Fairval

Notes on Indian equities, sectors and economy

Archive for the ‘Education’ Category

State Boards losing to CBSE/ICSE as people demand more quality

Posted by fairval on May 11, 2014

An article by Shekhar Gupta from India’s Hindi heartland (East UP, Bihar) makes an very interesting point. He says, even here – the most backward areas of India – there is a sharp change in education patterns. Travelling thru these areas on poll coverage, SG says he notices a change in wall grafiti (the free advertising option that used all over north India). Where earlier there would be words like IIT, PMT, now he says it all filled with ads for new age schools: touting CBSE, ICSE, UPSC and now an even greater surprise in five letters: NCERT.

From the article:

So here is a truly pan-heartland phenomenon. At a time when states are becoming more powerful and autonomous, and political arrangements increasingly decentralised and federal, here is one thing that is being centralised, and it is the most important thing in the lives of our children: school education. On both sides of the Ganga, in bigger cities like Patna, Allahabad, Varanasi, even Lucknow, or small towns, the walls are plastered with advertisements of schools offering CBSE or ICSE curricula, NCERT textbooks.

Why is this happening. SG quotes several people, but in short: There is a merit- and quality-based rejection of the trashy, corrupt, leaky and non-meritocratic state education boards.

Broad data confirms this. My colleague and assistant editor, Anubhuti Vishnoi, in the formidable Indian Express New Delhi bureau, covers the human resource development ministry, and tells me that the number of CBSE schools in UP has jumped from 1,173 in 2009 to 1,937 in 2014, an increase of 65.13 per cent. In Bihar, the rise is even steeper, from 285 to 593 or 108.07 per cent. Across India, the number has gone up from 10,011 to 15,215 or 51.98 per cent. The total number of students under the CBSE is now a staggering 1.25 crore. Data on ICSE schools is not readily available yet, but the HRD ministry believes there has been an even more spectacular increase. This, when so much Sarva Shiksha Abhiyan and now Right to Education Act money has been going to state governments. Please do note that almost all of these Central board schools are being set up by private entrepreneurs.

The full article Taking-the-poor-out-of-poorvanchal

 

 

 

 

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Kanpur doesn’t figure in IIT rankings anymore

Posted by fairval on January 5, 2014

How times change! Saw this chart in an alumni egroup. Amongst top 100 JEE ranks, just about no one wants (or went, not sure which) to IIT Kanpur in the last 2 years. In my time, it was totally different. Atleast 5-10 out of top 20, came to Kanpur. The JEE No 1, always came to Kanpur. The directors used to go all out to woo the JEE no 1. Clearly those times are long gone.

The reason – clearly Kanpur as a city, and UP as a state, does not appeal to anyone – faculty or student; much the same reason Kharagpur got left behind. (As an aside, Narayanamurthy was from Kanpur; and there was a time when, if you did not get any other job, you went to Bangalore, and just walked into Infy office, and started working. Those who stayed are long enough all multi-crorepatis now).

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In top 1000, Kanpur is still 3rd, but probably Chennai should overtake it. I don’t know if Bangalore has an IIT now, but that would be a good candidate to come into top 3 or 4 rapidly.

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Education – a missing pie in VC/PE action

Posted by fairval on April 21, 2008

While current sector allocation of VC/PE investment reflects India’s needs, education is one big sector to have missed out so far

While the VC/PE business has matured a lot in recent years, it is still instructive to see the dramatic transformation which has occurred in terms of where investments are going. Completely different sectors are soaking in money in 2008, compared to even 2-3 years ago.
The industry started off in the late’90s, when the first foreign firms started looking at India. The new entrants focused at IT and internet, much in line with the craze in US at that time. Quite a few of the early deals didn’t work out. The business really picked up only when investors broadened their horizons started looking at non-tech sectors like infrastructure, capital goods, financial services, retail and so on.
In the last three months, for example, infrastructure and real estate accounted for 30% of PE investments. Energy, telecom, media/entertainment, financial services, and manufacturing followed. Between them, these six sectors mentioned here accounted for 90% of all PE investments over the last three months. While this data may not be entirely accurate – some deals don’t report amount invested – the point here is, traditional VC/PE sectors like technology, internet, healthcare have perhaps accounted for less than 10% of investments this year so far. A clarification here – the distribution could look very different in the angel/VC space. PE deals tends to be large, and also focus on growth stage, rather than early stage. So the overall data here is perhaps coloured by trends in PE space.
The sectoral break up in 2008 seems to be vastly different even from say 2006, when IT/ITES accounted for about 20% of VC/PE money. Power/energy and real estate/infra barely accounted for 10% put together. So what does this all mean?
One inference – India is building up for the future. In terms of capital allocation, it seems about right that basic areas like infrastructure, real estate, energy, telecom get the largest share of investments; following by second order needs like financial services, logistics and manufacturing. Media/entertainment, internet, retail/consumer are perhaps third order needs, in a country like India.
Some of the basic sectors seem set to pull in a lot more money going forward, if the announcements in April so far are anything to go by. About $5bn of new funds have been announced in April so far, around 70% this dedicated money for real estate/infra. Some of the other money is sector agnostic, like Azim Premji’s newly announced $1bn fund – some of that could also fund infrastructure and energy.
However, PE investors are supposedly represent smart money – so this sector allocation could change just as rapidly a few quarters into the future.
For example, one sector which really hasn’t attracted meaningful VC/PE investment is education. A recent report by CLSA points out that private sector business in education is around $40bn. If CLSA estimate is correct, this makes education bigger than the healthcare sector, and almost as big as IT/ITES sector – the tradition favorites of VC/PE investors.
CLSA says – citing a household survey it seems to have commissioned – that education is the second largest item of middle-class household expenditure in India, after food. While a middle class household spends around 25% of monthly budget on food, around 9% goes to education, compared to 3% on healthcare. These ratios are very different from national averages, since CLSA’s sample set is intentionally different. CLSA has attempted to find the demand patterns of India’s consuming class.
Again, if this data is robust, it points to a great potential of education to throw up large businesses. One problem with education is that while private enterprises are there in basic schooling, and post secondary courses like engineering or management, most of these have been registered as trusts. There are ways to work around these restrictions – like for example, forming an operating company which the trust outsources or contracts out activities to. Outside of the formal schooling and graduation system, there could be number of opportunities in tuitions, assessments, vocational courses, e-enabling education, remote delivery, continuing education to name a few possibilities.

Posted in Corporate Finance, Education, PE/VC | Leave a Comment »