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As students of IIM-A, friends Vineet Ladia and Aravind Venkatraman did a lot of independent project research. And while doing so, it became apparent to them that there were numerous lacunae in the prevalent education system—not just in India, but also in any developing country. In India, especially, Ladia found that most people in academic circles were unaware of the newer technologies and methodologies being used in the developed world.

“We identified the gaps in the system and came across digital content,” says Ladia. “Through IIM-A, we went on an exchange program to the University of British Columbia, Canada, where we met a lot of people from different countries. We made friends with someone at a South African university who suggested we try out our model in South Africa, since the education scenario is similar in both countries.”

After completing their MBA in 2006, the duo went to South Africa and met up with ministers, schools, NGOs and traveled across the country. Within two months, they concluded that though South Africa was a difficult market, there was a definite potential there. By that time, however, their South African friend decided to part ways with them. Venkatraman and Ladia were left to fend for themselves.

“We opened our first Edukite office in Johannesburg and started building our team there,” says Ladia. “We also started a content-development team in India, since India has a lot of multimedia developers. South Africa, however, was a developed market with companies from the U.K. and the U.S. already present there. When we showcased our product, the initial reaction was that it won’t be able to withstand the competition. But, unlike in India, people in South Africa are willing to pay more for a good product.”

And so, they decided to get serious with content development. The venture was self-funded, with Ladia and Venkatraman investing about Rs. 10 lakh each. Today, Edukite sells its products in countries like Turkey, Mexico and the U.S. “This has been going on for the past three and half years, and we have now decided to enter the Indian market,” informs Ladia.

Their experience in the challenging South African market has done the duo a world of good, they believe. Edukite uses digital educational material to enhance the teaching and learning experience. Unlike their counterparts in the e-learning sphere, Edukite converts multimedia simulations into real classroom activity. The software they develop gives students the chance to actually experience the content they’re studying and get a hands-on understanding of the concepts. This leads the students to a virtual laboratory.

For example, if they are learning about the human heart, Edukite’s software lets them regulate the pressure and the flow of the blood through the vessels and the various compartments of the heart to see the effect on the working of the heart—virtually.

India has a population of 1.1 billion, with a literacy rate of just 61 percent. This has led to both the government and the private sector focusing on the education space, with total spending crossing $60 billion. However, government spending has proved to be ineffective over the past decade, as high spending has failed to translate into a higher rate of literacy or a better quality of education.

Private sector participation in the large sector is likely to mean a market size of $25 billion—with $35 billion for private players by 2012-2015 just in the multimedia and information and communication technology (ICT) sectors. India has 70,000-80,000 privately-run schools in urban India, of which multimedia companies have a target market of 15,000-20,000 schools.

As for Edukite not entering the Indian market earlier, Ladia defends his decision by pointing out that the awareness about content was very low in India back then. “We had approached about 50 schools in Gujarat before we realized that they could not really appreciate the product. The market was very nascent and premature, and it wouldn’t have given us suitable returns, given the kind of energy and investment we were putting into getting the software made,” he says.

Things have changed since then. Ladia believes a huge market is waiting to be tapped now, as today his competitors have penetrated just about 800 schools in India in the last ten years. Growth for these companies has been on account of sales to government schools, he says.

So what changed between 2006 and now for Edukite? “We have recouped our investment from the South African market, and we feel that the Indian market is also aware about software like ours,” says Ladia. “We [already] have about 20 schools in the Baroda region. Now, it takes me about half an hour to make
a presentation to a school; three years ago, most would have been clueless about what we have to offer.”

The company is currently in talks with two state governments. “However, clauses like a necessary turnover of Rs. 250 crore and software being used in 2,500 schools are an impediment for us to pitch for government tenders. It’s challenging, but we are able to show people the kind of experience we bring to the table,” Ladia explains.

Edukite hasn’t gone all out with retailing in India, though. “Some players are interested in licensing our product. We feel that the energy required to go to every school is too huge, compared to the remuneration. Instead, we are looking at different models, since in South Africa we could charge a premium based on purchasing power parity,” says Ladia.

The company is looking at revenues worth Rs. 5 crore from the South African market. For India, it has pegged revenues at Rs. 1 crore for this fiscal. And next fiscal, it is looking at consolidated revenues of about Rs. 14 crore.

Edukite has now set its sights on Mexico, as it presents much potential for growth. Further, Ladia and Venkatraman want to participate in government projects in India. “We are very cost-competitive, since we operate in other areas across the globe,” says Ladia. And this is just the first page for them.

©Entrepreneur December 2009

Tags:
Aravind Venkatraman, e-learning, education, Edukite, software, Vineet Ladia