Friday, April 12, 2013

Bigger Business Via Better Coaching

With over two lakh aspirants appearing for the Common Admissions Test (CAT) last year, it is obvious that most Indian students view a management degree as a gateway to untold riches. It is this mindset that VistaMind Education, a Bangalore-based coaching institute, aims to build on. “Where we really try to differentiate ourselves from the rest, is not just through the use of technology but through the old-fashioned methods of giving personal attention to our students and providing quality work materials,” said ARKS Srinivas who co-founded VistaMind a year ago.

Over the last decade-and-a-half, coaching establishments have become an extremely lucrative business proposition as they attempt to cash in on a 600 million-strong population aged under 35, looking to empower itself through the avenue of higher education. The market estimated at about $10 billion is however extremely fragmented.

“It’s all about reputation, word-of-mouth and results. If you can’t coach students to be amongst the top-ranked, they won’t sign up with you,” said Amitabh Jhingan, national sector leader for education at Ernst & Young.
“The problem with coaching establishments in India is that they offer general solutions to specific problems. The concept of personal mentoring just isn’t there,” Srinivas pointed out.

According to him, VistaMind offers a student-teacher ratio of 1:50, one of the lowest in the industry. Srinivas, 39, along with four other co-founders of VistaMind are graduates of the IIMs and XLRI. They were all previously a part of T.I.M.E, a leading coaching institute in the country, before deciding to set up their own shop. “There were differences in opinion with them (T.I.M.E), and we realised that our vision and growth plans were very different,” the IIM Calcutta graduate said. And it’s a move that seems to have paid off. VistaMind, which currently operates six fully-owned centres spread across Bangalore, Kolkata, Chennai, Lucknow, Kanpur and Mysore, plans to establish its presence in Delhi, Mumbai and Hyderabad by the end of the current fiscal. It also has a franchisee-owned centre in Nagpur.

“We hope to be in at least 15 centres by the end of the year, with a focus on the smaller cities, including Jammu and Patna, either through franchisee model, company-owned centres or through a partnership model,” Srinivas said. Earlier in the year, it also visited IIM-Kozhikode to participate in the premier MBA institute’s placement programme. The opportunities are manifold.

While official data on the size of the entrance examination coaching market is scarce, the CAT training sector by itself is estimated at about Rs. 1,000 crore (Rs. 10 billion) according to industry estimates. “The market is highly fragmented, with the organised players commanding a very small portion of it. For example, the IIT-Joint Entrance Examination market is between Rs. 3,000 (Rs. 3 billion) to 4,000 crore (Rs. 4 billion),” Srinivas said.

Given the state of the fractured market, VistaMind has not stopped at just offering coaching for MBA entrance exams. It also offers a programme called Campus Alliance, through which it offers training for recruitment examinations that job seekers have to undergo in order to get placed with a number of India’s largest information technology companies, including, Infosys, Wipro and Tata Consultancy Services. Through its Campus Alliance programme, VistaMind has trained about 15,000 job-seekers. It also offers coaching for pre-university exams, the Graduate Record Examination (GRE) and the Graduate Management Admission Test (GMAT) for those looking beyond the shores of India.

The company posted revenue of about Rs. 10 crore (Rs. 100 million) for the year ended March 2013, and expects to double that by the end of fiscal 2014. It expects to be profitable in financial year 2014-15. “We are expecting profits to be at about 30% of EBITDA by that time,” Srinivas said. VistaMind has raised Rs. 25 crore (Rs. 250 million) of angel funding, but an infusion of institutional capital will largely depend on the company’s turnover next financial year. “We don’t require that much money right now, since we are not a capital intensive business. If we meet our revenue target next year, we will consider it very strongly,” Srinivas said.

Source: The Economic Times, April 12, 2013

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