market research india - coaching classes market in india 2009

7/31/2019 Market Research India - Coaching Classes Market in India 2009

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March2009
http://www.netscribes.com/


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ExecutiveSummary

Market

Coachingclass

market

in

India

is

highly

fragmented

and

regional

in

nature

CoachingclassmarketiworthUSD6.8bnin2008;expectedtogrowtoUSD12.6bnby2012

Marketisdividedintotwoparts Privatetuitionsmarketandentrancetestprepmarket

Privatetuitionsma esup75%o coac ingc assmar et ut as imite potentia tosca e ueto ig

dependenceonreputedlocalteachers

Entrance testprep

market

is

growing

as

this

segment

is

process

driven

and

easy

to

scale

up

, ,

teacherpupilratioinschoolsandincreasecompetitionatgraduationandpostgraduationlevel

Challenges:Personcentricbusiness,lackofgovernmentandfinancialsupportandchangein

entrancetest

pattern

Drivers&

Challenges

Trends

Coachinginstitutesarediversifyingintomainstreameducationandopeningpre schools,K12

schools,BSchoolsandvocationaltraining institutes

PE/VCfirmsalsoinvestingincoachinginstituteswiththecapacitytoscaleoperations

Demandforcorrespondencecoachingmaterialsalsoincreasing

FewplayerslikeMTEducarehavebeenabletoscaleupoperationsinfragmentedtuitionsegment

2COACHINGCLASSES INDIA.PPT

, . . . .

preparationspace


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Contents

Market

OverviewDrivers&Challen es

Trends

Com etition

KeyDevelopments



4/27

Indianeducationsystemcomprisesofregulatedformalnetwork

andunregulatedinformalnetwork

IndianEducation

System

FormalEducationSystem InformalEducationSystem

Schools(K12)Professional

Colleges*Pre Schools

Vocational

Training

Multimedia

Coaching

Classes

Public Private Public Private inschools

andcolleges

Books

UnderthepurviewoftheMinistryofHumanResource

Development

;ICSE/CBSE/InternationalBoards

Highereducationcomprisesgraduate/diploma/

professionalcoursesregulatedbyUniversityGrants

Commision(UGC)andAllIndiaCouncilofTechnical

Education AICTE

InformalEducationsystemisfreeofanyregulations

Notgovernedbyanyregulatorybody


Note:*GraduateandPostgraduatecourses


5/27

Coachingclassmarketishighlyfragmentedandregionalin

nature

Overview

Coachingclassesaccountsformajorshareof

theinformaleducationmarketinIndia

CoachingClass

Market

(2008

2012e)

15 PrivateTuitions12.6

EntranceTestPrepUSDmn

Coachingclassesareaprominentfeaturein

Indiathat

complements

the

mainstream

educationsystem

5

10

25%

6.825%7.9

74%

26%

9.2

73%

27%

10.8

72%

28%

.

growthpotential

Marketishighlyfragmentedandregionalor

localizedin

nature

Coachin ClassMarketBreaku 2008

0

2008 2009e 2010e 2011e 2012e

ompr seso twosegments:

PrivateTuitionstargetedprimarily at studentsin

Grade5 12

EntranceTestPreparationMarkettargetedat: 25%

EntranceTestPrepMarket

Graduatelevel(engineering,medical,BBAetc)

Postgraduationlevel(MBA,GMAT,GREetc)

75%

Tutoring



6/27

Privatetuitionsaccountsfor75%ofthecoachingmarketandis

highlydependentonindividualteachers

Overview Teachingoutsidetheclassroomshasbecomeabig

businessinIndia

PrivateTuitions

Market

(2008

2012e)

9.110 +16%

USDbn

Privatetuitionsform75%ofthecoachingclass

market

Privatetuitionsaresubjectbasedandhighly

dependentonreputationofindividuallocalteachers

7.9

6.85.9

5.1

4

6

8

Marketishighlyfragmentedwithclassesoftenbeing

runbyindividualsfromresidentialpremises

Veryfew

players

(like

Mahesh

Tutorials)

have

been

ableto ainscaleinthismarketb ado tin a

0

2010e 2011e 2012e2008 2009e

PrivateTuitionsMarketBreaku 2008standardizedprocessdrivenapproach

Maximumpotentialforgainingscaleisinthegrade1012

coachingsegment,whichischaracterizedbystandardized

tests

administered

by

state

or

national

education

boards

23%

Grade58

Demandforonlinetutoringhaveincreasedwith

manyplayerslikeTutorVistaincreasingtheirservice

offeringsindomesticmarket77%



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EntranceTestPreparationMarketisgrowingrapidlyandis

fiercelycompetitive

Overview

Entrancetestpreparationmarketisprocessdriven

ascontentcanbestandardizedacrosscenters

EntranceTest

Prep

Market

(2008

2012e)

