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New Financing and Business Models in Education

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seemaSeema Jhingan,  Partner, LexCounsel  Law Offices, New  Delhi
There are lots of challenges in finding investors in education. In India, education is considered as a non-profit making  sector. For profit entities like partners firm, cooperatives, private limited companies, investments is not a challenge. But  with education, which is formed under entities like societies, trusts and Section  25 companies, finding  investor is a real challenge. Investor or VC  funds cannot invest  in trust or society  because they cannot  reap benefits out of  them.

NaveenNaveen Jha, CEO, Deshpande Foundation;  and Managing Trustee, Deshpande Education Trust;  President-TiE-Hubli
Most of the companies think  that investment happens  on top line. The new set of  investment that is happening  in the country, which is  particularly in education is  happening on PACT (Profit  After Tax). Even if you have  `1 pact there are investors  who are ready to give you  20 times of that. But if you have a top line of 50 crores and you  are not profitable means the execution is a big problem inside the  company and we as Indians are far better in giving ideas, chalking  out strategies, but lack in the execution side. If you are running a  company, or a business and, if you have `1 of profit, it is more  valuable than `100 of top line.

Ujjawal Singh, Partner, Indus Balaji
I think private players like us are looking to invest in innovations so that we can play a meaningful  role in the education sector. For instance, we support an organisation called ‘Agastya’ that designs  low-cost science equipment. So  here is a huge opportunity lying in the philanthropy and innovation  format that can be used to supplement the education system. Various sectors require very specific  skills. I think India’s demographic dividend has to be converted into human capital else it will  become a liability.

 Melwin Braggs, Business Lead, Develop Schools
India’s private education market is estimated to reach USD 103 billion from USD 71 billion currently. New models of PPP in the skill development sector are assisting the vocational education sector. We see expansion in education with participation of private  and foreign players. For that, the sector should be turned into for profit. Government  can allow long-term lease on land and infrastructure. It may cap profitability, but allow  a rate of return to the investor.

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