Indian Education Sector

Presented by
Amit Kumra
Priyanka Gupta
Agenda

INTRODUCTION
CURRENT SCENARIO
GLOBAL SCENARIO
HISTORY OF EDUCATION SECTOR
MARKET STRUCTURE
BUSINESS CYCLE
MAJOR REGULATIONS
DEMAND SUPPLY SCENARIO
RISKS
MAJOR ACQUISITIONS
SWOT ANALYSIS
MAJOR COMPANIES
Introduction
 Education refers to the process of learning and acquiring
information. It can be divided into two main types:-

Formal learning through an institution such as a school.

Self-taught learning or what is often termed life
experience.

“Education Sector : The Next Big Business Opportunity In India ”

Contd…
 In 2009, the education sector attracted private investment
of $118 million from 9 deals and saw launch of Kaizen
education fund - India’s first education focused PE Fund.
 
 As per IDFC-SSKI, Education sector will see a 14 percent
CAGR in private spending taking the education pie to $88
billion by 2012.

 The market structure of education industry is monopolistic

competition.
Current Scenario
 It is the largest capitalized space in India, growing at 14%
for the past 4 years as compared to GDP of around 8.5%.
 Government spending on education is $30 billion -3.7 % of
GDP.
 For the eleventh five- year plan , Centre has allocated 6x
higher spend on education.
Indian Education Sector – An
interesting class

Source : IDFC Report

Global scenario
Less than 40% of the countries provide girls and boys equal access to
education.

UNESCO Institute for Statistics has projected teacher shortages.

Changing levels of participation in tertiary education.

Current spending on education in India is not more than 3.5% of GDP

and never risen beyond 4.3%. In comparison, the US spends 12% on
education, France 7%, Malaysia 20% and Thailand 27%.

A low level of regulation has been the catalyst in creation of quality

education in developed countries
History of education sector
 Upto 17th Century :- Saw the flourishing of higher education at Nalanda ,
Ujjain and Takshila Universities.

 Prior to British Rule :- Indigenous education was widespread with school for
every temple, mosque or village in most parts of the country.

 In British Rule :- Current system of education introduced and funded by

British following recommendations by Macaulay.

 Post Independence till 1976:- Education became the responsibility of the state.

 From 1976 to 2005 :-Education made joint responsibility of State and Centre.

 From 2005 :-Introduction of Grade Based System.

Market Structure
 India is one of the largest markets for education in the world in terms
of number of students. There are over 1 million schools in India
providing education to some 200 million students.
Market Segmentation
 IES can be broadly divided into three segments:-
 Schools which include pre-schools and K12 segment.
 Professional Colleges imparting education in the field of medicine,
engineering and management.
 Vocational Training institutes includes IT training and teacher
training institutes.
Schools
 Pre- Schools :- Children are taught basic activities which help them get
independent faster.
 K12 :- Formal education is imparted to students right from LKG to XII
standard.
 Private Tutoring:- Specific subjects taught
Professional Colleges
Vocational Training
 Vocation is an occupational skill on which a person is specifically
trained.
 Third largest segment in education services.
Various Players

Source : IDFC Report

Why is sector lagging …
 The sector is highly regulated by UGC and AICTE. Obtaining approval
is lengthy and cumbersome process.
 Poor governance and high absenteeism of teachers in rural as well as
urban areas.
 Delay in allowing FDI in education. However the scenario is changing
with the Foreign University Bill being passed.
 Low government spending on education.

Source: Planning Commission

Growth Drivers
 Deregulations in educational sector:- It will arrest the
outflow of Indian students to Foreign Universities.

 Introduction of E-Learning and Online Tutoring.

 Education policy has missed out on technological

revolution though online tutoring is catching up in India.
Eg Tutor-Vista and mathguru
Indian Education Market: Snapshot
Business Cycle

1 Education industry is recession-

●

resistant industry.


People tend to upgrade their skills for more

2
●

competitive opportunities when the business

cycle turns.

3
As the recession becomes severe and
●

unemployment increases, there is greater

motivation for workforce to join institutions.
Indian Education Sector – rising or
consolidating??
 Bharti group’s Centum learning will invest 100 crores to set up education centers.
 Career Launcher, a training institute, invested $1 million for a minority stake in 361 Degree Minds a
R&D training institute.
 Nadathanur group has invested $10 million in Career Point, a test preparation company which also
runs a management school.
 Matrix Partners India invested $7 million in Tree House Education.
 FIITJEE : raised Rs 100 crore from Matrix Partners India
 Career Launcher  : Raised $10 million from Intel Capital and $10 million from Gaja Capital
Partners. Now Career Launcher invested $1 million in a research training center.
 Mahesh Tutorials : $12 million from Helix Investments.
 Career Point : FranklinTempleton invested 50 cr.
 IMS : Milestone Religare invested 25 crore rupees in IMS.
 Learningmate : $10 million from Helix Investment.
 Navis Capital’s $30 million for a majority stake in ITM, a tertiary & executive education service
provider.
 GVFL invested 11 crore rupees in iNurture education which offers animation courses.
Landmark Initiatives in Education Sector
 Right to free and compulsory education Act 2009.
 Sarva Shiksha Abhiyan Programme.
 Saakshar Bharat.
 Mid-Day Meal in Schools.
 Foreign Education Institutional Bill.
 Examination Reform.
 Model Schools.
 Rashtriya Madhyamic Shiksha Abhiyan.
 Kasturba Gandhi Balika Vidyalaya(KGBV).
 Girls Hostels in Educationally Backward Blocks.
Demand Function
 Economists normally describe the demand as:
QiD = f(Pi, Pj , OC, Pop, Y* )
All this means is that the quantity of good i demanded
depends on (i.e., is a function of)
 the price of good i,
 the prices of complements to and substitutes for good i,
 the opportunity cost of children's time,
 the size of the population
 the distribution of family incomes in the country.
Supply
Government and Privately run institutions in Indian Market

Indian Institutions entering into partnerships with foreign

universities.