4

USDbn

GraduateEntranceTestPreparationmarket

Morethan

80%

of

the

total

test

preparation

market

Demandforcoachingcentersishighduetofierce

com etition amon students for hi her education

.

2.9

2.4

2.01.7

1

2

3

professionalcourses

Thetestprepmarketforentryintoagraduationcourseis

dominatedby

the

engineering

courses,

followed

by

the

medicalstudies EntranceTestPre Breaku 2008

0

2010e2008 2009e 2012e2011e

PostGraduateEntranceTestPreparationMarket

PostgraduatecoachingdominatedbyMBAaspirants

Majorityofthetestsareheldatnationalleveland

a titudebased

6%

Others*MBA

7%

CivilServices

3%

Easytoscaleduetolowerdependenceonparticular

facultyandhigherfocusonstandardizedcontentand

studymaterial59%25%

EngineeringMedical


Note:* OthersincludeentrancetestpreparationforGRE/GMAT/SAT,MCA,HotelManagement


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Contents

Market


Trends

Com etition

KeyDevelopments



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Driversandchallenges

Challenges

Highpropensitytospendon

education

Growthindoubleincomenuclear

erson centr c us ness

Changeinentrancetestpattern

families

Highteacherpupilratioinschool

ac o governmen an nanc a

institutionssupport

ncreasecompe ona gra ua ean postgraduatelevel



10/27

Educationalspendisoneofthelargestitemofhousehold

expenditureforIndianmiddleclassfamilies

Highpropensity

to

spend

on

education

Impact

Indianfamilies,especiallythemiddleclass,givehighimportancetoeducation

Coachingclassesandprivatetuitionsareanormandfiercecompetitionatalllevelsofeducation

pressurizesparentstoenrolchildreninclassestoensuretheydonotmissout

Despitethesignificantlyhighfeescomparedtoformaleducationinstitutes,parentsaremore

thanwilling

to

send

the

child

to

coaching

institutes

Educationisthesecondhighestexpenditureinmiddleclasshouseholdsafterfoodandgrocery

24.5%Food&Grocery8.9%Education

8.3%Entertainment7.7%Mobile

Phones

4.3%TransportationHighest

share

of

discretionary

4.3%Stationary4.2%PersonalCare

3.7%Communication3.2%Healthcare3.1%Footwear3.0%Toys&Gifts

2.8%A arels

spen

2.3%LoanPayment2.2%Cable&Internet2.2%HouseholdHelp

1.5%Homecare1.3%Rent&Utilities1.3%Jewellery


.

Furnishing 10.0%0.6%Others


11/27

Workingparentsandhighteacherpupilratioisdrivingthe

coachinginstitutesmarket

DoubleincomenuclearfamiliesaregrowinginurbanIndiaasboththeparentsareengagedin

providingfortheirchildrensfuture

Growthin

double

income

nuclear

families

Impact

Withbothparentsworking,childrenstartattendingcoachingcentersataveryearlystagefor

educationalguidance

Doubleincome

makes

it

easy

for

parents

to

fund

childs

coaching

requirements

TeacherpupilratioforPrimaryeducationatnationallevelhasincreasedfrom1:43in1999

Highteacherpupilratioinschool Impact

2000to1:46in20042005

RatiofortheUpperPrimaryreducedfrom1:38in19992000to1:35in20042005

TeacherpupilratioishighinIndiacomparedtoothercountrieslikeUSandUK

Highratio

has

anegative

impact

on

the

quality

of

education

in

schools

thereby

increasing

the

demandforprivatecoaching



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Cutthroatcompetitionputtingpressureonstudentstojoin

