Can Schools On Budget Make Out Sense For Business?

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Published: Wednesday, March 28, 2012, 15:26 [IST]
Budget Schools And Their Business Sense

Budget schools or the erstwhile government or municipal schools, aim to provide affordable education at minimum cost. Those schools, as the players term it, will address the segment at the bottom of the pyramid. So, what is so common between Jerry Rao, Shantanu Prakash, the Galas and Satya Narayana R? They are selling the concept of budget schools in our neighbourhood.

Partho Dasgupta, the President of Educomp Schools said, “Budget schools have been existing. But these are mostly the government schools. However, it is now that professional players are becoming a part of it. It is very large market and will see good growth in the coming years”.

“The bottom of the pyramid concept works here. The total number of students at the budget school level is very large and the opportunity it throws up is huge, Educomp says setting up a Universal Academy costs anywhere between Rs.5 and 10 crore, depending on the location. However, Educomp investment are much lower with the asset-light model we use”, he added.

Priya Krishnan a CEO of VBHC Education Services said “We plan to bring this concept on every complex. We have eight projects at the moment and by next year, we will have one school operational each in Mumbai, Chennai, Bangalore and National Capital Region. Setting up a Sujaya School costs around 10-11 crore. The schools follow thw central Board of Secondary Education (CBSE) format and charge a fee of Rs.2000 per month or Rs.24000 per annum per stduent. The school plans to have 40% of stuents via the scholarships it provides and 60% on fees”.

The school, with over 50,000 students in the affordable education segment, are run under the Gowtham Model schools and Orchids brands. However, It is a function of looking at the concept from the perspective of an opportunity cost. “One can stretch the asset by using the same land and building and generate adequate volume. If many not be a very profitable venture, but will certainly be self sustaining and may attract investors too in the long run”, says Krishnan.

Source : Business Standards

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