HDFC's school foray delayed by two years

Land aquisition hassels resulting in the delay

Housing Development Finance Corporation Ltd (HDFC)’s plan to open schools has been delayed by at least two years. HDFC, which was planning to bring in its schools by this academic year, under the brand The HDFC Schools, has seen delay in acquiring land to build the schools.

“Land acquisition has taken more time than what we had anticipated. Thus, our plans have been delayed by almost two years,” said a senior executive from HDFC on the condition of anonymity.

HDFC plans to set up its first school in Gurgaon and will shortly seal a land deal for the same. The school would come up on five acres  and would be in the K-12 (Kindergarten to XII) segment.

BANKING ON SCHOOLING

• The school project has seen the delay due to land acquisition hurdle
• HDFC plans to set up its first school in Gurgaon
• To be built on a 5-acre land, the school will be in the K-12 (kindergarten to XII) segment
• The schools will be set up under the education arm HDFC Education and Development Services

“We wanted to begin operations this academic year but given that will not be possible, we may start a primary to Class V school in Gurgaon close to the land that we acquire. This school would be operational in 2015,” the official added.

The schools will be set up under the education arm HDFC Education and Development Services, a wholly  owned subsidiary of HDFC. The HDFC Education and Development Services was formed in November 2011.

HDFC did not reply to an email.

The education arm plans to target the middle class and provide affordable education. It would shortly begin recruiting teachers for the school. It is exploring both options — of owning and managing schools.

The company might have to spend anywhere between Rs 75 and  Rs 100 crore in setting up one school, including land cost.

“Though land is costly, we plan to own some schools. Other than this, we may look at managing schools wherever we cannot have our own schools,” the HDFC official added.

HDFC Chairman Deepak Parekh had earlier told Business Standard that HDFC would look at small towns to either set up schools or take over defunct boarding schools. “The opportunity is huge, as the need for quality education will only increase. Parents in even rural areas want to give their children a good education. Higher education is also on our radar,” Parekh had said.

The company also has plans of either going in for a long-term lease of land or managing schools by revenue-sharing model.

“After we have built some expertise in running our own schools, management of schools is what we would look into. We intend to provide school management and other allied services,” the official said.

K-12 is the most attractive segment of the education market, as a student usually stays on in the school for 12 years. The K-12 segment will be the direct beneficiary of rising middle class incomes in India.

HDFC already has an educational loan unit — Credila Financial Services.