coachingclassesforentrancetestpreparation

Competitionatgraduateandpostgraduatelevelincreasingeveryyear

About400,000studentsgaveIITJEEexamin2008andonlytop8,600wereacceptedfor

Increasingcompetition

at

graduate

and

post

graduate

level

Impact

admission

NumberofCATaspirantshaveincreasedby19%from20032008whilenumberof seatsin

IIMshas

increased

by

merely

3%

in

the

same

period

Morethan300,000MBAaspirantsgaveCATin2008

um ero asp ran sareexpec e o ncreasea era eo nnex years



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14/27

Changeintestformatsinvolveshugeinvestmentswhilelackof

recognitionfromgovernmentisanotherchallenge

Anychangeinentrancetestpatternwouldinvolvehugeinvestmentsbythecoachinginstitute

IIMsplanningtoconductCATexamonlineinthenearfuture

Changein

entrance

test

pattern Impact

Coachinginstitutesarealreadyinvestingheavilyininfrastructuresetupbyprovidingdigital

contenttothestudents

Coachinginstitutesaretyingupwithserviceprovidersintheonlinebusiness

TimeinstituteplanstoinvestaboutINR50 60mntoincludecomputerlabstestmanagementsystems

acrossallcenters

IMSbeingmarketleaderinGMATcoachingalreadyhassignificantonlinepresence

Governmentandfinancialinstitutionslikebanksprovidefinancialsupporttothestudentsfor

takingadmissionsintheformaleducationsystemlikecollegesanduniversities

Coachingclassesarenotrecognizedbyanygovernmentbodyandthereforefinancialsupportis

notava a e ora m ss on ncoac ng nst tutes,w c avecons era yexpens ve ees

Further,thelackofanystandardsoraccreditationhasledtowiderangeofqualitylevels



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KeyTrends

Coaching

institutes

enter

mainstreameducation PE/VC

firms

showing

interest

in

educationsector

Trends

Demandforcorrespondencecoachingmaterialsincreasing

Increasingdemandforonlinetutoringindomesticmarket



17/27

Coachinginstitutesarediversifyingintomainstreameducation

CareerLauncher:OpenedIndusWorldSchoolofBusinessinNoidain2008.Planstoadoptsome

IndustrialTrainingInstitutes(ITIs)andtieupwithengineeringcollegestoofferfinishingschools

Coachinginstitutes

enter

mainstream

education

Coachinginstitutes

arediversifyingbyorgra ua ngeng neers

IMS: IMSalongwithJamshedpurbasedXLRIsetupthePraxisBusinessSchoolinKolkatain2007

MTEducare:

Opened

10

owned

pre

schools

in

Mumbai

under

the

brand

name

Little

Tigers

T.I.M.E.: OpenedplayschoolinHyderabadandplanstoopenplayschoolsin70citieswherethey

shiftingfocusto

mainstream

education

a rea y avepresence. . . . .a sop ans ose up sc oo s

VidyalankarCoachingInstitute: OpenedengineeringcollegeinWadalain2000.Planstoopen

anotherengineeringcollegeinPanvel

Professional Vocational

Institute PlaySchools K12Tuitions Colleges Bschools training

CareerLauncher

IMS

T.I.M.E.

VidyalankarCoachingInstitute

Alread resent


FuturePlans

C hi k i h bili l i i i


18/27

Coachingmarketwithabilitytoscaleupattractingprivateequityinvestors

PrivateequityplayersarebullishoneducationsectorinIndia

Focushasshiftedfromexportfocussed educationcompaniestotrainingandcoaching

Increasedfocus

of

PE/VC

firms

Privateequityfirms

areseeinghuge

institutesthattargetdomesticmarket

Privateequityplayersinvestingincoachinginstituteswithscalablebusinessmodel

opportunityinthe

unregulated

coachingindustry

USDmn

.

