Preschool and K-12 in India - Investing in Human Capital PDF

Pre-School and K-12 in India –
Investing in Human Capital
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the publication or contents.
Pre-School and K-12 in India – Investing in Human Capital
Table of Contents
1. Overview of the Education Sector in India...................................................................................... 3
1.1 Indian Education Structure ..................................................................................................... 5
2. Pre-School Market in India............................................................................................................. 6
2.1 Revenue Structure of Pre-Schools in India............................................................................... 8
2.2 Kinds of Preschool Programs in India ...................................................................................... 9
2.3 Investments and Upcoming Projects ..................................................................................... 10
3. K-12 Market in India .................................................................................................................... 11
3.1 Major Investments in Education and Training Sector in India ................................................ 12
4. Financials of Major Players .......................................................................................................... 13
5. Outlook ....................................................................................................................................... 14
2|P a ge
© Gyan Research and Analytics Pvt. Ltd., 2013

1. Overview of the Education Sector in India
The Indian education sector has been

called a sunrise sector because of the Education Market in India
huge investment opportunities it 120

108
offers.
100 91
77
The education sector in India is USD Billion 80
66
primarily divided into regulated and 57
60
non-regulated segments. Low literacy
40
rate, high concentration of
population and growing per capita 20
income have been some of the major

0
contributors to the growth of this FY2009 FY2010 FY2011 FY2012 FY2013E
sector in India.
Source: FICCI, Gyan Research and Analytics

Several niche sectors such as, child-
skill enhancement, vocational Outlook of Education Market in India
training and various other

educational services have emerged 250 237
too. Growth of the sector is further 202

200
173
propelled by rise in marginal
148
USD Billion
propensity to spend on education 150 126

among the middle class and 100
aggressive initiatives by private
50
entrepreneurs.
0
Due to poor quality of education FY2014F FY2015F FY2016F FY2017F FY2018F
imparted by public-sector
institutions, there has been an Source: Gyan Research and Analytics
3|P a ge

exponential growth of private-sector participation in the Indian education sector.
The formal sector consists of Kindergarten-12th grade (K12) schools (3-19 age group) and higher
education colleges; institutions are regulated and must be run on a not-for-profit basis set up under
a trust or society. Over the last eight to ten years, a new unregulated segment has come into
existence. This non-formal private education segment comprises pre-schools, coaching classes,
provision of multi-media and information and communication technologies (ICT) to assist teaching in
schools and colleges, vocational training and a huge educational book market. It now represents
approximately 25 percent of the overall private education sector in the country.
4|P a ge

1.1 Indian Education Structure
Indian Education
System
Core Non-Core
Schools
Higher Education Pre-Schools Book
The K12 sector -
Coaching
Kindergarten to 12th
grade Market
Classes
Multimedia
Vocational
Training
5|P a ge

2. Pre-School Market in India
The pre-school segment caters to

Pre-School Market in India
children between 18 months and 3
years. Although the concept of pre- 1.2
1.03
schools has become popular over the
1
last five years, it represents nearly 2
0.8 0.75
percent of the overall private-education
USD Billion
industry and is estimated to grow at a 0.6 0.55
Compound Annual Growth Rate (CAGR) 0.41
0.4 0.3
of 36 percent. The pre-school market in
India stands at USD 1.03 billion in 2012 0.2
and is estimated to reach USD 5 billion

0
in 2017. This segment is dominated by 2008 2009 2010 2011 2012
the unorganized sector. Due to rapid
growth of pre-schools in Tier-III and Source: IDFC, SSKI Gyan Research and Analytics
Tier-IV cities, the penetration rate is

Outlook of Pre-School Market in India
expected to rise to 25 percent by 2015.
6
Although pre-school education is 5
5
gaining momentum among young,
working/professional parents, the 4 4
USD Billion
market remains highly fragmented.

3 3
2
Low market penetration, low barriers to 2
1.4
entry and high growth forecast, along
1
with the high propensity to spend on
education among young working 0
2013E 2014F 2015F 2016F 2017F
professionals, offers immense growth
potential for the market. Increasing
Source: Gyan Research and Analytics
6|P a ge

proportion of women
Share of Organised and Unorganised
contributing to the workforce has
Sector in Pre-School Market
also contributed to the growth of 1200
701.76
this sector. 1000
800 585
Pres-schools in India do not fall
under the purview of formal USD Million 600 412.5
educational system and, hence, is 336.2

400
252
marked by absence of
200 329.6
government regulations. This has 165
73.8 137.5
0 48
facilitated influx of private
2008 2009 2010 2011 2012
entrepreneurs and corporates to
form joint ventures with
Organised Unorganised
builders/partners to move up the
value chain by upgrading pre- Source: Gyan Research and Analytics
schools with varied modern
amenities.
7|P a ge

