Education Sector in India



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A Report on Education in India Status and Opportunities Contents: Status of Education in INDIA • • • • • Play School and Pre School Education Play School and Pre School Education Elementary Education Secondary Education Hi h Ed i Higher Education Vocational Education Opportunities and Role for Private Players Opportunities and Role for Private Players • • • • Opportunities for Service Providers Public Private Partnership (PPP) Public Private Partnership (PPP) Support Services in Education Sector Indian Education Sector: A Snapshot

Status of Education in INDIA Play School and Pre School Education Present Status Lack of any regulatory mechanism for Play School – Pre School Segment   1 2 • P Population under the age group of  2? 6 years is 10? 11 Cr ( 9 ? 10 %) l i d h f 26 i 10 11 C ( 9 10 %) • Gross Enrolment Rate (GER)  in pre? school segment is as low as 18% @ • Current Trends Current Trends

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Rising awareness about the significance of early education for child development  and maintaining high enrolment and retention rates in primary education • Majority of the Play School and Pre School market is concentrated in Urban Areas Majority of the Play School and Pre School market is concentrated in Urban Areas • Market Size and Players Organized pre school market is dominated by private players a few of them are Kidzee, Eurokids, Treehouse  • The current urban market size is estimated to be Rs 6000 Cr  • @ at government pre schools`

Source : Fortress Team Research Elementary Education (Std I? VIII) Present Status The Positives …… • Participation: Rapid improvement in enrollment  p p p rates, at least in primary schools 2 • Equity: Social disparity which was very high till  90’s has been reduced significantly. 3 Sarva Shiksha Abhiyan (SSA) gets most of the credit  for the improvements in Elementary Education 4 The Problem Areas …….. • Drop out rates : 48 % in elementary Education (std I VIII) mainly because of socio economic reasons (std I? VIII) mainly because of socio? conomic reasons • Regional disparity: States like Bihar, UP are way  behind  in terms of GER, Drop outs.. ( Cont.. ) ( Cont.. ) The Problem Areas ……. ( Cont.. ) 5 • Infrastructure:  5 o Low PTR and teacher absenteeism o 24% Schools in India do not have  proper school building 6 o 8 % schools Lack drinking water    facilities • Quality of Education: o Pratham’s ASER survey: 60% of  children aged 7 to 12 cannot read  a simple paragraph ( h d k (Pratham is a reputed NGO working   towards education in India) Source: DISE, MHRD Overall Performance

Aspects Gross enrolment ratio (GER) Drop out rates Teacher appointments h Teacher training Construction of school  buildings Construction of additional  classrooms % of Expenditure on  Education & Training of total   Budget Better Performing States Rajasthan, Delhi , Maharashtra,  Uttarakhand Kerala , Goa, Haryana, Himachal,  Andhra Pradesh, J&K, Orissa, UP dh d h Chhattisgarh, Gujarat, Assam,  Tamil Nadu Tamil Nadu, Rajasthan Gujarat, Karnataka, Assam, AP Slow Performing States Bihar, Punjab, Haryana,  Nagaland Assam,  Bihar, Mizoram,  Meghalaya W. Bengal, MP l Bihar, Maharashtra, Arunachal  Pradesh W.

Bengal, Bihar, Jharkhand Chattisgarh, UP, Manipur Assam, Maharashtra, Bihar Delhi J&K, Sikkim, Arunachal Pradesh Source : Fortress Team Research, DISE, MHRD and Presentation by Mr. Amit Kaushik  UNDP Workshop on MDGs And Human Development Lucknow 2006 Secondary Education (Std IX? XII) Success of SSA has resulted in a pull effect on Secondary Education System Secondary Education is an important foundation for vocational / higher education Hence expansion of Secondary Education is important for the development of any Nation The problem areas ….. Financing: While India has pursued the drive 2000 the share of investment financing for  (grades 9 and 10), the gross enrollment rate (GER) secondary education has declined significantly. y g y is 54 % while at the senior secondary level (grade %, 11 and 12) it is just 29 % (2006? 07). Access: Number of secondary Schools are almost half the number of Upper primary schools 7 available i th country il bl in the t Equity: Most secondary students are boys, and disproportionately from urban areas and wealthier segments of the population. Participation: At the lower secondary level towards universal elementary education, since

