24 Good Businesses 2012

The gift of knowledge

Sudiksha runs schools that offer quality education to kids from bottom-of-the-pyramid families

RA CHANDROO

The big round clock at the gate shows 9.05 am. Kalpana, 5, is impatiently waiting to see off her father before rushing to school at Parigi in Ranga Reddy, a district just two hours south of Hyderabad. As he waves from the foyer, 29-year-old Shankar, who works as a tractor mechanic, can’t help but feel proud about his daughter’s interest in studies. But the person who is more than happy about the whole situation is 35-year-old Naveen Kumar P.

For someone who graduated with a degree in forest management from IIFM-Bhopal, in 2001, entering the education space was sheer providence. Initially, Naveen worked with NGOs such as Eklavya in Bhopal, Naandi Foundation in Hyderabad and ‘Aide et Action’, a French funding agency, in Chennai. In 2009, he joined Indus Academy, a four-year-old low-cost school franchise set up by an IIM post-graduate Satyanarayana. But a year later, Satyanarayana decided to pull the plug on Indus Academy, which was operating seven low-cost schools, as it was incurring losses. That’s when Naveen had an epiphany: why not run these schools on his own?

Coming from a village in Ranga Reddy district, Andhra Pradesh, Naveen had seen many of his relatives struggle to get quality education in good private schools. So he realised there was a huge demand for good education because the bottom of the pyramid communities, in villages and slums, do not trust government schools, especially at the primary level.

Though Satyanarayana counselled him otherwise, Naveen was adamant. The Indus Academy project had been “like a laboratory” for him. He had learnt the importance of school management, financial management, enrolment, marketing and brand building, among other things. That’s when Naveen went ahead and set up an education management company, Sudiksha Knowledge Solutions. While Naveen invested₹18 lakh in the venture, he managed to rope in his IIFM course-mate, Nimisha Mittal, who pumped in an additional ₹9 lakh.

Learning curve

Today, Naveen is successfully running 18 schools, of which 12 are pre-primary schools (Sudiksha Kids) in urban areas near slums in Hyderabad, three primary schools (Joybells Schools) in semi-urban areas and three primary schools (Indus Academy). Since schools in India can only be owned by a not-for-profit trust, Naveen created two legal structures. A trust (Progressive Education Foundation) that runs the school and books the expenses, and Sudiksha that owns all the assets — land, building, management and technology — and leases it to the trust for a fee.

But the important bit about Naveen’s business strategy is that he is setting up pre-primary and primary schools in rural and semi-rural areas where a sizeable number of people are looking out for private schools for their children instead of the regular government schools. Keeping that in mind Sudiksha charges fees in the range of ₹300-400 per month per student. “Kalpana used to earlier study in a government school but we were unhappy with the quality of education so we got her admitted into Joybells,” says her mother Mrinalini, a housewife.

And if Sudiksha has managed to convince parents like those of Kalpana it is because they are reaching out to families through outreach programmes that include door-to-door campaigning and experiential marketing tactics, such as library programmes and baal mela. A curriculum management team works solely on the learning modules by integrating international trends in creative education. Besides, the schools follow a flat management structure.

There is no headmaster or principal, only a teacher coordinator who, besides teaching, also handles administrative and human resource responsibilities. To keep costs low, teachers are recruited locally. But quality is not compromised. Prospective hires have to take a written test, followed by a group discussion and a personal interview. The chosen candidates undergo training, with an emphasis on activity-based learning besides being exposed to the Montessori philosophy of education.

Challenges galore

With a total of 440 students, Sudiksha generated a fee income of ₹1.76 lakh in FY12. Naveen needs 750 students to break-even operationally. While the search for students continues, Sudiksha is looking at additional sources of income. 

For instance, in 2011, Sudiksha earned #6 lakh when IL&FS conducted a training programme in leather fabrication as part of its community welfare initiative on its premises. While additional revenue streams are welcome, Naveen is looking at all possible ways to scale up except franchising. “As our schools are high on social impact and make a marginal return, the franchise model may not work,” he says. Hence, Sudiksha is looking at ‘creating’ entrepreneurs, especially women, by paying them ₹3,000 to ₹4,000 per month and 10% of the profit. In turn, they identify new locations to set up schools and canvass for students, while Sudiksha creates the infrastructure.

Notwithstanding the fact that Sudiksha has been able to set up about 18 schools in the past two years, Naveen has set an audacious goal of setting up 200 schools by FY16, across states such as Andhra Pradesh, Maharashtra, Madhya Pradesh and Delhi. Fanning Naveen’s ambition is Eleos Foundation, a venture capital fund which bought a 10% stake in the company last year. Whether Sudiksha manages to achieve that number would largely depend on more families like that of Kalpana’s making that
big switch.

unsub

You don’t want to be left behind. Do you?

Our work is exclusively for discerning readers. To read our edgy stories and access our archives, you’ve to subscribe