New Delhi: InterGlobe Enterprises Ltd , which runs budget carrier IndiGo , plans to launch a university with a Canadian partner and open retail stores in a joint venture with a Swiss retailer as part of a diversification effort.
The $1.09 billion company, which also sells business jets, operates hotels, runs an airline distribution system, and supplies travel software, will launch a university in Delhi in collaboration with the Ontario-based University of Waterloo, and team up with Dufry AG to open a chain of small retail stores, chairman Rahul Bhatia said.
“We had engaged Boston Consulting Group some years back to put together a strategic road map for InterGlobe and some of the diversification is based on the findings of that effort,” Bhatia said in an interview.
Bhatia, an engineering alumnus of the University of Waterloo, has been eyeing possible new businesses that InterGlobe can invest in, saying in an April 2011 interview that the company wanted to enter a “domain that is not core to us today”.
The university will be located on a 100-acre campus for which land has already been acquired along the Dwarka expressway in south Delhi, close to the Indira Gandhi International Airport. It will follow the Waterloo model of work-integrated studies in which students attend a university programme for one term of three-four months and go on to acquire practical experience by putting in one term with an employer, for which they will be paid.
This approach will allow the turnout of a steady stream of skilled and job-ready graduates, Bhatia said, declining to specify a budget for the project.
“The initiative to establish a world-class university in India is a social initiative of sorts, to be able to give back to society,” Bhatia said. “And this is going to be a not-for-profit effort.”
“There is enormous paucity of world-class higher education in India, and there are so many students who leave the country in search of good-quality university education. Our endeavour is to be able to offer higher education of a standard which will encourage students to stay in India, rather than explore options overseas,” he said.
The InterGlobe university, a name for which hasn’t been picked yet, is expected to open for students by 2016, offering programmes in engineering and technology.
The campus will not be a satellite campus of the University of Waterloo, said the Canadian institution’s president and vice-chancellor Feridun Hamdullahpur in a phone interview. Waterloo has satellite campuses in Europe and the Middle East.
“At this point of time, the Waterloo curriculum will be used, but will not award degrees. Our investment is our commitment, our time, and no material investment. Neither has it been requested,” Hamdullahpur said.
InterGlobe has launched a pilot training centre in partnership with aviation and defence training firm CAE Inc. that has become a preferred training facility for the European plane maker Airbus SAS, Bhatia said, referring to the trajectory the group is taking on the findings of the Boston Consulting Group.
It is also taking the first step towards its retail venture with Dufry, which runs duty-free shops in several countries.
“We have had a long-standing relationship with Dufry as we had bid for duty-free concessions at some airports in India in partnership with them,” Bhatia said. “Dufry also owns Hudson News and Cafe, and we collectively decided to proliferate Hudson outlets across Delhi Metro stations.”
One business strategist was puzzled by InterGlobe’s diversification strategy.
“Most companies that have entered retail are finding it difficult to earn sustainable profits. So I am a little surprised about the choice of retail,” said Rishikesha Krishnan, a professor of corporate strategy at Indian Institute of Management, Bangalore.
“I am not aware of the specifics of the Delhi Metro retail opportunity though. Possibly that offers significant access to retail customers,” he said. “Regarding setting up a university, as per the current laws, all universities in India have to be set up as non-profit organizations. So the financial benefits of setting up a university are far from clear.”