Indian Education Market: Manipal K-12

I have been interested in the Indian educational market and this is the first of a series in which I will write about companies in this space. In this post I am profiling Manipal K-12.

Manipal K-12 , a player in the Indian K-12 school market, has been promoted by Manipal group, a leader in higher education in India. and TutorVista, a global online tutoring company. TutorVista is promoted by K Ganesh, who had earlier founded, along with Meena Ganesh one of India’s early BPO companies CustomerAsset which they sold to ICICI OneSource. Meena is the CEO of Manipal K12.

TutorVista’s online tutoring focus is largely the US market. The company, which had raised VC funding from Sequoia Capital, Lightspeed Venture Partners and Silicon Valley Bank in 2006, entered the domestic Indian market by acquiring Edurite Technologies in late 2007.

Edurite Technologies (it still maintains a separate website) was set up in 2000 by Srikanth Iyer and over the years has developed an impressive library of multimedia content in the Indian K-12 segment. Srikanth is the COO of the company.

I must mention that in the late 1990s there was considerable interest in creating educational multimedia content. In 1998 I had co-founded Aesthetic Technologies with the same broad business objective. We too had developed content for the K-12 market but for schools in Singapore and Malaysia.

The strengths of the various partners brings a certain uniqueness to Manipal K-12. The flagship product targeted at schools is DigitALly™ a PowerPoint enabled multimedia tool consisting of hardware (interactive whiteboard or plasma TV) and software (the multimedia learning content developed by Edurite over the last several years). The digital solution enhances the quality of teaching and effectiveness of the teachers. Manipal K12 also targets the coaching segment of the market with Edurite Tutorials (physical centers) and TutorVista (online presence).

The key proposition is simple enough: use technology to deliver top quality standardized learning at low cost independent of the physical location of the student. It is a thought that has been at the core of technology-aided learning. There is considerable interest in this market. Educomp with its Smart class, Everonn with its ViTELs, NIIT with its Interactive Classroom and IL&FS Educational & Technology Services are direct competitors. Smart class accounted for 60% of Educomp’s Rs. 145 cr (USD 29 mil.) revenue in the quarter ended Dec 09 (source: website).

How scalable is this business? Consider the following facts.
India has about a 1 million schools out of which 75,000 are private schools. The private schools are further classified into:
• Approx. 30,000 Government aided schools with an average monthly fee of Rs. 450 (USD 9).
• Approx. 30,000 un-aided “standard” private schools with an average monthly of Rs. 750 (USD 15)
• Approx 15000 un-aided “premium” schools with monthly fee upwards of Rs, 1250 (USD 25)

At this point, the key addressable market is the 45,000 private unaided schools. According to a IDFC-SSKI report the reach of the key players is about 1000 schools each for Educomp and NIIT and 1000 schools for Everonn and IL&FS combined. That leaves a lot of room for growth.

It does, in my opinion, for the next few years. However, schools are investing in ICT infrastructure, often with the help of these same companies. In a few years time, it is possible the private unaided schools would want to be free to buy content from any publisher and not bound to multi-year contracts that are the norm today. At that point, I hope, the market would move to the public schools. It is in this market, which cannot attract decent teachers, that technology can really create a disruption. To enable this to be possible Public Private partnership paradigms will have to be established and/or companies like Manipal K-12 will have to have working relationships with educational NGOs. Most importantly, costs would have to be driven down.. At this point, Educomp charges Rs. 150 per student per month. This is 12% (or less) of the average tuition costs in a private premium school but is 33% of that in an aided private school. At current costs, these companies will find it hard to get the scale that India’s large population warrants.

Manipal K-12 will potentially be able to drive down costs given its in-house content development expertise. Its other approach is to set up its own brand of schools either directly owned or managed. The idea is to bring in good learning content, trained teachers and efficient academic management processes. The K-12 market size in India is large. CLSA estimates the total size to be USD 20 bn. (based the reasonably conservative annual fee assumptions indicated above). Can organized players emerge in this sector? Manipal K-12 does have the advantages of the brand and the technology infrastructure. Having said that, the success of a school in India is based on board-level examination success and it does take years to build reputation. Good schools in India and elsewhere are built by dedicated teachers and principals and therefore the question that I am mulling is: how can an organization like Manipal K-12 create a cadre of great teachers?

Perhaps the answer lies in the other market that Manipal K-12 is trying to target: the tutoring market. CLSA estimates that the market size to be USD 5 bn. (and this does not include specific tutoring for competitive exams and for specialized skill training). However, the market is fragmented, and likely to remain so. Tutors will come from a variety of backgrounds: young students, experienced teachers and patient mothers. However, this may provide Manipal K-12 a very wide recruiting ground for future teachers.

Success of organizations like Manipal K-12 will ultimately depend on execution. There are three key components of an execution strategy: customer (student/parent) satisfaction, entrepreneurial management of individual schools (while using standard processes and technology) and teacher talent management (motivating the ultimate knowledge worker). The business of education is that of people building people. Technology and facilities help to a point.