Hyderabad: Until last month, I. Prudhvi Tej could have been a teenager from anywhere in India. A cricket lover and an admirer of veteran batsman Sachin Tendulkar, he used to watch an average of two movies a month, read English fiction, and hang out with friends when he wasn’t studying—nothing that would have made him special.

His life changed on 25 May, when the results of the Indian Institute of Technology (IIT) Joint Entrance Examination (JEE) were published, showing he had topped the fiercely competitive qualifying test for a seat in the elite technology schools.

Tej, 17, the son of a grocer from the small Hindu pilgrimage town of Dwaraka Tirumala, in West Godavari district of Andhra Pradesh, became an instant celebrity and was held up as a role model for schoolchildren in the state, and featured on newspaper front pages and prime-time television bulletins surrounded by his adoring family.

He knows what he wants to do—read for a BTech degree at IIT Bombay, then appear for the Indian Administrative Service examination.

“My ambition is to take up civil service," Tej says. “It has been my childhood dream."

The top rank didn’t come easy for Tej. It took two years of study—seven days a week—at a coaching school in Vijayawada run by Sri Chaitanya Educational Institutions for IIT aspirants. Lessons began at 6am and went on until 10.30pm, with a 1-hour recess for breakfast, a 2-hour break for lunch, and an hour for sports in the evening.

Because Tej topped the entrance test for admission to Sri Chaitanya, the 1.5 lakh fee for the two-year course was waived by the school management. The school’s eventual payoff was the top rank he secured from among 468,240 candidates who sat for the exam all over India, giving it the bragging rights to coaching an IIT-JEE topper.

Coaching centres for highly prized medical and engineering courses abound in Andhra Pradesh as they do elsewhere in the country. Admission to a course at Sri Chaitanya or its Andhra Pradesh rival Narayana Group of Educational Institutions is considered by many IIT aspirants and their parents as a potential passport to the country’s premier technology schools and eventual career success.

Education in India, dominated by the unorganized sector and largely unregulated, is estimated at $60 billion (Rs 2.7 trillion) a year with 450 million students and growing at an average annual pace of 10-15% over the next decade, according to an April report by KPMG. Coaching institutes are estimated to form a market worth $600 million and growing at 17% annually, the report said.

As many as 62,880 students sat for JEE from the IIT Madras zone this year in competition for 9,618 seats up for grabs nationwide. Of those who appeared for the test from the zone, 3,126 qualified for a seat, and from among them, nearly 2,400 are from Andhra Pradesh. Six of the top 10 rankers belong to the state.

That means the state accounts for one out of every four students who will be admitted in IITs this year—a trend also maintained in the All India Engineering Entrance Examination (AIEEE).

In comparison, 48,032 candidates from Bihar took JEE and 499 qualified for IIT admission. From Rajasthan, 39,483 aspiring IITians appeared for JEE and 1,508 students qualified for admission.

High motivation helps

“In an agrarian economy like Andhra Pradesh, where there is a huge income disparity, people perceive quality education as the only way to move up the pecking order," says Narayanan Ramaswamy, an education analyst and executive director at KPMG Advisory Services Pvt. Ltd. “And that perception is only accentuated with the economy dependent on knowledge-based services."

“A mix of high motivation and quality coaching is what gives Andhra Pradesh an edge in professional entrance exams," he says.

To be sure, the proliferation of coaching centres is not a phenomenon peculiar to Andhra Pradesh. Kota, in Rajasthan, has become synonymous with IITs for the coaching institutes that have mushroomed there to train students to take JEE. Kota-based Bansal Classes Pvt. Ltd claims to have coached 11 of the top 100 who passed the exam this year—the highest ranker stood 16th.

Coaching institutes in Bihar, too, have been churning out IITians with clockwork regularity. Best known is Ramanujan School of Mathematics, or Super 30, in Patna, which chooses 30 poor students a year and trains them for the IIT entrance exam. Twenty-four of the 30 passed the exam this year.

Sri Chaitanya and Narayana Group claim to have coached 15 each of the top 100 JEE rankers in the open, or non-reserved, category of students, this year.

Narayana Group started as a small coaching centre for intermediate (10+2) students in 1983 in Andhra Pradesh’s Nellore district, with an initial batch of just 30. Today, the institution says it has around 165,000 students enrolled at 200 branches.

Of them, 6,000 students are preparing for JEE, and the rest for AIEEE and the common entrance tests for engineering and medicine administered in various states. More than 90% of the students are from Andhra Pradesh. Narayana Group claims 1,200 of its students, in both the open and reserved categories, have cleared IIT-JEE this year.

“Till 1998, Andhra Pradesh was sending only 100-150 students to IITs per year; there was a huge pent-up demand for IIT coaching," says P. Narayana, chairman of the Narayana Group, who has an MSc in mathematics. “Except for one, the Ramaiah institute, there were no organized coaching institutes. Students used to take IIT coaching outside their 10+2 college classes, losing precious time on travel."

