International Institute of Vocational Training (IIVT)

Abstract

Description of Business concept and the business: Our business focuses on a vocational training which will provide training to those students that are otherwise unsuccessful in the traditional 10+2 Indian education system or even those that do not even enter the proposed system but endeavor to follow trade practices that may be prevalent in their villages or community We propose to initially set up a institute, named International Institute of Vocational Training (IIVT) that will initially provide training for three complementary types of tradesmen; welders, electricians and plumbers, yet maintain the scalable model to cater for expansion in the future. This will have 3 institutes in the first year followed up with 125 more in next 4 years.2.2. Opportunity and Strategy As a country in the midst of development and educational reforms, India has the favorable factors permitting opportunities for significant growth in the Indian Education Sector. Indian Education Sector (IES) is characterized with paradoxes. On the one hand there are elite institutes like IITs and IIMs where lakhs of students every year vie for handful of seats. On the other hand there are lakhs of 10th or 12th pass students who are filtered out of the school education system due to their lack of adaptability to the traditional schooling. A large proportion of these filtered out students remain bereft of any good vocational education either due to ignorance about vocational training or due to sheer shortage of good vocational training institute. It also must be mentioned that a large proportion of the potential students never see the light of any school and waste their life in idle pursuits who now can be guided to pursue a career of work that would not be frowned upon by their community (a fact that plays an important role in a country such as India) and hence can lead to overall development in society. 2.3. Target Market and Projections: The target market for output is the private real estate sector that needs skilled tradesmen for their organizational growth and competitive advantage. We have not limited the focus on providing the skilled manpower only to the companies that are in this country but to the companies that are overseas as well. 2.4. Competitive Advantages and Marketing Strategy: Our competitive advantage will come from the industry linked curriculum based on the standards followed by Construction Skills Training Institutes (CSTI). Close interactions with industry will make sure that we impart training which is the need of hour and hence ensure immediate employability of our trainees. Trainees who enrol will mainly hail from the rural and semi urban areas. The promotion will be done through regional newspapers, word of mouth, other low cost methods like pamphlets/banners and guerilla marketing involving mobile vans and nautankis. We have started to build relationships with the real estate companies as well met the city and Guilds people. The key factor which has been not the focus earlier with the manpower providing companies going on their own, was the attractiveness of the proposal vis a vis the real estate returns . It needs to be understood that this is a slow growth business initially but will provide astounding returns in time to come and needs a steady focus that will be provided on a larger scale by investing in a brand that companies will depend on. Many developers have started their in house institutes but these are not focused on providing manpower externally a huge gap still remains which is the focus segment to be catered to. Our strategy is also tempered by the fact that the alternatives to this institute are small time operators who have become big for the sheer lack of focus on this segment in all these years but with the growing need of the companies to hire better and more skilled people as demands for housing becomes more and more specialized it remains to be seen that if the shoddy outputs of semi skilled labor can now be replaced with a organized skilled labor which is marketable on a global scale. It was true earlier if there was no option but with IIVT the options will be there. 2.5. Sustainability: The institute is sustainable though it caters to a niche environment but there are many opportunities for growth both in terms of geography and number of service offerings. This is coupled up with a huge demand and supply gap. We will endeavor to build a brand name of the institute with superior execution which will add to our competitive edge. It is important to mention that the demand supply inequity can be understood that most real estate companies are falling back on the deadlines of their projects. It is estimated that over 85% of the projects are delayed and most of them are from funds, lack of skilled labor or both. The start for the institutes has been proposed to be on the conservative side so that the exit costs for the project are kept at a minimum and the fact that we as a team have the patience to start small and learn as we go along. We know that we would need to shift strategies while we learn the ropes. We have started the process with the following points in mind:1. Low capital requirements The entire requirement for the initial 3 years is a million dollars or Rs 4.25 Crores per institute assuming all costs. This will get reduced if the lodging and food costs are removed which will lower all costs in some way or another.2. Low margin for error this business seems to be from all the discussions that we have had a business having a low margin for error.3. Significant payoffs the first 3 years seem to be the hardest the cash breakeven is coming in the 3rd year. This is only in case we go for lodging and food else the breakeven is in the 2nd year.4. Low exit costs - In the worst case scenario the total exit costs are extremely low with the capex being sellable though for a reduced value and the variable costs can be curtailed at a minimum. 2.6. The team Primarily this is the major issue and as such the mix of ex-army and people from allied industries coupled with people from government who have retired or are on the verge of retiring they would have to be kept in mind.2.7. The offering: It is proposed that the source of the funds be three fold:1. Equity from promoters.2. Debt from banks /institutions.3. Quasi equity from companies that we tie up with This has been detailed in the financial plan - part equity and part debt from the promoters has been envisaged Offering Initial part of the equity (detailed below) as a part of seed fund as an angel before planning a bigger share for a proposed venture PE/VC on the part where we would need to scale up Use of funds - primarily for capex and revenue needs (detailed below extensively). Investors return complete payback in 3-5 years depending on the low cost or the high cost model. Expected to generate a minimum return of over 30-35% over a 5-7year period after the initial 2-3 years