2.1 Revenue Structure of Pre-Schools in India
Pre-School: Annual Revenue Estimation

Premium Schools Mid-Segment Schools Tier-II Towns
in Metros in Metros
Admission Fee (INR) 10,000 3,000 1500

Annual Tuition Fee (INR) 72,000 27,000 15,000
Other Revenue (uniform, 7,000 5,000 2,000
books, etc) (INR)
Average Capacity of a 80 160 120
Pre-School
Annual revenue of a 7.1 5.6 2.2
Pre-School (INR Million)
8|P a ge

2.2 Kinds of Preschool Programs in India
Preschool Program in India

Kidzee Preschool Program
Parent Toddler Age Group: 10 months onwards
Duration: 1½ hour per session - 2 sessions per
week for 6 months
Play Group Age Group: 2½ to 3½ years
Duration: 2 ½ hours per day
Kindergarten Age Group:
Junior KG: 3½ years to 4½ years
Senior KG: 4 ½ years to 5 ½ years
Duration: 3 ½ hours per day

Eurokids Preschool Program
Preschool: Playgroup Age Group: 1.8 to 2.5 years
Preschool: Nursery Age Group: 2.5 to 3.5 years
Euro-Junior Age Group: 3.5 to 4.5 years
Euro-Sunior Age Group: 4.5 - 5.5 Years
Treehouse Preschool Program
PlayGroup Age Group: 1 ½ years to 2 ½ years
Duration : 2 hour
Nursery Age Group: 2 ½ years to 3 ½ years
Duration : 2 hour
Junior KG Age Group: 3 ½ years to 4 ½ years
Duration : 3hour
Senior KG Age Group: 4 ½ years to 5 ½ years
Duration : 3hour
9|P a ge

2.3 Investments and Upcoming Projects
Many companies, including local and foreign players, are now investing in developing pre-school
chains through joint ventures or individually. Here are the major developments:
Singapore-based educational company, EtonHouse International Education Group, has joined

hands with Serra International Pre-school to set up a pre-school chain across the country.
EtonHouse is already popular across the globe for its schools and pre-schools in countries such
as China, Indonesia, Malaysia, Korea and Vietnam. The company has announced investments of
INR 1,000 million to start 100 franchised international pre-schools by 2013, going up to 1,000
franchised international pre-schools in the next seven years. The cities targeted include Chennai,
Bangalore, Hyderabad, Secunderabad, Delhi/NCR, Mumbai and Pune
Well-known pre-school management company, Tree House Education & Accessories Ltd, has
plans to acquire 100-percent equity of Brainworks Learning Systems Pvt Ltd. Brainworks, founded
in 2008, is a leading chain of pre-schools in India and follows the franchisee model for expansion.
Tree House Education & Accessories Ltd, founded in 2007, and has made previous attempts to
acquire other pre-school businesses. In 2012, the company acquired the business of MT Educare,
a Mumbai-based K-12 tutoring and test-preparation firm
Another popular chain of Mumbai-based pre-schools called Beehive Preschools has appointed
Sparkleminds Franchise Consultants to plan its expansion across India
Kinder Pillar-Ivy League Schools Pvt. Ltd, a US-based chain of pre-schools, has taken the initiative
to launch its chain of pre-schools in Punjab
10 | P a g e

3. K-12 Market in India
The K12 sector - Kindergarten to 12th

grade - comprises students in the age K-12 Market in India
group 3-19 years. The market segment is 40

34
primarily dominated by the public sector, 35
30
which accounts for more than 75 percent 30
26
of schools in India. K-12 market in India is 25 23
USD Billion
20
considered to be the most-regulated 20
segment of India’s education sector. It is 15
valued at USD 34 billion in 2012 and is 10
expected to reach USD 66 billion in 2017 at 5
a CAGR of 14 percent. 0
2008 2009 2010 2011 2012
Backed by rise of participation of the
private sector, the market is expected to Source: IDFC, SSKI Gyan Research and Analytics
grow. Private-sector enterprises
operating in pre-school segment are Outlook of K-12 Market in India
looking to grab the untapped k-12 market

70 66
especially in Tier 1 and Tier 2 cities.
58
60
51
50 44
39
USD Billion
40
30
20
10
0
2013E 2014F 2015F 2016F 2017F
Source: IDFC, SSKI Gyan Research and Analytics
11 | P a g e

3.1 Major Investments in Education and Training Sector in India
InOpen Technologies has entered a partnership with Japan-based Benesse

