Thursday, April 19, 2012

We have a long-term vision: Educomp Solutions

When Shantanu Prakash graduated from Indian Institute of Management, Ahmedabad (IIM-A) in 1988 and floated Educomp Solutions, entrepreneurship was a term largely used only in books. Over two decades later, his venture has not only diversified into various education segments but also inspired other companies to tap the education market. In a chat with Disha Kanwar, he talks about changes in his business strategy and why Educomp is betting big on the rural sector. Edited excerpts:

There are several new players in the market. Has that impacted your market share?
The 10,000 private schools using Smart Class have helped us establish our credibility. We have 85 per cent of the market share. We have a long-term vision. We take long-term bets.

Analysts say Smart Class margins are under pressure...
Of 100,000 private schools in India, 10,000 schools use Smart Classes. At the current pace, it will take us 10 years to go to all schools. India is a market of volumes and we want to leverage that. As a deliberate move to increase consumer base, we have decreased margins in Smart Class to 35 per cent from 45. In the third quarter, we sold to about 10,000 class rooms; our fourth quarter has seen addition of 18-20,000 class rooms.

What is your strategy?
We want to increase our customer base. We believe in reducing the price and inducing mass consumption. We also invest a huge amount — Rs. 500-600 million — in research and development, which gives us an amazing edge. Take Smart Class as an example. Educomp has almost nine years of experience in selling and marketing this product. My guess is that our investment in R&D for intellectual property development is more than the revenue of all our competitors combined. Our R&D centre in Noida employs around 400 people who develop digital educational content.

You are looking at tapping the hinterlands...
Educomp has presence in many towns seldom heard of by people. Educomp has a sales force of about 600 people, and we have presence in some very small and remote parts of the country. Through methods like VSAT (very small aperture terminal) technology teaching, we attempt to bring the expertise of renowned teachers in metros to small towns and rural areas.

Educomp recently bagged a project worth Rs. 2.09 billion from the government of Assam. How are its other such ventures doing?
The Edureach division of Educomp manages tenders and RFPs (request for proposal) related to government school contracts. This contract is from Edureach ICT Information and Communications Technology division. We are also in higher education, e-learning, etc. The government pays for our component in such schools. As our model is subscription based on a quarterly basis, we are increasing our volumes at a fast pace. We are currently in 12,000 government schools in 14 states. Our margins and revenue from the 10,000 private schools are much more than those from government schools.

Educomp is investing in formal education, which is not giving them immediate returns due to a long gestation period. How does Educomp see this in the long run?
There are only a few institutions in India known for their educational excellence. But we need to have both, quality and quantity.

Source: Business Standard, April 19, 2012

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