Quality : Assessments of student achievement in mathematics by at the secondary and senior secondary level suggest that the quality of instruction and learning is very low. (Source ASER report) Source: Fortress Team Research Current Trends • Enrolment in Government schools has  decreased in last decades. There is a  trend in Urban as well as rural areas to  opt for private education  • Sharp increase is expected in the  demand for secondary education in  coming decade. (Actual And Projected  Demand is shown in Graph) Demand is shown in Graph) Actual and Projected Demand for Secondary Education 0 60 Millions of St tudents 50 40 30 20 10 0 19 99 -0 0 20 01 -0 2 20 03 -0 4 20 05 -0 6 20 07 -0 8 20 09 -1 0 20 11 -1 2 20 13 -1 4 20 15 -1 6 20 17 -1 8 20 19 -2 0 Total Demand Lower Secondary Senior Secondary Market Size and Players Market Size and Players Source: Presentation by Sam Carlson Education consultant (World Bank) • Share of Private Institutions in Indian School Education is,  Primary 7%, Upper Primary 21%,  Secondary 32%  • Ann al pri ate market si e for the segment I to XII is estimated at Rs 22 26k Cr Annual private market size for the segment I to XII  is estimated at Rs 22? 6 k Cr • With growth being expected in private unaided institutions the market should witness  encouraging growth Source: Fortress Team Research What needs to be done… Policy Level Initiatives • Public classroom and school construction, especially in rural areas where private suppliers are  unlikely to venture;  • Training and hiring of more teachers, and rationalizing their deployment, so that supply better  matches demand;  • Investments in curriculum revision, progressive pedagogy, technology and examination reforms,  to make schooling more relevant • Provide financial and in? ind assistance for poor and disadvantaged students, to offset direct  and indirect costs of schooling, and overcome household reluctance to send their children  (especially girls) to school; f p g g g y • Public information campaigns to change attitudes about the benefits of schooling and delayed  marriages Government Initiatives • Programs to improve the internal efficiency and quality of Secondary education, so as to  increase the number and quality of graduates;  example  programs like SSA • Promoting ICTs, so that students can take greater control of their learning and skills acquisition  from sources other than the teacher and textbook.

Source: Fortress Team Research Higher Education (beyond XII) Present Status The positives…… • • • • • • • • • • • • 416 universities, 20677 colleges, >500,000 teachers; 10. 5 million students;  , g , , ; ; Third largest number of graduates after US & China. Professional education in English medium  Growing rapidly; Covers all major disciplines;  9 Weakness….. W k Low enrolment (13% ? 2006 ) 10 Regulatory system  is over centralized;  Lack of institutional autonomy and accountability still it fails to maintain standards.

Lack of institutional autonomy and accountability still it fails to maintain standards Unplanned expansion  Variable quality; market mismatch;  Little knowledge creation– little interaction with economy, society and other academic/ research  institutions Limited access and regional disparity (80% of technical educational institutions are concentrated in  4 states of MH, AP, TN, KR)   g p g( ) Diminishing and skewed public funding (0. 6 % of GDP in 2006) Source: Fortress Team Research What needs to be done…

Increasing Access and Reducing Regional Imbalances  Increasing Access and Reducing Regional Imbalances Empowerment and Accountability of Institutions Academic, Administrative, Financial, Managerial Improving Quality and Effectiveness Improving Quality and Effectiveness Quality and effectiveness of teaching learning processes Faculty development Curriculum reforms Networking to Enhance Capacity, Improve Quality and Produce Excellence Networking of institutions with each other, with R&D labs, industry and service  sector Resource sharing of expertise, facilities Resource sharing of expertise facilities Mobilization of Additional Financial Resources Encourage private funding N df ki I di hi h d ti l b ll titi t l f ii Need for making Indian higher education globally competitive not only for seizing  opportunity for global trade in higher education services ($30 billion last year), but to corner a larger share of fast growing international trade in professional services ($270  y ) g g p billion last year) – higher education feeds into growth of professional services Source: Research Paper  by  Shashi Shrivastava,  Education Consultant , World Bank Vocational Education Conventional Vocational Education • Vocational education is very important for building skilled workforce to meet growing demand  of a developing country. f a developing country • Percentage of students applying for vocational education in India is less than 20% compared to  developed countries where it is more than 50 % . • Gov  ITIs  and private ICTs  offer  1 1 0  courses under conventional vocational education  including engineering and non engineering courses including engineering and non engineering courses ISSUE Role of private players in  ITI Scheme for up? gradation Embedding with Formal  Education State: Option Available S O i A il bl Central : scheme in progress Low awareness,  Non Up? gradation Invite views of private players,  Appoint PMC Up? gradation of courses Action taken No specific action Bottlenecks Scheme Structuring,