Holdings to deliver game-based computer science lessons to students in Silicon
Valley schools
Manipal Group has signed a MoU with Durban University of Technology in

South Africa to foster collaboration between the two institutions in the areas of
health sciences, teacher training, online education, business management,
engineering and design architecture
Mexican edutainment theme park brand KidZania is set to see the soft launch
of its property in Mumbai. Its Indian franchisee, ImagiNation Edutainment
India, has entered into a partnership with Birla Sun Life Insurance for an
employment centre at the park
12 | P a g e

4. Financials of Major Players
Sales Return on Earnings

Profit After Net Profit Debt-
Revenue Capital P/E Per
Tax (PAT) Margin Equity
(INR Employed Ratio Share (in
(INR million) (%) ratio
million) (%) INR)
Tree House
Education and 1,142.80 333.30 26.71 12.37 0.20 24.91 10.46
Accessories Ltd
Zee Learn Ltd 1,000.80 -212.20 -44.8 -12.02 0.42 -- --
Core Education &

11,228.40 1,586.00 20.36 15.59 0.83 1.44 13.85
Technologies
Everonn
1,150.10 -2,554.20 -222.09 -20.72 4.04 -- --
Education Ltd
Aptech Ltd. 1,003.60 252.70 25.18 8.47 1.14 11.99 5.18
Source: Annual Report of the Company
13 | P a g e

5. Outlook
Globally, India is the largest market for k12 age group. Hence, a huge growth potential exists based
on the sheer size of the country’s population. Indian households are gradually spending more money
on children’s education, one of the key motivations for household savings. It is estimated that per
household expenditure on education has increased to 7 percent in FY2012 from 2 percent in FY1994.
The Indian education sector is expected to have exponential growth in the next five years with
further rise in spend on education and growing investments from the corporate to cater to a large
pool of population looking for quality education.
More and more international schools are foraying into India now and there has been a considerable
growth in enrolments to such schools. Interestingly, there has been a considerable drop in the
enrolment ratio in the higher-education segment and, hence, K-12 market in India offers immense
potential for private players.
14 | P a g e

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Website: www.gyananlytics.com
15 | P a g e


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Pre-School and K-12 in India –

Investing in Human Capital

1. Overview of the Education Sector in India...................................................................................... 3

1.1 Indian Education Structure ..................................................................................................... 5

2. Pre-School Market in India............................................................................................................. 6

2.1 Revenue Structure of Pre-Schools in India............................................................................... 8

2.2 Kinds of Preschool Programs in India ...................................................................................... 9

2.3 Investments and Upcoming Projects ..................................................................................... 10

3. K-12 Market in India .................................................................................................................... 11

3.1 Major Investments in Education and Training Sector in India ................................................ 12

4. Financials of Major Players .......................................................................................................... 13

© Gyan Research and Analytics Pvt. Ltd., 2013

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1. Overview of the Education Sector in India

The Indian education sector has been

huge investment opportunities it 120

income have been some of the major

Source: FICCI, Gyan Research and Analytics

training and various other

too. Growth of the sector is further 202

propensity to spend on education 150 126

© Gyan Research and Analytics Pvt. Ltd., 2013

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exponential growth of private-sector participation in the Indian education sector.

© Gyan Research and Analytics Pvt. Ltd., 2013

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1.1 Indian Education Structure

© Gyan Research and Analytics Pvt. Ltd., 2013

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2. Pre-School Market in India

The pre-school segment caters to

and is estimated to reach USD 5 billion

Tier-IV cities, the penetration rate is

market remains highly fragmented.

© Gyan Research and Analytics Pvt. Ltd., 2013

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educational system and, hence, is 336.2

© Gyan Research and Analytics Pvt. Ltd., 2013

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2.1 Revenue Structure of Pre-Schools in India

Pre-School: Annual Revenue Estimation

Admission Fee (INR) 10,000 3,000 1500

© Gyan Research and Analytics Pvt. Ltd., 2013

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2.2 Kinds of Preschool Programs in India

Preschool Program in India

Duration: 3 ½ hours per day

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2.3 Investments and Upcoming Projects

Singapore-based educational company, EtonHouse International Education Group, has joined

© Gyan Research and Analytics Pvt. Ltd., 2013

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3. K-12 Market in India

The K12 sector - Kindergarten to 12th

group 3-19 years. The market segment is 40

looking to grab the untapped k-12 market

Source: IDFC, SSKI Gyan Research and Analytics

© Gyan Research and Analytics Pvt. Ltd., 2013

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3.1 Major Investments in Education and Training Sector in India

InOpen Technologies has entered a partnership with Japan-based Benesse

Manipal Group has signed a MoU with Durban University of Technology in