Source: Mint via PwC – EdLive
The change in education policy makes it imperative for smaller companies to tie up with bigger organizations. The consolidation in India’s fragmented and unregulated test preparation industry continues with small local entities getting acquired by bigger ones.
The latest is the listed coaching company MT Educare Ltd. acquiring a majority stake in Lakshya, a chain that prepares aspirants for admission to the Indian Institutes of Technology (IITs). The trend has picked up largely because of three reasons—a change in education policy, the modification of exam formats and efforts by leading test-prep companies to expand their portfolio. For smaller companies it is a question of survival as a merger or partnership with a bigger entity allows them to be competitive in a changing environment. In the last three years, the common admission test (CAT) conducted by the Indian Institutes of Management (IIMs) has gone online. The civil service exams have become more like CAT by adopting an aptitude test. In May, the government decided to give 40% weight age to school board marks in engineering college admissions. The implementation of a single, online entrance system for selection into all engineering colleges including IITs has made it difficult for smaller coaching centers without the capability of delivering national-level tests. Adding to this is the stress on English language capability in both CAT and the civil service exams and the growth of a blended tutoring format that combines elements of the classroom with distance education.
According to a Crisil Research report, from 40,187 crore INR in 2010-11 the tutorial business is expected to grow to 75,629 crore INR by 2014-15. Sensing that the business was set to expand, Educomp Solutions Ltd. acquired Vidyamandir classes in 2010 and Triumphant Institute of Management Education Pvt. Ltd. (TIME) took a majority stake in Veta, an English language training chain in south India. The acquisition made Educomp a complete education company catering to students from school to higher education and finally the job market. For TIME, the acquisition was aimed at making its MBA coaching more robust.