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Poor market forces new B-schools to put down their shutters

Published On: 05 Apr 2012 | Last Updated On: 05 Apr 2012

The increasing number of vacant seats in new management colleges is leading these business schools to close down their business. Recently, Mumbai Business School (MBS), Mumbai run by A Mahendran, managing director, Godrej Consumer Products Limited (GCPL), Charles H Kellstadt, professor of marketing at Emory University and Jagdish Sheth, leading marketing guru had to put down their shutters due to poor business.

These days BIMTECH (Birla Institute of Management and Technology), Greater Noida is receiving large number of proposal from B-schools to acquire their control. In last 6 months 5 B-schools – 1 from Northeast, 2 from Delhi and 2 from Kolkata; have approached BIMTECH with proposals to be taken over. These new B-schools do not have sufficient number of students and are struggling hard to continue.

A business school at Gurgaon, located in the proximity of BIMTECH recently appointed a global real estate services firm, JLL (Jones Lang LaSalle) to search for an existing higher education institute which can acquire it.

As per the industry players, these low rung management institutes are appointing consultants to give signals to potential buyers. They are seeking big brand names to acquire them and utilize their land space to set up an additional campus.

However, AICTE is clueless about such happenings. Sources from AICTE stated that institutes can change their names but the council does not permit change of trust. In last 2 years council has received proposals from over 95 management institutes to close down.

Academic institutes are developed under a trust. If a buyer provides the required capital to a trust, it may seize its control to the buyer. And many institutes which need capital to expand opt for this channel to get the required funds.

CRISIL Research report states that it predicted a ‘shake out’ in the higher education system in India due to large number of seats going vacant. The study disclosed that many colleges were not able to equip students with the current corporate requirements. Declining occupancy rates in lower rung colleges make it difficult for them to sustain. As a result some colleges are expected to either close down or change their ownership in the next few years.

Source: Business Standard

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