The number of children attending school in India has increased manifold in the past 50 years – 19.2 million in 1950-51 to 113.8 million in 2000-01. Earlier this year, the Supreme Court of India upheld the Right to Education Act, which makes education free and compulsory for all children between ages 6 and 14 years. Despite this, the struggle for quality education remains elusive for the vast majority of Indians. This presents an interesting opportunity for entrepreneurs to experiment and set up businesses that provide alternate teaching and learning mechanisms that can aid learning and improve learning outcomes.
The Government remains the largest provider of education in India. In the 6-14 year age group, ~70% of the children went to Government schools with ~26% going to private schools. In the 7-16 year age group, 68% of the children went to Government schools while ~26% went to private schools. This largest network of schools in India continues to be plagued by problems of low enrolment, a dearth of teachers to cover the required grade levels, and a scarcity of resources to support the poorly trained teachers.Upcoming areas:
Entrepreneurs are exploring different ways of deploying technology in traditional schools to achieve better and consistent learning outcomes. While there are many players today that offer end-to-end school management platforms, the deployment of technology within schools has not been smooth; the deficiency of well-qualified teachers, the lack of integration with the existing lesson plan, and the insufficient resources within affordable private schools and Government schools limit the efficacy of technology. The non-profit Teach a Class (TAC) works with educational institutions to deploy education hotspots containing all the courseware in their computer facility. TAC volunteers train and guide local teachers on how to use the educational resources on the hotspot effectively. TAC’s product lends itself to usage by groups of learners as well as individual learners.
Other entrepreneurs are focusing entirely on the self-study market. iProf offers a tablet based education delivery platform offering various test prep, K-12 school curriculum, and vocational courses to students on Android tablets. The Digi library that they have developed offers free video lectures and notes as well as live assistance to students through internet and telephone.
2. K-12 Schools:
The school segment is probably the only segment where there is enough scope to make a direct impact since schools involve all the stakeholders – students, parents and teachers. This space is heavily regulated and investments have happened in this segment through various structures. The Right to Education (RTE) Act lays down a broad framework for schools to have certain facilities such as playgrounds, laboratories and libraries, leaving it to the states to figure out the fine print. Despite the RTE, the growing demand for good quality private education has led to the expansion of school chains like Gowthama Model Schools and Narayana Concept Schools (fee range> Rs. 1,500 a month)2 that cater to the mass market. Gyan Shala is a private school model that provides low-cost, high quality primary education in poor neighborhoods. They have been operational since 2002 and have successfully managed to provide quality education across 350 locations at Rs. 2,000-2,200 per child vs. Rs. 18,000 per child in a Government school in a metro.
Interesting approaches are being tried out in the content and curriculum space. While many players like NIIT Nguru have focused on developing products for the entire curriculum, there are others who are exploring specific areas within this. MadRat Games is a Bangalore-based company that specializes in developing board games in Indian languages. They not only design board games but also market them innovatively both as games and language learning tools, making language learning fun and interesting. Their flagship product, Aksharit has reached 200,000 children in 3,500 schools. Nokia has launched the mobile version of the game on 500,000 touch phones and other partners include Google and Intel. InOpen Technologies is a Mumbai-based company that has developed Computer Masti, a program to teach computer science in schools. Currently being used by 300,000 students across India, the company is a classic case of academia collaborating with business. Computer Masti is a collaborative product of IIT Bombay and InOpen Technologies. Led by Rupesh Shah, a young computer science graduate from IIT Bombay, the company remains a market leader in quality computer science curriculum for schools and is working with both public and private schools today.
Most people who grew up in India in the 80s and 90s would have grown up reading Tinkle magazine or Amar Chitra Katha. Other than these, there were few quality books available for kids that also helped them hone their reading skills. Karadi Path, an off-shoot of Karadi Tales, an audio books publisher, helps kids learn language through simultaneous reading and listening and is currently being implemented in various states.
4. Assessment and evaluation:
India has always had the high stakes annual end school exams that focus on rote learning but few comparative studies across schools to analyze learning outcomes. Educational Initiatives, a company that started in 2004 in Ahmedabad, has grown very quickly to fill the gap. The Assessment of Scholastic Skills through Educational Testing (ASSET) Test that they have developed is a scientifically designed, skill-based assessment test that focuses on measuring how well skills and concepts underlying the school syllabus have been learned by the student. The ASSET helps schools focus on initiatives like teacher training and also allows schools an opportunity to benchmark themselves and identify weak areas.
Many other businesses are looking at evaluation and testing now and offering it as a part of the overall service offering, be it at the school level or at the high education level, where students need to make career choices
Many studies have shown the impact of early childhood interventions on learning outcomes. The most rapid phase of a child’s development occurs in the first five years of life. In fact, the rate of return to investment in human capital is highest on funds invested into programs targeting early childhood education. Realizing this, many parents are now keen to send their kids to some sort of a pre-school program before they join a regular K-12 school.
The pre-school market in India is estimated to be at US$ 2 billion in FY 2012 and US$ 2.9 billion in FY 2015. While there are big pre-school chains such as Tree House, Eurokids and KidZee on the one hand, many standalone pre-schools have also mushroomed across metros and tier II and tier III cities. These pre-schools are being started and led mostly by entrepreneurial women who enjoy spending time with young children. The two main models of pre-schools in the country today are company owned and franchisee-led preschools. The franchisee led model promises higher growth in a short period time while the company owned model ensures that the company has greater control over teaching and methods deployed.Another interesting player in this segment is Hippocampus Learning Centres (HLC), who runs pre-school and after school centers for rural children at a monthly cost of Rs. 60-100 per child. Currently based in Karnataka, HLC wants to establish 100,000 centers in the next 7 to 8 years, addressing the needs of more than 3 million children in rural India.
The other factor that makes this sector much more interesting to investors is the relatively unregulated nature of this sector. Unlike the heavily regulated K-12 space, the area of early childhood education remains largely free of Government presence. This has its downsides with poor quality of teacher training and curriculum, but for the most part it is the consumers’ market, given the sheer number of players operating in this space today.
6. After school training:
The after school coaching and training market has so far been restricted to tuitions and test preparation focusing entirely on the upper and upper middle class. However, the need for something like this is far more acute at the bottom of the pyramid. In 2007, the percentage of Class V students who could read a Class II text was just 59% – falling to 53% by 2010. Naandi Education Support and Training (NEST) is setting up NEST learning centers to help children bridge this divide so that even students from underserved Government schools can compete with those from the finest private schools. Even HLC runs after school centers for children who attend Government schools in rural India. Interesting remedial learning models in the country are also being tried by various NGOs – Pratham’s Balsakhi programme in Mumbai and Vadodara being the most widely cited one.
This article is part of our Unitus Capital Expert Series.
 ASER 2011 Report
 APS Sector Analysis, Gray Matters Capital 2012
 Anand Rathi Report, December 2011