IIM-A posts surplus despite making provision for pension

Cumulative hikes in fees for its flagship PG course as well as mgmt development programmes have boosted its income

For the second consecutive year, the Indian Institute of Management-Ahmedabad (IIM-A) has achieved an operating surplus in 2011-12. Though almost negligible, IIM-A posted a net operating surplus of Rs 45,000 in 2011-12 against Rs 6.83 crore the previous year.

"The Institute achieved an operating surplus for the second year in a row, despite having to set aside about Rs 30 crore towards meeting pension liabilities. This was possible through a prudent watch on expenses and making concerted efforts to enhance and diversify the sources of revenue," said Samir Barua, former director of IIM-A. "The initiatives taken by the institute have laid the foundation for creating a sound financial position for the years ahead."

IIM-A would have earned a net operating surplus of Rs 8.149 crore in the year. However, the institute transferred around Rs 8.145 crore to its corpus fund, thereby bringing it down to Rs 45,000.

It is the cumulative hikes in fees for its flagship post-graduate programme (PGP) as well as management development programmes (MDPs) that have boosted its income. Cost rationalisation has also paid off.

"The financial self-sufficiency was achieved not only through enhancing revenues from various activities but also through rationalisation of costs wherever is possible. There is a further scope for adding to the corpus. I think an institute of IIM-A's size needs a corpus of at least $50 million (Rs 300 crore) to fund new initiatives to grow its performance and reputation," said Barua.

IIM-A generated a net surplus for the first time in 2010-11 at Rs 6.83 crore against an operating loss of Rs 50.49 lakh in 2009-10, and Rs 6.33 crore the year before. In 2008, IIM-A had announced a nearly six-time increase in fee from Rs 2 lakh to Rs 11.5 lakh for its flagship two-year PGP in management. Fees were further increased in the next two years to Rs 15.5 lakh for the 2012-14 batch.

Talking about the transfer to corpus fund in order to reduce the pension liabilities, Barua said: "When I assumed directorship, the pension liabilities of the institute were not fully funded. We added over Rs 100 crore to the corpus for meeting the pension liability. Today, with a fund of Rs 137 crore, the liability is fully funded."

While fee hikes for its management programmes have helped the institute post surplus, it has also helped IIM-A reach out to students from economically weaker sections through its fee waiver scheme. What's more, in the last five years, IIM-A has waived off over Rs 40 crore of fee to help needy students.