17.5

50

0

2006 2007

Date Investor Target %Stake AmountUSD

July2008 Lightspeed

Venture

Partners

&

Sequioa

Capital Tutor

Vista n.a 18.0

mn

August2007 HelixInvestmentAdvisors MTEducarePvtLtd 30% 12.0mn

October2007 GajaCapital CareerLaunchers n.a 8.3mn

December2006 LightspeedVenturePartners&SequioaCapital TutorVista n.a 10.8mn


November

2000 Intel

capital Career

Launchers n.a 10.0

mn

D d f lt ti d li th d h li t t i


19/27

Demandforalternativedeliverymethodssuchasonlinetutoringandcorrespondencecoachingmaterialspickingup

Playersinonlinetuitionmarkethasprimarilyfocusedonexportmarket

IndianteachersprovidetutoringservicesatafractionofthecostincountriesliketheUnitedStates,UKand

Demandfor

online

tutoring

increasing

in

domestic

market

Onlinetutoring

gainsacceptanceino er uropeancoun r es

DemandforonlinetutorshasgrowninIndiawiththeincreaseinbroadbandpenetration

Playerslike

Tutor

Vista

are

looking

at

providing

coaching

through

online

media

in

the

domestic

market

Indiaasbroadband

penetration

increase

mn40

18

610

20

30

40 InternetSubscribers

Demandforcorrespondencecoachingmaterialincreasing

0

200920082007

materials

Coachinginstitutearealsoprovingselfstudymaterialsalongwithonlineassessmentand

support

Corres ondence coachin materials hel the coachin institutes in reducin ca ital costs

Fiercecompetition

increasingdemand

forcorrespondence

coachingmaterials



20/27

Contents

Market


Trends

Com etition

KeyDevelopments


P i t t iti k t i hi hl f t d ith li it d


21/27

Privatetuitionsmarketishighlyfragmentedwithlimitedorganizedplayers

MTEducare

Pvt

Ltd

Overview: Startedin1988andcurrentlyhas153centersand1,200teachers.Copeofoperations

limitedtoMaharashtrawithsmallpresenceinSouthIndia,GujaratandonecenterinDubai.

BusinessModel:MTEducareisprimarilyin subjectbasedtutoringacrossschoolandcollegelevel.

The

company

follows

both

owned

and

franchisee

based

model Financials:RecordedrevenuesofINR355mnandplanstoincreasetoINR1500mnby2010

ExpansionPlans:MTEducareplanstogroworganicallywithinMaharashtraandinorganically

outsidethestateinthetuitionssegment.Companyplanstoexpanditsnationalfootprintwith

centersinGujarat,SouthIndiaandNorthIndia.Companyhasalsoenteredmainstreameducation

byopening

10

owned

preschools

in

Mumbai

and

plan

to

scale

up

through

franchisee

route

er eyp ayers n r va e u onmar e nc u ngon ne u ors

Institute History Currentnetwork BusinessFocus

ChateGroup Startedin1989 89centers Privatetuitionsforschools.Alsopresentintestprepmarket

Sukh

Sagar

Institute Started

in

1976 24

centers Coaching

for

Commerce

Stream.

Specialized

in

CA/CS

coachingGrowingStars Startedin2001 online ChargesUSD1520/hr.~60tutors.

learninghour.com Startedin2006 online In2007,Educompacquired76%stake

Onlinetutoringforschoolandtestprep.

Onlinetutorin forcolle eand raduatelevel ro ramsinover30sub ects


Tutorvista Startedin2005 online

Employsover

600

tutors.

Charges

US$99/month

for

unlimited

tutoring

E t t t k t i i l d i t l lik


22/27

EntrancetestprepmarketisincludeprominentplayerslikeCareerLauncher,FIITJEE..

CareerLauncher

Overview: Startedin1995,currentlyhas135coachingcenters.CareerLauncherstartedwithMBA

coachingandnowalsotrainstudentsforIITJEE,NLSandBBAexams

BusinessModel:.About70%ofthecentersaresetupthroughfranchiseemodel

Financials:TurnoverincreasedfromINR80mnin2001toINR900mnin2007

ExpansionPlans: Itplanstosetup125playschools,150K12schoolsand25vocationaltraining

centres. It also lans to o en centers in Sin a ore China Ja an Korea Indonesia Thailand Taiwan

andtheUSbyinvestingaboutINR2bninthenext35years.

