No kidding, pre-school business is a billion-dollar baby

No kidding, pre-school business is a billion-dollar baby

Every day, around 178 toddlers flock to a cozy little building located on a tree-lined lane off the main road at Basveswarnagar in Bangalore. The walls of this building are painted in bright colours with pictures of animals, flowers and fruits. Inside the low-fenced compound sit a tiny swing, slides, see-saws, bicycles and a mini basketball court. The building has seven classrooms and a mini gym for the tots, who range from a year-and-a-half to four years in age. There are eight other preschools in a 1-1.5 km radius around this one. Some of these are branded, while the others are run by neighbourhood "aunties." Still, demand is as strong as ever, says Suma Swamy, the coordinator. "Parents have started realising that this is a professional setup providing ample exposure." There is enough room for several schools to stand cheek by jowl, says a teacher at Little Crest, another preschool situated just behind Aarambaa EuroKids, who also goes by the name Suma. Like in the Basveswarnagar area, preschools are sprouting within kissing distance of each other across almost every big and small city. The scenario has changed a lot from a decade or so earlier, when preschools were still a nascent concept, say experts. "When we started in 2006, we had just 10 kids. The number grew by four times the following year, and today we have 200 kids," says Manjula K N, head (accounts & administration), Kara4Kids, a preschool chain having three centres in Bangalore. Sumathi A R, a preschool teacher in the IT city, says earlier the idea was just to engage tots in a school environment in order to prepare them for the main school. "But today, the objective is also to educate them so that they are ahead of their peers in this competitive world." Experts say parents don't think twice before spending as much as `30,000-50,000 per year for the education of their two- or three-year-old kids. Not surprisingly, some preschools have margins as high as 30%. "The fees of good preschools start from `12,000 per year and go on till `50,000, depending on the city and location. Ten years ago, spending in thousands for the education of a kid who could barely walk or talk was unheard of. But today it is the norm," says Sumathi. No wonder then that estimates by Religare Institutional Research peg the preschool market in India at $770 million, and slated to reach $1 billion by 2016. This $770 million currently comprises just 2.5% of India's urban school going population. "The potential is tremendous, not just from the metros but even really small places like Rudrapur, Tinjore and Yamunangar," says Amol Arora, managing director, Shemrock Preschools, headquartered in New Delhi, with 130 preschools across India catering to 8,000 kids. Shemrock aims to grow 20% every year. Pritam Agrawal, director of Bangalore-based Hello Kids which has 137 preschools in 21 states, says the demand from small towns has increased so much that he is mainly looking at targeting places with 20,000 households. EuroKids International, which has 812 centres in India, expects to grow at a compounded annual rate of 25%, says Prajodh Rajan, director, education services. "We want to have 2000 preschools in the next five years." Several factors contribute to this trend. Arora points to the increasing preference for all things branded. The spending capacity has also multiplied, given the booming private sector, particularly the IT sector, says Manjula from Kara4Kids, which has grown just through word of mouth. Swamy of Aarambaa EuroKids says the organised players stand out for their curriculum and teaching methodology. "We take any theme and introduce different learning styles. If "fruits" is the theme, we explain by telling stories on fruits, holding puppet shows, taking the kids to the fruit market, bringing fruits to class, cutting them and asking kids to taste," says Swamy, adding that this one concept goes on for a month and each day a different fruit is introduced. "Such a technique helps in better registration of the concept as the kid gets to touch, taste and see the fruits." Suma of Little Crest, which has five centres in Bangalore, says extensive training is provided to teachers on the teaching methodology as well as child psychology. Also, most preschools keep a healthy teacher-child ratio of 1:10 along with a helper, a factor given importance by parents. Despite being run in batches, as the operational time of preschools is less than six hours, several like Little Crest, Tree House Education have started utilising the space by incorporating daycare centres to mitigate the real estate expenses and rentals. EuroKids, on the other hand, uses its centres for dance and theatre classes to increase asset utilisation.