When M. Venkata Narayana envisioned providing quality education at an affordable price, he did so by starting a junior college in Vijayawada, Andhra Pradesh (AP) in 1984 that went on to receive positive feedback from both the students and parents. With over 25 years of teaching experience at various levels, as the founder and chairman of K12 Techno Services Pvt. Ltd. (K12) that vision still continues to this day. The Secunderabad-based company offers many schools management services so that schools can focus more on imparting good education. Some of its services include curriculum development, books, student counselling, student management technology, assessment solutions, event management, brand building and soft skills development.

“It helped when we suggested a revenue sharing model and hiring and training of quality personnel.”

When K12 was featured in The Smart CEO in October 2010, the company was founded the same year and had already received investment from venture capital firms, Sequoia Capital and Song Investments for US $15 million. With most schools being run by few organisations or family businesses, it was tough for an outside commercial entity like K12 to convince schools onboard. M.S.C. Srikanth, director, says, “It helped when we suggested a revenue sharing model and hiring and training of quality personnel.” Back then, it was also overseeing about 60 schools under its Gowtham Model School brand, which caters to middle class segments looking for affordable education. In this short span, K12 now has 80 state board schools functioning under this brand, 10 junior colleges and one international school under its Orchids International School brand that caters to the high end category, all spread out in AP. According to Narayana, the company’s revenue has increased by 20 per cent in the past year.

Building network
The company has also received more rounds of funding from Sequoia again in March last year for Rs. 25 crore, but the company is yet to receive the amount. Its third rounding of funding came from Mumbai-based stationary products maker and publishing firm Navneet Publications for an amount of Rs. 45 crore in September 2011. This investment will be used to set up 10 more schools in Hyderabad and make K12’s foray into Odisha, Maharashtra and Karnataka. “We are currently in the process of selecting locations where the population is more than five lakh, for instance, in places like Cuttack in Odisha. We would be able to finalise by April end,” says Narayana. Srikanth adds that these states were chosen because of its proximity to AP, familiarity of the Gowtham brand due to the presence of Telugus and a greater degree of success in replicating their model. The plan is to set up at least 10 – 15 schools in each of the three states with a total of 30 – 50 schools by next financial year. K12 has also entered into a separate joint venture with Navneet to take the company’s services to Maharashtra and Gujarat with a combined investment of Rs. 20 crore from both companies. “We are concentrating on Maharashtra first, Gujarat will be a bit delayed,” Narayana shares. By focusing on CBSE (Central Board of Secondary Education) curriculum and the availability of two acres of land, the team will begin its operations.

This is the first stage of its expansion plans. The schools in these three states will be operated on experimental basis. “Based on the performance of these schools, we will further expand to other states such as Uttar Pradesh and Bihar on an experimental basis by 2013 – 14,” shares Narayana. With a corporate team of 180, it has also appointed a team of five in each of these three states. The funds are also being used to ramp up its other services as well, mainly extending its teacher training, principal training, hiring and providing smart boards to classrooms. K12 also provides services to 10 (four existing and six upcoming soon) other schools under different management as well, besides the schools under its Gowtham Model brand.

Continuing challenges
In 2010, one of the biggest challenges K12 was facing was the shortage of well-qualified teachers. “That problem still plagues us – it is hard to find quality teachers throughout India. We identify candidates after a selection process and train them for three months to nine months, depending on their qualifications,” says Narayana. About eight to ten per cent of the company’s revenues are utilised for this purpose. It also expanded its other services, namely its transportation to schools – providing logistics is one of its important services now. K12 has added 70 more buses this financial year taking its fleet to 400.

Another one of its significant services is curriculum development and the company is soon bringing out its very own K12 curriculum for standards first to tenth that will be based on the CBSE curriculum but will be closer to the State Board one. However, K12’s effort to provide vocational training when it tied up with Bengaluru-based India Skills did not provide much traction since very few opted for vocational training over professional courses. Narayana hopes to revive it in a couple of years.

Moving ahead
Every year, 4000 students pass out of its Gowtham Model School from 10th class and 5000 from 12th class. So far, 12,000 students from 10th class and 10,000 students from 12th class have passed out in its three batches since having commenced its operations. Its marketing strategy is simple, says Narayana. “We regularly interact with parents, advertise on print and electronic media, conduct events in schools every Sunday from February to June and also have a monthly newsletter. But more importantly, our results speak for the company’s emphasis on academics,” he shares. By providing all round development, Narayana believes K12 can stay ahead of the curve. Srikanth affirms that the potential of this sector is huge. “When we posted an advertisement in a local paper in early 2011, we received 190 responses a day. It showed the number of school managements that require such a service,” he says.
One of the most important changes the company has seen ever since its first investment was the professional management of matters. “We have since streamlined our operations, generate sufficient revenues and hire from some of the best institutions,” says Narayana. For FY 2012, its turnover is over Rs. 100 crore, up from above Rs. 80 crore in FY 2011. He now targets revenue of over Rs. 120 crore for FY 2013. “The past two years, our growth has been on an average 25 per cent. The next three years, it will be 30 per cent,” he states confidently.