Not updated as per the  industry requirements Inputs from industry professionals Suggestions Review of schemes Source: Fortress Team Research New Trends in Vocational Education  & Market Size After economic liberalization the contribution of service sector as a percentage of GDP has  increased from 34 % in early 90’s to 56% in 2008. This has triggered the need for trained  manpower leading to flourishing of various private  vocational institutes. In the recent times it has expanded into fields like Finance, Retail, Animation, Hospitality, Media,  Aviation etc. The current market size of private vocational training is estimated as Rs 5k? 6k Cr Comparing  Govt. un conventional training and private vocational training l d l Conventional Training Gov Intervention Profit Motive Penetration Streams Offered Up gradation of courses Quality Infrastructure  Linkage with  industry Job Orientation  Government controlled /run  Not for profit Deep but highly under utilized Welding, turning (total 110)  Less/ no up gradation  Basic and inadequate Lesser tuning with the industry  Yes, low key jobs Private Training Lesser/No Gov intervention For profit Urban Areas, optimum utilization IT, Finance, Retail, Media, Animation Frequent up gradation Advanced and adequate Designed as per industry requirement Yes, medium? top end jobs

Source: Fortress Team Research Opportunities and Role for Private Players Opportunities for Service Providers • Teachers training Institutes India  has a shortage of around 10? 12 Lac teachers in all forms of education. Which means the demand for teachers training and retraining is going to increase  Which means the demand for teachers training and retraining is going to increase in coming years • Setting up Play schools   With increasing awareness & no regulatory mechanism in place play schools is  With increasing awareness & no regulatory mechanism in place play schools is one of the most lucrative business  • Setting up Universities & Private Colleges .

As per the National Knowledge Commission report to raise the G R in Higher As per the National Knowledge Commission report to raise the GER in Higher  education to 15 % by 2020 India will need 1500 Universities and cluster of  colleges  affiliated to them. • Private Open Universities and Distance education Popular among young workers / professionals who want to pursue further  education. The trend is growing in India   Case Study :  Manipal Universal Learning (Cont…) Case Study: Manipal Universal Learning Revenues FY 09 Revenues FY 09  Background It is the corporate entity of the Manipal Education Group. Domestic Operations Rs395 crore Manipal University is a Deemed university in Karnataka, India since  1993 Sikkim Manipal  University, an open university under the Sikkim Govt.

Distance Courses Offered Various programmes in the areas of medicine, engineering,  information sciences, allied health sciences, biotechnology, dental,  i f i i lli d h l h i bi h l d l etc Online MBA programmes. Potential for industry? academia collaborations by establishing ICICI? Manipal Academy Offers distance education courses through 550 Learning Centers Revenue  Gross revenues of Rs814 Cr . Sponsor? funding $30m from IDFC  p g$ Private Equity and $40m from Capital International. 70% of the  domestic revenues from services to SMU Has acquired a stake in U21 Global (revenues of $4. 2m) Program for engineering through its International Centre for Applied  Sciences (ICAS) International Operations: Rs419 crore Education: Rs281 crore Antigua university: Rs156 crore Meritrac: Rs53 crore (88%)

