Friday, June 14, 2013

IITians seek pre-school admission

While higher education is a billion-dollar business, pre-school education (kindergarten) is well on its way to getting there. The rise in nuclear families and increase in disposable incomes have led to greater demand for quality pre-schools even in small towns and non-metros. Indore alone requires over 2,000 such centres, according to industry estimates.

Six months ago, Yograj Patel and Akshay Gupta, two young IITians, decided to tap the potential of this segment and set up a chain of pre-schools in Central India. “Schools are supposed to be non-profit organisations by law and we couldn’t find any investor. That’s when the idea of starting a pre-school came as it requires far less investment and is a lucrative business opportunity,” says Patel. As part of their due diligence, he and Gupta visited schools in Mumbai, Surat, Ahmedabad, Indore and Bhopal. ‘Countryside’, the first pre-school in their chain, is set to open in Indore this month.

According to industry estimates, the pre-school market in India is pegged at $770 million (about Rs. 4,460 crore). It is expected to be worth Rs. 13,300 (Rs. 133 billion) crore by 2015-16, according to a Crisil research report. Moreover, this segment currently comprises just 2.5 per cent of India’s urban school-going population, says a report by Religare Institutional Research.

With a seed capital of Rs. 60 million raised through the private equity route, Patel and Gupta plan to open five pre-schools in the next academic session, focusing on Central India, where they hail from. The annual fee at ‘Countryside’ is Rs. 15,000 (playgroup and nursery) and Rs. 18,000 (KG1 and KG2). “Admissions happen mostly in July, so we hope to break-even this year,” says Patel.

The fee may seem steep, but industry experts say parents are ready to spend even up to Rs. 50,000 a year on the education of their two- or three-year-olds. Not surprisingly, some pre-schools have margins as high as 30 per cent.

The pre-school venture has many challenges to overcome, including a limited reach and competition from bigger players such as Eurokids, Treehouse and Kidzee. “We are developing a clearly articulated curriculum and programme to prepare kids for school,” says Patel.

Source: The Hindu Business Line, June 14, 2013

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