Deal Radar 2009: Lakshya Institute

Lakshya was formed with an aim to revolutionize the way learning is perceived and teaching is delivered. The basis of the process is that “Learning can be made interesting”.
Lakshya’s goal is to operate and sustain a parallel training system to schools, from K-12, using a unique instructional methodology, to provide students with more tangible education.

Four friends from the Indian Institute of Technology (IIT) started the company in 2005, soon after their graduation. Just months after taking up lucrative jobs they yearned to do something of their own that would help inspire and empower people. They saw in education the power to revolutionize the way a whole generation thinks and the attitudes they inculcate. Lakshya was founded by Anand Prakash, Pulkit Jain, Saurabh Saxena, and Vamsi Krishna, all executive directors.

Teaching students for the IIT competitive exams was a natural choice for the founders. After some research on service providers and customers, the team was confident of a sustained revenue flow in the test prep sector. A few months later they were certain that talking to and motivating people, and sharing ideas and values was something they loved. The founders pooled their savings to get started. Their second round of money came from a previous employer, Ranjinder Gupta, MD of the Trident Group, an angel investor who put in 5 lakhs rupees ($10,000) interest-free for a year. From that time, Lakshya has been internally financed without the need for external funds.

The company uses a twin focus strategy of pedagogy and training. With this approach, instruction is provided via a ‘teacher + innovative digital content’ module. Content is conceptualized in-house by subject experts comprising a team of 12 graduates from IIT and Thapar University. Teacher training is also conducted to bring uniformity in delivery, with the main focus being to bring an organized approach to the education sector and innovate the way teaching has been delivered.

Lakshya currently operates through three verticals. The first is one- and two-year IIT-JEE (IIT Joint Entrance Examination), AIEEE (All India Engineering Entrance Examination) and medical training, where instruction is through regular classroom instruction, test series and distance correspondence education. The second vertical is iClass, where Lakshya goes on a contract with a school to train its own students. Last is Junior Wing, where there is regular classroom teaching for ninth- and tenth-grade students. The customers in this vertical have shown a tremendous response and the management team intends to scale this section up next year.

Currently Lakshya focuses on medical and engineering aspirants from the ninth through the twelfth grades. Entrance exams in India are extremely competitive, and students often need to join hard-core test preparation classes to help them qualify for the exams. The test prep segment for engineering and medical programs is fragmented, crowded and unorganized. The system is heavily dependent on individual teachers who deliver lessons through coaching centers and their personality. Lakshya faces competition through two main segments: organized coaching classes and unorganized local tuition classes. There are a few big players in the organized sector such as FIIT-JEE, Resonance, Mahesh Tutorials and Educomp’s Learning Hour, but the industry is generally self-employed. In the unorganized sector, competition is in the form of every local tutorial class, which is run by local tutors, who may often be schoolteachers themselves. The recently imposed law banning after-school tuition by schoolteachers should prove to be a boon for the company.

The K?12 tuition market in India is estimated to be $6.5 billion. The test prep market for the sixth through the tenth grades is estimated to be around $5 billion. Engineering and medical entrance examinations test prep in particular amount to a $2.5 billion market. Lakshya’s opportunity lies in the size of the market and the prospect of creating a strong system which is not entirely teacher-dependent.

The company believes that its USP lies in its single- minded focus on students and academics. Another selling point is the twin focus on pedagogy and training. Averse to a franchisee model, the founders believe in nurturing in-house entrepreneurs. The company also focuses on students’ emotional needs and has an Aacharya, a spiritual counselor and a yoga teacher to deal with the stressful aspects of preparation.

Lakshya broke even in its second month of operation. In the first year, turnover was 26.8 lakhs rupees ($54,000) with 12.7 lakhs rupees ($254,000) as profit. In 2007-2008, they saw a turnover of 1.20 crores rupees ($240,000) with combined profits of 78.8 lakhs rupees ($158,000) including 48 lakhs rupees ($96,000) in fixed assets, an overall growth of around 348%. For 2008-2009, the company estimates revenue of 250 lakhs rupees ($500,000) and profit of 150 lakhs rupees ($300,000). The number of students has grown from 280 to 1,020 and the number of employees from eight to 49 in the past four years.

The company wants to expand in the pre-tenth grade sections. Their target is to reach 30,000 students by 2012 in the test prep and pre-10th segment. By 2012, Lakshya aims to open 20 centers and have an enrolment of 28,000 to 30,000 students.

Recommended Readings:
Vision India 2020: MIT India
Education: Should Entrepreneurship 101 be Compulsory?

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