The Narayana Group clubbed coaching for the school-leaving examination and the IIT entrance test, focusing on the latter, he says.

Sri Chaitanya, which started in 1986, has 180,000 students enrolled at 120 branches. Between 6,000 and 7,000 students are being coached to appear for JEE. The institution claims to have coached 656 successful IIT candidates in the open category and 400 in the reserved categories this year.

Busting a myth

“IIT coaching is a different ball game," says Sushma Bopanna, director of academics at Sri Chaitanya and the daughter of founder-chairman B.S. Rao, a doctor by profession.

“We did a lot of research, we ran through the syllabi of various boards, IIT previous papers, hired professors from IITs, streamlined the whole process, and built a coaching regimen," she says.

“It’s a myth that only extraordinarily intelligent students can clear the IIT entrance exam. An above-average student willing to put in hard work and follow our regimen can crack IIT-JEE," she says. “In IITs, out of 480 marks, the cut-off level is 180-200, which means students need to get around 37-40% to qualify and make it to IITs."

Hiring faculty isn’t easy; it’s an expensive proposition. The annual pay package for IIT coaching faculty starts at 10 lakh and might go all the way up to 40 lakh, based on the experience and demand, according to Bopanna. That compares with an annual salary of 10.8 lakh paid to IIT professors and 5.69 lakh to assistant professors after the Sixth Pay Commission recommendations in 2009.

Narayana Group has 10,000 faculty members on its rolls and Sri Chaitanya employs more than 15,000.

“Earlier we used to hire faculty from outside, but now we train some of our own in-house faculty and promote the brighter among them to teach IIT aspirants," says Narayana. “The results have been encouraging."

Both Narayana Group and Sri Chaitanya charge annual fees ranging from 50,000 to 75,000. Each of them spends 5 crore a year on advertising, mainly in the regional media, according to a media marketing professional who didn’t want to be named.

Both have plans to expand outside their home base in Andhra Pradesh. Narayana Group this year expanded its network to Bangalore, where it has had an “overwhelming" response from students, says founder Narayana, adding that the institution wants to open branches in two other states. He didn’t name the states.

Sri Chaitanya wants to adopt a “bottom-up approach" for expansion, starting with 30 so-called techno schools across the country in the next two years, according to Bopanna. A techno school is one in which students are introduced to the concepts of IIT-JEE right from class VII. The institution has 60 of these, mainly in Andhra Pradesh. It also has plans to set up IIT coaching centres in Dubai and Singapore.

Narayana Group plans to set up 40 concept schools. Both Narayana Group and Sri Chaitanya are also starting coaching classes for aspirants to the civil services.

Commercializing education

Critics complain that coaching institutes are commercializing education, exploiting the aspirations of students and their parents to secure prized IIT seats, and claiming top rankers as their alumni although their courses may not necessarily have helped. Poaching of faculty—and bright students in return for fee waivers—is common, they say.

Chukka Ramaiah, a pioneer in IIT coaching in Andhra Pradesh, says it’s difficult for smaller institutes, including his, to compete with Narayana Group and Sri Chaitanya and retain faculty and students. Ramaiah, 83, has been running a school called Ramaiah IIT Coaching Institute for the past 26 years in Hyderabad, which picks 125 students annually after conducting an entrance examination that is taken by about 10,000 students annually.

“IIT coaching is not a one-way communication; it has to be a dialogue between students and the teacher," Ramaiah says. “The student should be eager to challenge conventional thinking. There were times when students came up with better solutions than faculty."

“Unfortunately, with commercial people entering the fray, they found out a particular pattern to IIT coaching and press students to practise hard. More than original thinking and conceptual clarity, students who can put in hard work are able to secure seats," he says.

“These big players with deep pockets make life harder for smaller institutes like us," Ramaiah goes on. “For them, rankers are marketable products. A rank in the top 10 gets them a thousand students. Sometimes they even go to an extent of buying out rankers from other institutes."

Narayana Group’s founder rejects this view. “Parents and students are wise enough," he says. “They do their own research and they know what is what."

M.S. Ananth, director of IIT Madras, says coaching centres “have become clever".

“The idea of the IIT exam is to find the right answer. The coaching centres train students to identify wrong answers (and reach the right answer through a process of elimination)—defeating the whole purpose of IIT-JEE. We are taking extra care to outsmart these coaching centres," he says, without elaborating.

Analysts say Narayana and Sri Chaitanya could have a valuation ranging between 1,000 crore and 1,200 crore each.

“Both Narayana and Sri Chaitanya at the moment command a premium. Private equity investors will be more than happy to invest in these institutions," says KPMG’s Ramaswamy.

For all the growth they have experienced in their years of existence, both Narayana Group and Sri Chaitanya still have strong family management controls.

“We are open to private equity (investors) at some point," says Bopanna, a graduate of the Birla Institute of Technology and Science, Pilani, and an MS in information systems from Oklahoma State University in the US. “They will bring in much-needed professionalism and market research capabilities to help us to take our company to the next level."