, medical,
financial crisis, all major B-schools across the world secondary, elementary, vocational and other sectors
have started giving more emphasis to ethical of education. The commission, which will suggest
practices at workplaces. In India, all the Indian ways to the Government to improve all levels of
Institute of Management and other major B-Schools education, will also have inputs from the reports of
such as SP Jain Institute of Management & the National Knowledge Commission, the Yashpal
Research, and Symbiosis Institute of Business Committee and the Valiathan Committee. However,
Management have changed, or are in the process of experts feel that the commission should also include
changing their curriculum. B-schools are also laying foreign experts, as the sector is now collaborating
importance on the industry internship, and are with many foreign bodies due to the globalization of
making adequate changes in the curriculum so that education.
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 Uniformity in K-12
Graduate Program in Management (PGPM), by
including six-month internship.
The government is also planning to bring uniformity
in the pattern of education till class XII across the
Besides their regular programs, B-schools are also country, in order to increase the quality of
revising the curriculum of their executive education education, primarily at the secondary and higher
programs, to make them more in sync with the secondary levels. The panel, constituted by the
industry requirements. Corporates are now asking government to suggest policy changes for education
for a quantifiable return on investment on the in the XII five-year plan has advocated
money they are spending on their employees’ universalisation of secondary education by 2017.
executive education programs. As a result, B-schools
are now coming up with special curriculum, which
are inclined toward the specific needs of students, The panel has also asked for integration of the
and can help them in relating their learning at B- 10+2+3 pattern of education of various states into
schools to their work. ISB has come up with a new one. The panel has stated that variation in patterns
system by creating an organization structure, which at state level is causing hindrance in meeting the
focuses on industry verticals such as manufacturing, goal of providing quality education. Further the
oil and gas, and financial services. 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.



to employ at least one teacher each for science,
mathematics, social studies and language subjects
According to the XI five-year-plan, a sum of
for the three classes. The schools will have to
INR269,873 crore was allocated for the ministry of
maintain the teacher-student at 1:45. Also, for
human resource development. Out of this,
schools having more than 100 students per class,
INR1,84,930 crore (69%) was allocated for the
there needs to be a full-time head teacher,
department of school education and literacy, and
supported by part-time instructors for subjects such
the remaining for the department of higher
as art education, physical education and work
education.
education.

Pre-school education might get formalized
Changes in education loans

Government of India is also planning to formalize
the pre-school education system in the country. Education loans are also expected to witness some
However, the education will be imparted without changes in coming future. Indian Banks' Association,
the levying the burden of school bags and books on which is working along the lines of the education
children. According to the Human Resource loan scheme in the UK, is expected to allow
Development Minister, Kapil Sibal, though the extended repayment period of up to 15 years for
preschool education might be formalized, the pre- education loans, against the present 5 — 7 years.
school age group (4 – 6 years) will not come under The step is expected to be beneficial for both the
the Right to Education, which means the education banks, as well as the borrowers. Banks are expected
would not be compulsory. to witness decrease in loan defaults, with the
introduction of extended repayment periods. This in
turn will also lead to the decrease in provisions,
RTE Act expected to bring changes in the system 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
As many state governments are implementing the placements from their colleges.
Right to Education (RTE) Act, schoolteachers might
now have to work for 45 hours a week, including
The new scheme will have a maximum loan limit of
preparation, as specified in the act. Schools now will
INR10 lakh for studies in India and INR20 lakh for
also have to rework on the number of hours and
studies abroad. Further, there will be no margin
teachers, in order to abide by the act. The number of
money for loans up to INR4 lakh. For the loans above
hours specified by the act are 800 (200 days a year)
INR4 lakh, margin money will be 5% for studies in
for classes I to V and 1,000 (220 days a year) for
India and 15% for studies abroad. Also, parents will
classes VI to VIII.
have co-obligation but no security for loans up to
INR4 lakh. For loan amount of INR4 lakh — INR7.5
The act also specifies the minimum number of lakh, collateral will be in form of a suitable third-
required teachers. For classes I – V, minimum party guarantee. And for loans above INR7.5 lakh,
number of teachers should be two if the number of parents having co-obligation will have to provide
students doesn't exceed 60, three for 61 to 90 tangible collateral security along with assignment of
students, four for 91 to 120 students and five for 121 future income of the student for payment of
to 200. Further, for classes VI – VIII, schools will have installments.



Companies’ Score Card

Debt- Price- Market
Operating Equity Equity Price
Margin Net Margin Ratio EPS Ratio change
Q1-2012 Q1-2012 Q1-2012 Q1-2012 August 31, August
(%) (%) (%) (INR) 2011 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%

Software
Technology
ERP for Group
Educational International
Institutions Ltd. N.A. N.A. 112.7% -0.40 N.A. -9.6%

ICT Birla Shloka
Solutions Edutech Ltd. 3.6% 2.8% 6.8% 0.70 4.44 -24.0%

ICT Compucom
Solutions Software Ltd. 30.4% 23.9% 52.5% N.A. 8.45 -11.0%

CORE
Education
and
ICT Technologies
Solutions Ltd. 39.2% 23.8% 81.9% 3.64 23.85 0.4%

ICT Edserv
Solutions Softsyst Ltd. 42.6% 27.3% 12.2% 4.65 4.05 -13.7%

ICT Educomp
Solutions Solutions Ltd. 41.5% 23.4% 41.3% 4.54 5.08 -37.9%



Debt- Price- Market
Operating Equity Equity Price
Margin Net Margin Ratio EPS Ratio change
Q1-2012 Q1-2012 Q1-2012 Q1-2012 August 31, August
(%) (%) (%) (INR) 2011 2011 (%)

Everonn
ICT Education
Solutions Ltd. 37.1% 16.4% 39.2% 5.75 10.97 -22.5%

Comp-U-
Learn Tech
IT Education India Ltd. 15.4% 6.7% 2.8% 0.11 11.94 -8.0%

Jetking
IT Education Infotrain Ltd. 17.3% 11.5% 0.0% 1.67 7.04 -15.6%

Tree House
Education &
School Accessories
Education 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%

Career Point
Infosystems
Tuitions Ltd. 40.0% 29.5% 0.0% 2.56 17.07 -14.5%



List of Organizations

Bank of Baroda KLE Group of Institutions

Baroda Manipal School of Banking Macmillan

Bharat Sanchar Nigam Limited Manipal Education

CORE Projects & Technologies Limited Matrix Partners

Educomp Solution Limited Pearson Education Services

Everonn Education Limited Repro India

Everonn Education Limited Smart Technologies

Facebook SP Jain Institute of Management &
Research
FC Advisors
Sterlite Technologies Limited
Harvard Business School
Symbiosis Institute of Business
HCL Infosystems
Management
Indian Institute of Management
Tree House Education and Accessories
Indian School of Business Limited

Indira Gandhi National Open University 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 businessineducation@indalytics.com

If you want to advertize your products and services through this report, then please write to us at
business@indalytics.com

Publication Volume: 11-009

Publication Date – September 2011

© 2011 Indalytics Advisors Private Limited

For further information, please contact businessineducation@indalytics.com


Business in education september 2011

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