FIITJEELtd

Overview: Startedin1992andcurrentlyhasabout35centers

BusinessModel:FIITJEEfocusisonengineeringtestpreparation.Theinstitutehasabout300faculty

members.FIITJEEadoptedfranchiseemodelforexpansion

ExpansionPlans:Theinstituteenvisagescreatinginternationalstandardboardingschool,public

school,promotingapublishinghouse,deliveringthecontentwithdifferentapproachandconcept

besideresidentialandnonresidentialIITJEETrainingCentreofExcellenceandEngineeringEntrance

ExamTrainin Centreacrossthecountr


IMS d T I M E ith th bilit t l ti


23/27

..IMSandT.I.M.E.withtheabilitytoscaleoperationsacrossIndia

IMS

Overview: IMSstartedin1977andistheleaderintestprepspacewithtotal185centers.IMS

startedwithCATcoachingandnowalsotrainsstudentsinGREandGMATexams

BusinessModel:Outofthe185centers,135areinpartnershipand50ownedcenters.Mostofthe

keymetrosarelocatedinmetros

Financials:IMSrevenuesinFY08wereaboutINR1,000mn.Segmentwiserevenuecontribution

Classroom(80%),Correspondence(10%),TestSeries(5%)andConsulting(5%)

ExpansionPlans:IMSstartedaBschoolunderthebrandnamePraxisin2007inKolkatawitha

capacityof160seats.Inthenextfiveyears,IMSplanstosetupthreemorebusinessschoolsinnon

metrosbuthighgrowthareassuchasChandigarhandGurgoan.

. . . .

Overview:T.I.M.E.startedin1992inHyderabadandcurrentlyhas175centersin87cities.

BusinessModel:T.I.M.E.instituteisstructuredoncorporatemodelwithbothownedandfranchisee

Financials:T.I.M.E.reportedturnoverofaboutINR1500mnin200607andwitnessedgrowthat

CAGRofover60%in5years

ExpansionPlans:TimehasopenedplayschoolinHyderabadandplanstoopenplayschoolsin70cities


w eret eya rea y avepresence. mea sop anstosetup sc oo s

Many other players are also scaling up their operations in


24/27

Manyotherplayersarealsoscalinguptheiroperationsinentrancetestprepmarket

Otherkey

players

in

entrance

test

preparation

market

Institute HistoryCurrent

networkBusinessFocus

AakashInstitute Startedin198836centers

(AcrossIndia)

Admissionofstudentstocoursesonbasisofscreeningtest/percentage

of

marks

BrilliantTutorials Late1970s 10

Focusonengineering,medical,IAS,GATE testpreparationmarket

Nofranchisees.Movingawayfromcorrespondence focusedtoclassroom

focused

BansalClasses Startedin1985 3(Kota) Focusonengineeringtestpreparationmarket

FeesrangefromRs30,00060,000annually.About8,000enrollannually

Focusontestprepmarketforgraduate,postgraduateandforeign

education

ChanakyaIASAcademy Startedin1993 1(Delhi) FocusonIASexampreparation

About900studentsperintake

ProfessionalTutorials Started

in

1993 60+

Focusongraduateandpostgraduateentrancetest

pera es

roug

ranc sees

Rau'sStudyCircle Startedin1953 2(Delhi,Jaipur) FocusonIASexampreparation

About500studentsperintake

Focusongraduateentrancetestpreparationmarketandsomepost


Coaches~9,000

students

annually


25/27

Contents

Market


Trends

Com etition

KeyDevelopments



26/27

KeyDevelopments

Date Development April2008 Thecommonadmissiontest(CAT)togoonlinefrom2009.TheIndianInstituteofManagements(IIMs)issuedapre

qualificationbidinvitingserviceproviders,ITfirmsspecializinginassessmentandtestingservices,forcomputerizationoftheCATexam.

March2008 HumanResourceDevelopmentMinisterhasplanned8newIITsand7newIIMsundertheFive YearPlan.The8IITswillbesetupinAndhraPradesh,Rajasthan,Bihar,Himachal,Orissa,MadhyaPradesh,GujaratandPunjab atacostofINR7600mn

each.

The

7

new

IIMs

to

come

up

in

Meghalaya,

Tamil

Nadu,

J&K,

Jharkhand,

Chattisgarh,

Uttarakhand,

Haryana,

which

will

costINR2500mneach.

January2008 TheDistrictConsumerDisputesForumI(Chandigarh)hasdirectedallprivatecoachinginstitutestorefundaproportionateee os u en sw o eave ecourse e ore scomp e on. e orum asa so rec e ns u esno oc arge ees n

advance.



27/27

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market research india - coaching classes market in india 2009

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