Lecture Notes: Running Schools in India with Kunal Dalal

Introduction

• Speaker: Kunal Dalal, Managing Director at JBC Education
• Group: Runs a group of international schools in Mumbai, India

School Market in India

• Interest: Education sector receives significant investor interest
• Comparison: Indian education GDP spend lower than other countries

Government Initiatives

• Government focus on education over last 5-10 years
• Increasing opportunities in the education sector

EdTech vs Traditional Education

• EdTech: Different from traditional education, based on valuations and funding
• Traditional Schools: Includes K-12, medical, engineering, and MBA colleges, must be run as nonprofit entities

Regulatory Framework

• All schools must be nonprofit entities (charitable trust, society, or Section 8 company)
• Supreme Court Order: TM Pai Order allows reasonable profitability in education

Policy and Incentives

• Education aimed at building Legacy and not for short-term profit
• Capital required for quality education in rural and tier-4/5 cities
• Education is a long-term, capital-intensive business

Business Motivation

• Adds to the brand value of the organization
• Access to CSR funds for capital
• Builds relationships through difficult admissions

Financial Aspects

• Annuality income: Steady cash flow over the long term
• Risk: Need to take long-term decisions for school health over short-term financial gains

Revenue Calculation

• Revenue based on number of students multiplied by fee per student
• Example: 1000 students, fee INR 5 lakh/year = INR 50 crore/year

Fee Determinants

• Board and curriculum offered
• Student-teacher ratio maintained
• Location of the school (affects property tax, electricity costs)

Government Regulations

• Fee Control: No fee regulation, but controlled fee increment (visibility for 10-12 years)
• Permissions from various government bodies required
• Between 43 to 48 approvals needed

Setting Up a School

• Steps: Identify philosophy → Assess area and viability → Secure trust/entity → Gain permissions
• Categories: Building infrastructure, board affiliation, safety, teacher qualifications
• Process meticulous and time-consuming

Growth Strategies

• Rental vs ownership of land
• Pan-India operations complicated by varying regulations

Franchise Models

• DPS uses franchise model, groups like Podar and Ryan manage their own
• JBCN prefers own management for quality control

Revenue Beyond Fees

• Limited additional revenue sources in premium schools
• Renting out infrastructure post-school hours for additional income

Financial Viability

• Investment returns vary by debt, infrastructure built-in phases
• Consolidate revenues and reinvest in long-term growth

Education Boards

• Emphasis on IB (International Baccalaureate) and Cambridge programs
• Traditional boards teaching styles vs international boards focusing on skills
• Personal experience with IB and its impact

Skill Development

• Assessments prioritize understanding and application over rote learning
• Focus on concept-based, relevant education

Adapting to AI

• Embracing AI as integral to education
• Teachers recognize student capabilities beyond assignments

Teacher Retention

• Creating positive culture and environment
• Transparency, alignment of vision, and professional development key

Personal Journey

• Inspiration from mother, initial struggles, reliance on learning from mistakes
• Collaborated with Rakesh Jhunjhunwala for initial funding
• Consulting background before establishing own schools

Covid Impact

• Transitioned smoothly to online education
• Increased student numbers amidst the pandemic
• Transparency and support to parents and staff helped sustain operations