Friday, December 19, 2014

Kota – Expenses, History and the Coaching Sub Industry – Part 2

I saw this board, while walking around the city of Kota. It had a picture of the Indian Actor, Boman Irani and there was this statement next to it,

'Life is a race' Is it always?

How much do students spend on these coaching classes?

Students spend between Rs 40,000 to Rs 1 lakh on coaching institute fees every year. The annual lodging and boarding expenses go up to Rs 80,000.

The Business of coaching is further described in the article as such,

The institutes and related businesses such as hostels, stationery shops, cyber cafes and photocopiers have spawned an industry with estimated annual revenue of Rs 1,700 crore. For instance, there are an estimated 500 private hostels in Indra Vihar and Rajeev Gandhi Nagar localities alone. Overall, nearly 70 per cent of Kota's economy depends on these businesses. The lure of some coaching centres is such that students even have to take an entrance test to join these institutes. In recent years, however, growing competition among coaching centres has led to simpler entrance tests. Most institutes admit almost all students who apply as they do not want to lose revenue. "If we say no to a student, he will take admission at some other institute," says Pramod Maheshwari, a Kota native and IIT-Delhi alumnus who founded Career Point in 1993.”

History of Kota

Kota is the third largest city in Rajasthan and is located about 240 kilometers away from the state capital of Jaipur. As described on many web portals, Kota’s fame today is driven by the all India fame of its coaching classes, it is regarded as one of the largest coaching hubs in India.

Here is a history of the first few coaching institutes, founder backgrounds and the students that got into the IIT that eventually sparked the coaching revolution in India.

As described in the Business Today article 

The foundation of the coaching industry was laid in early 1980s by V.K. Bansal, an engineer at a J.K. Synthetics factory who began his teaching career by taking math tuitions for local students. Slowly, his students started clearing the IIT exams. In 1986, Kota came in the IIT limelight when local boy Sanjeev Arora topped the entrance exam. Bansal says 13 of his students cracked the entrance test in 1990. In the mid-1990s, after the closure of the J.K. Synthetics factory, several engineers joined Bansal Classes. Many of them later started their own institutes. One such was B.V. Rao, who founded Rao Academy. Kota's image got another boost in 1995 when 51 students from the town made it to the IITs. This further attracted aspiring engineers and teachers.”

Start a Chain – Hire IIT Graduates as Teachers 

Many of the coaching institutes go into the IIT’s for campus placements to hire IIT Graduates. This trend stopped in 2002, when the IIT’s stopped institutes from doing so. But coaching institutes in Kota still continue to lure teachers to their institutes with promises of a high initial pay package.

The top teachers from Kota earn anywhere between Rs 30 lakhs to Rs 60 Lakhs. A Korean education company based in Kota recently made an offer for over Rs 1 crore annually for a good professor.

As described in the Business Today article on Kota titled the Dream Factories in the May 12th, 2013 report, “Such was the euphoria at the time that coaching centres started hiring IIT graduates as teachers. R.K. Verma, an IIT Madras alumnus who founded Resonance in 2001, had also initially joined Bansal Classes. Maheshwari of Career Point recalls recruiting 12 faculty members through campus placements at IITs in 1997. This trend continued until 2002, when IITs stopped allowing coaching institutes to participate in campus placements. But hiring was still possible as institutes started putting posters in hostels and fresh graduates could directly apply. Today, almost 35 per cent of the coaching fraternity is from the IITs.

Train Them. Get Them into IIT. Then Hire Them. Keep the cycle running. This seems like the mantra.

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