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Kota-based institutes see admissions drop by 31% in 2024: Allen’s Rajesh Maheshwari

EntrackrEntrackr · 1y ago
Kota-based institutes see admissions drop by 31% in 2024: Allen’s Rajesh Maheshwari
Medial

Rajesh Maheshwari, founder director at Allen Career Institute, has acknowledged that admissions to Kota-based educational institutions have declined this year. In a note to educators, as seen by Entrackr, Maheshwari stated that admissions this year so far are down by nearly 31% compared to the previous year. He, however, attributed this decline to “disinformation” [translated from Hindi] against the city of Kota. Maheshwari disclosed that there have been 46,000 admissions in the medical quota, which is down by nearly 33% from the previous year. Similarly, there have been less than 24,000 admissions in the IIT category compared to 33,000 last year. He added that total admissions are less than 80,000 this year, compared to 115,000 last year. “We stood together during a tough situation like COVID and showed the world why Kota is the frontrunner…,” Maheshwari said in the note [loosely translated from Hindi]. “Allen has performed well in all examination categories… There has been good work in the areas of student care too, which has helped reduce disinformation,” he added. It is worth noting that the admissions rates have been declining for a while. In September 2023, The Ken reported that Kota saw nearly a 20% decline in student admissions since June 2023. Kota, a city in Rajasthan, has become a major hub for students from across the country preparing for competitive exams, such as IIT or medical entrance tests. Institutions like Allen have been pioneers in establishing the city as an educational hub. The coaching industry is pegged to be worth Rs 6,000 crore. But there is a dark side to the city as well. While there is always a rush to get admissions in such institutions, the city is now mushroomed with small-sized hostels and paying guests. Moreover, there have been accusations of putting a high pressure on students to perform. In 2023, as many as 23 students died by suicide. It is worth noting that this number was 15 in 2022. In a bizzaire order in 2023, local administration ordered hostels to install a spring device on ceiling fans, dubbed as ‘anti-suicide’ device. Maheshwari’s comments come amid ongoing controversies over cancellations of several key examinations over paper leaks. There have been sporadic protests as well. As far as the Kota factory goes (pun intended), we’re likely to see city-based institutes offer more lucrative facilities, discounts, and other incentives to retain students and compete with each other. However, we’re not very sure if this will address the real despair of aspirational students in the country. We have reached out to Rajesh Maheshwari to understand more about the admissions and efforts to improve students’ care. We will update the copy as soon as we hear from him.

Related News

Allen nears Rs 3,500 Cr revenue in FY24, profit shrinks 44%

EntrackrEntrackr · 7m ago
Allen nears Rs 3,500 Cr revenue in FY24, profit shrinks 44%
Medial

Offline coaching institutes have been finding it tough to scale their profits, and Allen Career Institute is no exception. The Bodhi Tree-funded firm reported a 44% year-on-year decline in profit for the fiscal year ending March 2024. In the second half of this story, we’ll delve into the expense patterns that led to this decline. For now, let’s focus on its revenue and sources. Allen’s revenue from operations increased 42% to Rs 3,244.7 crore in FY24, as compared to Rs 2280.8 crore in the previous fiscal year, its financial statement filed with the Registrar of Companies shows. This growth was driven by a 42.2% increase in service income, reaching Rs 3,215 crore, which accounted for 99% of the revenue, and a 51% rise in product sales to Rs 8 crore. Income from product sales vertical grew by 51.4% year-on-year in the last fiscal year. With a 98.9% increase in interest income, the company’s total revenue reached Rs 3,473.2 crore in the last fiscal year. Employee benefit costs were the largest expense for the company, rising 68% to Rs 1958 crore in FY24. The cost of materials increased by 74.2% to Rs 123.5 crore. However, its marketing expenses spiked by 2.3X to Rs 117.9 crore. Overall, the company’s total expense surged 63% to Rs 3252 crore in FY24 from Rs 1993 crore in FY23. Due to higher spending and relatively lower revenue growth, the company’s profit declined by 44%, falling to Rs 135.9 crore in FY24 from Rs 243.7 crore in FY23. While its EBITDA remained stable at Rs 629.8 crore, margins declined to 18.13% in the last fiscal year. Further, the firm’s ROCE declined to 9.26% from 14.7% in FY23. On a unit basis, Allen spent Re 1 to earn a rupee of operating revenue in the fiscal year ending March 2024. Allen's financial position remained stable, with total assets rising by 10.8% to Rs 5,759 crore and cash and bank balances improving by 19.8% to Rs 1,958 crore. Current assets also grew by 8.2% to Rs 2,795 crore, while capital employed expanded by 15.9% to Rs 3,630 crore. While Allen maintained revenue growth and a stable financial position, the significant rise in costs and a drop in margins underline the challenges of scaling in the offline coaching industry. The decline in profitability signals a need for further optimization as the company navigates an evolving education sector landscape. Allen Career Institute is reportedly in early discussions to acquire Unacademy amid a 31% year-on-year decline in admissions to Kota-based institutes in 2024. The waning popularity of the city-based coaching culture is set to impact the top and bottom lines of Allen, and FIITJEE(FY25). However, they remain better positioned compared to their online counterparts, Byju's and Unacademy. FIITJEE, Allen's closest competitor, operates at approximately one-fourth of Allen's scale. While FIITJEE has yet to disclose its FY24 financials, it reported a 21% year-on-year revenue growth to Rs 542 crore in FY23. In the same fiscal year, Allen's income stood at Rs 2,277 crore. Another competitor, Aakash, which was acquired by BYJU'S, anticipated crossing the Rs 3,000 crore revenue mark in FY23. However, its audited financials for FY23 and FY24 are yet to be released. Allen’s PE deal in some ways marked the peak of the edtech boom, as the last of the large firms that had held out until then before taking the plunge. It is showing signs of the same, with pressure to spend their way to some sort of leadership, even at the cost of margins that the firm always had before the funding. The Unacademy deal, if it works out, will be yet another investor-backed deal no doubt, to beef up the balance sheet size. Will that really be the solution the firm is looking for to combat future risks? One has to wonder, considering just how fast the market is evolving, and the challenges of integrating such a firm within the Allen culture.

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