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Deal Radar 2009: Elements Akademia

Posted on Tuesday, Sep 1st 2009

The education market in India was recently estimated at $30 billion, with an ‘employability training’ segment pegged at about $1 billion. Today’s Deal Radar company aims to emerge as one of the top providers in this segment and capture a 7%–8% market share. Elements Akademia runs India’s first chain of finishing schools aimed at bridging the gap between academic theory and industry requirements and thus make graduates more employable. Students are taught ‘the nine employability skills’, which include attitude, business communication and spoken English, personal grooming and presentation skills, customer service, behavioral skills, basic IT, an overview of the service sectors, corporate awareness and ethics.

Founded in 2007, Elements Akademia is run by 12 Indian Institute of Management (IIM) alumni with several years of experience in various blue-chip companies. The CEO, Nishant Saxena, has experience at Proctor & Gamble in India, Japan, Singapore and the Philippines. Vinay Sharma, COO, has 12 years experience at companies such as Bharti Airtel, Comsat Max (a JV with Lockheed Martin) and Blowpast. The company has been funded entirely by angel investors and its own management team. It has offices in Lucknow, Kanpur, Jaipur, Bhopal, Gurgaon and Noida and plans to increase this number to 20 by 2010.

Elements Akademia focuses on Tier II and III towns and cities in North India. The standard six-month part-time program is a combination of proprietary content, structured delivery, periodic assessments, counseling sessions, and final placements at institutes. The course is offered through three channels – undergraduate and graduate colleges, through the company’s own retail centers and through tie-ups with government bodies and micro finance institutes (MFIs). Elements Akademia has 12 partners who sign a MoU providing a total of 8,000 annual openings. Partners include Max New York Life, HDFC, WNS, Accenture, Shopper’s Stop, Kotak Mahindra Bank, and Bank of America Continuum. While the usual selection rate in these companies is 3%, Elements students typically deliver a hiring rate of 60%. Elements has also tied up with the KJ Somaiya Business School, a top 20 MBA program in India, to collaborate on course content; all students receive certificates formally endorsed by KJ Somaiya.

Although India’s service sector has grown tremendously in the past few years (60% of GDP, up from less than 40% in 1970), the country faces an acute shortage of skilled workers. India has a large graduate pool of over 15 million people and 2.5 million new graduates every year, but employment in the organized sector is only 13% Elements aims to make over 10,000 Indians employable annually through its programs.

The company aims to set itself apart from the competition by providing high-quality training with small class sizes of 12–20 students. Another area of strength is Elements Akademia’s corporate partnerships developed in the banking, BPO, retail and sales and operations sectors. Elements is one of the few courses to offer a complete curriculum with a focus on an overall well-rounded ‘finished’ product. The management team of IIT graduates is another key factor which sets Elements apart. On the downside, the company lacks a strong brand name and has limited funds for marketing and advertising. Also, several new entrants are making the marketplace crowded.

The training class market has several national and local-level competitors. These comprise of one-stop shops offering English or computer training but are often uncertified and offer a low quality of education. Most national players focus on a single sector, which can make placement difficult. Other courses such as NIIT (computers), Frankfinn and AHA (air hostess training) and IHM (hotel management), typically offer one- to three- year programs, with fees ranging from Rs (rupees) 30,000 to Rs 3.5 lakhs ($600–$7,000). At the end of these programs, students can expect a monthly salary of Rs 2,000–6,000 ($40–120) on the lower end and Rs 14,000–20,000 ($280–400) at the higher end. Their placement success ratio is 20–40% on average. Elements Akademia costs students Rs 15,000–20,000 ($300–400) but has a higher placement success ratio of 50–70% and a higher average monthly salary of Rs 5,000–15,000 ($100–300).

Elements Akademia is cash positive and has been generating a profit every month in its first full financial year. The company is on track to deliver a 50% return on equity in its second year. There are currently 1,000 students enrolled in their programs, and over 40% of new admissions happen through referrals.

Approximately 70% of old students, who were previously unemployed, have found jobs at Rs. 5,000–15,000 ($300–400) per month. In most cases, this salary almost doubles an employee’s family’s total monthly income and increases monthly disposable income three- to fourfold. Element’s newest product is a focus on making professional college students employable. This concept was presented to 10 college owners in the past four months, and six have signed annual deals of approximately Rs 20 lakhs ($40,000), at 40% margins. Elements plans to expand this institutional business by reaching out to over 500 professional colleges that offer BE and MBA programs. At the company’s current deal size, this translates into a potential opportunity of Rs 100 crores ($2 million).

The company is also aiming to have 20 centers by 2012, which means three new centers each year for the next three years. It will also increase the number of placement tie-ups so that more students can be placed successfully. As Elements grows through franchising and alliances, it will need to focus on maintaining its quality standards. The company’s long-term vision is to explore the international developing market in places such as China and Eastern Europe.

Recommended Readings:
Education & Technology: Now is the Time – HotChalk CEO Edward Fields
Deal Radar 2009: Lakshya Institute

The Education Problem: Raj Reddy

This segment is a part in the series : Deal Radar 2009


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