Dubai Campus: Rs52 crore Corporate Training: ICICI Manipal: Rs35 crore Nepal Campus: p p Rs50 crore Professional Skills: Rs7 crore Malaysia campus: 38 crore International Center for applied science: Rs12 crore U21: Rs27 crore Treasury Income: Rs8 crore Others: Rs94 crore Source: SSKI report, Fortress Team Research Sikkim Manipal Manipal Universal: Fund Flow Payments Service UGC • • • • • • Defines Eligibility Defines Curriculum Approves programmes with appropriate Certification Admits Students Conducts Exams Award Degrees SMU STUDENT MUL LC • • • Provides infrastructure at local level Local faculty support for counseling & tutoring y pp g g Supports placements • • • • • • Creates Awareness Appoints LCs Develops Content Supports admission process Mails course material Supports in hiring faculty Supports student placement Supports student placement Source: SSKI report, Fortress Team Research Opportunities for Service Providers • ICT and E? learning  in Education It is a sunrise Industry in India. Increase in Computer Infrastructure , internet  users and broadband penetration in last decade means ICT & e learning industry  is expected to grow in near future. i t dt i f t Products Case Study : Educomp Ltd Largest provider of technology education products and services for K? 12  Private Schools students.

Reaches out to over 21,000 schools  d h 2 000 h l Smart Class It leverages its strong understanding of the technology and education needs  ICT Solutions of schools(Public & Private) to deliver high quality, cost effective products. Retail & Counseling 6% Prof. Development Business Model 10% • Smart Class:  Smart Class 49% ICT Builds IT infrastructure for private schools and licenses the digital  35% curriculum content 276. I Incurs the initial expenditure in return of which it receives revenues for  h i ii l di i f hi h i i f 300 Sales (Rs Crore) 276 9 the next 5 years 112. 200 • ICT Segment 2 Builds IT infrastructure for government schools on BOOT model 100 53. 7 Incurs the upfront expenditure and receives quarterly payment for  0 services rendered FY06 FY07 Pre? schools FY08 Source: Annual Reports Opportunities for Service Providers Vocational Training Institutes As Discussed there is a huge scope for private Vocational Training Institutes in  areas like IT, Media, Hospitality, Aviation etc  Case Study: NIIT Ltd Started as an IT training  provider, expanded to  Finance, school (ICT), corporate  Fi h l (ICT) t training etc Works on a franchise model  Setting up university in the current  year Courses Target Customer l Value Preposition  Customer Coverage Geographical  Coverage School Learning Solutions School children d Academics School Multimedia Learning Teacher Training g India Sales (Rs Crore) 1006. 1006 8 Corporate 35% Finance 3% 795. 1 450. 7 IT 54% Schools 8% FY06 FY07 FY08 Individual Solutions Young adults  l bl Employability Individual IT/BFSI/Spoken English,  Management education g India + emerging economies`

Corporate solutions Working professionals d Productivity Corporate Learning products Training delivery & Admin g y India + USA + Europe Source: www. niit. com Opportunities for Service Providers • Coaching Classes and Competitive Test Preparation Private coaching for curriculum and for competitive exam centre is a booming  business expected to be worth Rs   8k – 9k Cr  • Franchise Investor  Franchise Model and Role of Franchise Investor Franchise owner Right to operate  business Franchisee Franchisee Fee Profit/Loss in the  business Franchisee investor Source: Fortress Team Research Public Private Partnership (PPP) Opportunities in Education ( Innovative public? rivate partnership models take advantage of existing underutilized capacity in  ( Inno ati e p blic pri ate partnership models take ad antage of e isting nder tili ed capacit in the public sector and induce a supply response to expand that capacity. Representative models  could be… ) For Existing Infrastructure Reinstate Infra. and use separate  floor area for  Private and  Private and public training  purposes Reinstate Infra. Impart training  on different  rates for Private  Students and  d d Recommended  students To Create New  To Create New  Infrastructure Infrastructure Build school &  use different  floors for Public  and private  and private training  purposes Package 2 plots Package 2 plots 1: Education  1: Education  Infra Infra a 2: Commercial  2: Commercial  Infra Infra

Prerequisites of a bidder:  • Experience of Training Institute in various  levels  • Experience of  handling students in large  volumes Bidder can be an Education Institute Government to offer:  • Present Infrastructure Present Infrastructure  • Right to use part of the infrastructure for  Training on commercial rates Prerequisites of a bidder:  Prerequisites of a bidder:  q • Experience of Training Institute in various  • Experience of Training Institute in various  levels  levels  • Experience of Building activities • Experience of Building activities Bidder can be  a JV between Institute & Real  dd b b & l Bidder can be  a JV between Institute & Real  estate Developer estate Developer Government to offer:  Government to offer:  • Pl

