‘Future holds tenfold growth in the organised sector’

The organised sector of India’s booming preschool industry is set for a tenfold increase in the coming years; believe Anurag Sharma and Kushal Suri, Executive Directors at Shri Ram Study World. In conversation with ENN, they also say that regulations should be well-thought before being implemented

anurag and kushalWhat are the current trends in the preschool business in India?
The preschool market in India has a huge appetite; there is a huge shortfall in supply of quality preschools, especially those that are children friendly. The market meets only 20 per cent of the total demand, out of which majority are non-branded ‘Mom n Pop’ owned institutes. There is a huge market for good quality, branded preschools in the country.

What are the different models in preschools? Is any model better over others?
Preschools in India could be divided into unorganised sector, organised sector and a K12 school-feeder model. The unorganised sector comprises of the majority of the market, the second being the organised sector which is very small at the moment but has huge potential. The future holds tenfold growth in the organised sector where a lot of foreign players will try to enter the space.

What is the role of franchisee in preschool education in India? What are the trends?
The franchisee plays a key role in this industry. With a steep rise in land prices, the economic viability and returns are very slow if one acquires land and builds the school. However, if the property owner is willing to rent the property, it makes more economic sense for him to take a preschool franchisee as it has a quick payback period and low investment, and can be opened anywhere within vicinity of offices.

In view of the increasing need for preschools across the country and classes, do you think it should be regulated?
In the present scenario, with government regulations and the present economy, profitability in any ongoing business appears meager. There is growing concern that strict ongoing regulation in the education sector shall reduce venture in education profitability leading to fewer good ventures in the field. I’m of an opinion that one should think twice on regulating this industry.

How lucrative is the business of preschool business in India?
The preschool business is the most lucrative business in the organised franchisee businesses in India at the moment. The payback period as compared to manufacturing sector is very fast, the gestation period is low, and it’s the most satisfying business in the service sector.

Global preschool chains are eyeing India for big opportunities.
There are a lot of global preschool chains eyeing the organised sector in the Indian market as there is huge potential. However, there is an impertinent need of the right local partner, who shall implement the curriculum effectively and cultivate awareness about preschool education and its importance in local areas.

Venture capital funds have evinced keen interest in the pre-school sectors.Have they been funded by VCs?
VCs have definitely shown a lot of interest in the preschool industry. There are Singapore, UK, Dubai-based funds which are looking to invest in Middle East, India, Russia, Brazil, China & Africa. The market in these countries is very big, and there is huge space for quality products in the organised sector. The pros of VC funding are the low gestation and fast return period of this industry. However, they are very hard to convince and the due diligence is very strict.

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