Lanchester , Purdue and Sutherland University looking

towards India for new markets.

Concordia Universities of Canada discussing collaboration

possibilities with Indian Universities.
Education Sector – The risk it faces
 Institutional Risks
Misaligned Policy Priorities
Absence of Legal Framework
Lack of well defined regulations

 Organizational Risks
Lack of Planning and Financial Management
Unclear Bid Evaluation criteria
Contract Management
Human Resources
Contd…
 Operational Risks
School Admissions
Obsolete curriculum
Scholarships
Teacher development and training
School Administration and Supervision
Evaluation and Examinations
Major Acquisitions
 Educomp : A – plus Education Solutions Pvt Ltd,
ASKNLearn
( Singapore based educational services company ).
 Everonn’s : Aban Informatics (K12 segment).
 NIIT : Element-K (US corporate training company).
 Core Projects: KC Management Group, Azzurri Education
and Hamlet Computer Group.
 SkillSoft : NETg (e-learning and performance support
solutions).
 Manipal Universal Learning : MeritTrac and U21Global.
 TutorVista : Edurite(multimedia content provider).
SWOT Analysis : Strengths
 Responsible for creation of large human resource for the country.

 Mastery over quantitative concepts coupled with English proficiency

due to structure of Indian education concepts has resulted in a skill set
that has enabled the country to take advantage of the international
demand.

 Presence of government run initiatives and few NGO’s have provided

a strong base to Indian education system.

 New Education Reforms had made Indian education sector more

lucrative.
Weaknesses
 Good undergraduate colleges like IIT’s have fallen short as research
universities when measured by objective criteria internationally.
 Lack of investment in infrastructure have led to India's underfunded
and mis-administered universities.
 Some excellent undergraduate colleges in India impart education which
is narrow, and this becomes an increasing weakness as India tries to
compete at the higher end of the knowledge chain.
 Indian universities are controlled by the government. The Education
Raj has not only failed in the task of creating a first rate higher
education system; it has led to the decline of formerly good
universities.
 The University Grants Commission currently functions as regulator,
inspector and disburser of government grants. This centralisation of
authority has created the ineffective Education system
Opportunities
 The education sector - once seen as the exclusive obligation of the government
and NGOs - now presents opportunities for research and private investment.
 The Center for Civil Society has recently launched the Education Choice
Campaign through which they are providing vouchers to poor students.
 The Ministry of Human Resource Development (MHRD) is keen to commence
the Foreign Educational Institutions Bill. With the bill, 100 percent FDI in
higher education would soon be a reality. And far cheaper and better education
would come to the kitty of Indian students.
 The MHRD plans to set up around 14 Innovation Universities. In this cause,
Ivy League universities like Yale, Harvard, Princeton and MIT will take active
part. The basic premise behind the move is to attract talent from all over the
world.
 More than 300 private equity funds are keenly waiting to invest in the
education sector in the country.
Threats
 Due to reforms like Foreign University Bill and Rte the
quality of Indian eduaction is at stake.

 More private players in the industry can make it more

profit driven sector.
Major Companies
Educomp Solutions (for yr ended march 2010)
( All figure in Rs )
 Market Capitalization : 6000 crore
 Share Price : 630
 Turnover : 832 crore
 EBITDA : 470 crore
 PAT : 221.87 crore
 EPS : 23.69
 PE : 26.50
Contd…

Everonn Systems (for yr ended march 2010)

( All figure in Rs )
 Market Capitalization : 1090 crore
 Share Price : 722
 Turnover : 210 crore
 EBITDA : 96 crore
 PAT : 43.4 crore
 EPS : 28.7
 PE : 23.52
Contd…
NIIT Ltd (for yr ended march 2010)
( All figure are in Rs )
 Market Capitalization : 1087 crore
 Share Price : 66.0
 Turnover : 625 crore
 EBITDA : 96.53 crore
 PAT : 31.17 crore
 EPS : 1.93
 PE : 34.12
Contd…
Edserv Softsystems (for yr ended march 2010)
( All figure in Rs )
 Market Capitalization : 339.2 crore
 Share Price : 231
 Turnover : 52 crore
 EBITDA : 26.10 crore
 PAT : 18 crore
 EPS : 15.01
 PE : 15.51
Investment Recommendations

 Increased allocation and renewed emphasis by the government on the

Education Sector.

 Cabinet Committee’s approval for establishment of a National

Knowledge Network (NKN).

 Announcement of the revised ‘ICT in Education Policy’ for

introduction of computer-based education at secondary and senior
secondary levels.

 Therefore, a foreign fund should consider investing in this sector.

References
http://www.slideshare.net/sanketvd/educationreport
http://www.digitalopportunity.org/comments/icts-drivi
ng-the-education-sector-in-india
http://www.scribd.com/doc/5352354/Education-Sector
-in-India
http://www.scribd.com/doc/3484697/India-Education-
Sector-Report
IDFC Research Report