Plot of land to develop School  fl d d l S h l • Plot of land to develop School  Infrastructure  Infrastructure  • Plot of Land / FSI for Commercial FSI  • Plot of Land / FSI for Commercial FSI  Source: Fortress Team Research Public Private Partnership (PPP) Opportunities in Education CASE STUDY : Contracting out (failing) state schools       Case Study :  Schools run by BMC in Mumbai BMC runs 1171 Primary  and 49 Secondary Schools in Mumbai Region BMC runs 1171 Primary and 49 Secondary Schools in Mumbai Region Over the years enrolment is BMC schools is declining  (for primary schools 4,85,000 in 20005? 06  to 4,25,000 in 08? 09and for secondary schools 55000 in 2005? 06 to 43000 in 08? 9) Decrease in enrolment of BMC schools has resulted in Shutting down of around 17 primary  schools in last three years. schools in last three years The Major reason being lack of facilities and quality in BMC run Schools PPP model can be developed whereby the underutilized School Infrastructure can be used in a  better way   BMC Low Enrollment Schools on the verge  of closure High Spending on  High Spending on Salaries &  Infrastructure There are 1171  Primary and 49  Secondary Schools  run by BMC in  Mumbai Trends of High  Enrollment in   Private Schools Private Schools Good  Infrastructure  Facilities Leased  Out Private  Schools Pays  Rent   to BMC High Student Fees Source: Fortress Team Research

Public Private Partnership (PPP) Opportunities in Education Open Schooling Why Open Schooling? • Improvement in enrolment at Up Improvement in enrolment at Up  primary and Secondary level  • Drop out rate: 26% (I? V), 46%  (I? VIII), 60% (I? X) •L b Laborers  migrate along with  i t l ith families, for their children attending schools is difficult  Present Status 600 400 200 0 TOTAL ? I ? TOTAL ? VI  TOTAL ? IX? TOTAL I TOTAL VI TOTAL IX V ? VIII X Promotion   From  Government as  Government as alternative  schools Actual Drop outs in India (12 Cr Approx) Boys 282 134 202 281 Girls 191 201 • NIOS , the central body formed in  ‘79 • Lower Enrolments (3. 4 lac 06? 7) Funding • Lower passing rates Lower passing rates • No specific funding  towards OS Role of Private  • No major focus at state level as  Players, NGOs well Concept Open  Schooling Development and  Development and Project Management Bridge Schools:  Sakhar Shala, Bhatti Shala Source: Fortress Team Research Scope for support services in Education Sector Concept to commissioning of Private / Gov educational projects like education cities  and theme schools                     Education City Concept Development Marketing to g Implementing Authority (HUDA, MIDC, CIDCO) Invite Expression of Interest Marketing to the Players in Education Planning, Allocation of land, Landscaping Design Handling of the procedures (Pre/Post Bid) Commissioning of project Project Management

Rajiv Gandhi Education City  (Sonipat, Haryana) Implementing Authority: HUDA HUDA has allocated 700 acres at Sonipat for the  proposed Education City  1 institute of international repute (60? 180 acres) + 10  other institutions (3? 25 acre) Lease hold/ Free hold land based on area,  L h ld/ F h ld l d b d Payment terms to be decided accordingly Gujarat Vittal Innovation City  (Valsad, Gujarat) Implementing Authority: GIDC + EMPI Centre  INNOPOLIS Consortia University to be located in the GVIC SEZ  IT companies also invited to set up their campus in  GVIC Executives of the company can also participate as  faculty f l As located in SEZ, university will be free to modify  curriculum to meet industry needs Source: Fortress Team Research Scope for support services in Education Sector • • • Project development and management consultants for PPP Capacity building Investment Banking Project Management of supporting implementing various government schemes (some government schemes  are as under)                    Rashtriya Madhyamik Shiksha Abhiyan (RMSA) Targets of RMSA • Access to quality and affordable education  available to all in the age group of 14? 18 • A secondary school at every 5 km and a higher  secondary school at every 7? 10 km • Universal access to secondary education (USE)  by 2017 (GER of 100%)  • Universal retention to secondary education by  2020 (0 dropouts) • Special attention towards economically and  socially backward sections • Model Schools Scheme Genesis of the Schemes   2500 schools to be set up in EBBs under  government (state + center) and 2500  schools on PPP model  State government to contribute land at  free of cost  Emphasis on English language Classes VI? XII or IX? XII • • • Source: Fortress Team Research

