Ahmedabad: As organizations that effectively teach people how to make and manage huge sums of money, it is only apt that the Indian Institutes of Management (IIMs) eat their own dog food.
The seven IIMs (in Ahmedabad, Bangalore, Kolkata, Lucknow, Kozhikode, Indore and Shillong) could together make a profit of up to Rs22 crore this year from merely selling application forms, up from Rs18 crore last year. The increase is on account of a Rs200 hike in the price of the forms.
The forms are for the common admission test (CAT), which is conducted by each of the seven IIMs in rotation to shortlist candidates for admission to the two-year postgraduate business management programmes the schools run. In 2007, around 220,000 people sat for the exam and 2,000 made it through to the schools.
The administrators of the CAT examination, called the CAT group, a body consisting of admission committee chairpersons of each of the IIMs, have raised the cost of forms for so-called “general” candidates by Rs200—from Rs1,100 to Rs1,300—and for those belonging to the scheduled castes (SCs) and scheduled tribes (STs) by Rs100—from Rs550 to Rs650.
Profit in the air: The IIM Ahmedabad campus. IIMs have raised the price of forms for general candidates by Rs200 and for SCs/STs by Rs100.( Madhu Kapparath / Mint)
The profit from the sale of forms is equally distributed among the IIMs after deducting the cost of organizing CAT.
“Last year, the IIMs had earned around Rs24.2 crore selling these forms and spent around Rs6.2 crore for conducting the examination, making a profit of Rs18 crore,” said a senior faculty member at IIM Ahmedabad, who did not want to be named. People familiar with the matter at the IIMs expect the sale of forms to fetch Rs30 crore this year.
Another senior faculty member at IIM Calcutta (IIM-C), who also did not want to be identified, saw no logic in the increase in the prices of the forms.
“Despite the rise in inflation, the cost of conducting CAT 2008 would not be more than Rs7.5 crore. IIMs would make more than Rs20-22 crore profit this year from CAT,” he said.
According to him, the number of students appearing for the examination could be around 250,000 this year, with up to 15% of them belonging to the SC and ST categories.
Another faculty member at IIM-C, who was once part of the CAT admission process, wanted a drastic reduction in the cost of the forms. He said a substantial part of the cost of holding CAT is fixed cost and does not increase with the increase in the number of people appearing for the test. “IIMs claim to be not-for-profit public institutions and even get income-tax exemption. What is the need to earn a profit from selling these forms?” he asked.
The senior faculty member from IIM-C said, “Earnings from CAT and placements are the cross-subsidizing aspects for IIMs”, implying that the IIMs were using the profit from these to cover losses in other areas. “IIMs are not losing money on CAT, so it is improper to raise the cost of forms,” he said. Officials involved with the CAT examination process could not be contacted for comments.
An IIM review committee is looking into the financials of the schools, but the issue of the forms does not fall under its purview, according to its chairman R.C. Bhargava, who said that he wasn’t aware of an increase in the price of forms.