Case Studies: Support Service Providers in Education Sector EdCIL India  Limited  EdCIL I di Li i d A government of India enterprise offering consultancy services in all areas of education and  human resource development in India and overseas Undertakes education projects on turnkey basis from concept to commissioning Undertakes education projects on turnkey basis from concept to commissioning Services for Institutional  development •Feasibility Studies i f l •Preparation of Master Plan  •Conceptualization of Schemes •Engineering Designs •Bid Preparation •Techno Commercial Evaluation T h C i lE l i •Award of Work •Implementation and Monitoring •Quality Assurance and  Inspection •Construction Management C i M Technical Support to Govt schemes •DPR & Feasibility report   Educational Planning and   •Educational Planning and Administration •Manpower Planning 18 16 14 12 10 8 6 4 2 0 Inst titution  dev velopm ent Plac cement  services Tec chnical  assistance Secondme nt T Testing  ac ctivities 16. 84 8. 35 9. 73 6. 84 EdCIL Sales 07/08 14. 74 4. 67 0. 56 0. 74 9. 52 9 52 2. 1 21 •Institutional Planning •Sector Studies Curriculum Development •Curriculum Development •Developing Computer Infra • •Training Needs &  Assessment Capacity Development •Capacity Development •Impact Assessment Studies •Evaluation of Projects Source: www. edcil. co. in

Case Studies: Scope for support services in Education Sector IL & FS IDC (Infrastructure Development Corporation)  It is the infrastructure development arm of IL&FS  Roles played by IL&FS IDC • Creation of commercial prototypes, suggest and evolve requisite policy/legislative framework • As a Project Developer & Sponsor, creation of structures and achieve techno commercial  closure • As an Advisor it assists govt local bodies and sponsors to undertake projects As an Advisor, it assists govt, local bodies and sponsors to undertake projects Services to Govt / Govt Agencies • Project conceptualization • Project Structuring & Development Project Structuring & Development • Contractual Documentation • Bid Process management • Project Implementation and facilitation • Quality Assurance and oversight Quality Assurance and oversight • Merchant banking and fund mobilization Services to Sponsors • Project Costing • Bid Structuring • Assistance in financial closure Current Projects Nursing Training Institutes in NE states    Sports Academy in Jharkhand Sports Academy in Jharkhand ITI in Jharkhand Source: www. iidcindia. co. in Indian Education Market : A Snapshot Segment Pre + play  school  School  Education Higher  education Market  M k t Size (Rs  Cr) 6000? 7000  20000? 5000 15000? 20000 Regulation No Key features • Urban driven g • Unorganized • Franchise based • Largest market  •Low  Quality • Structuring issue •Variety of courses  •Regional disparity • Well organized • Unregulated pvt mkt. • Number of streams • Franchise Based •N No regulations l ti • High fees • Trends/Cycles  • No regulations g • Highly unorganized • Urban driven   Growth Drivers •Peer pressure • Free pricing p g • Low penetration • Pref to Pvt. Schools • Aspiration of parents • High stickiness •Growing Economy •Government Policy •High Population • Job/placement • Newer sectors • Affordable fees Growing enrolments i l t •G • Use of technology  •

Free pricing • Quality Education  Q y • Free pricing •Peer pressure Business Potential • Capital intensive  y • Scalability is an issue •Lucrative investment • Newer business models •Large scope for PPP • Structure: A dampener •Large scope for pvt. technical institutes •Scope in semi urban areas •Scope for Distance edu. •Scope for PPP •Capital intensive •Lucrative Investment Ni h focused market d k t •Niche f • Low stickiness •Scope for new areas like e? learning  • Scalability Issue y • Capital Intensive High Very High Vocational  Education 5000? 6000 No T tP Test Prep 600 800 600? 800 N No g Coaching  Classes 7500? 7800 No Source: Fortress Team Research Footnotes

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