Tree House Eyes Above Rs 25cr Turnover By 2010

Moneycontrol.com:

Rajesh Bhatia, founder of preschool chain Tree House, swears by the age-old formula for educating children. But when it comes to business of education – it’s not that easy. Tree House is India’s largest non-franchised preschool chain. And like many other entrepreneurs it was a personal problem that inspired Bhatia. It is already an overcrowded market. Will it work? CNBC-TV18’s Isha Dalal finds out.

Rajesh Bhatia, said, “I was looking for schools for my son in South Bombay and it was nightmarish trying to get into a school at that point of time. We thought there is so much more that children can get in terms of space, curriculum quality, teacher focus, which is being missed out by children in Mumbai.”

That is what made Bhatia quit his high paying investment banking job and start Tree House five years ago. Today he runs 55 centers across Mumbai and Gujarat that are clocking a turnover of about Rs 6 crore.

Tree House is growing at almost 80% annually and its investor – Matrix Capital believes that this growth rate is not tough to sustain. Rishi Navani, Matrix Capital Partners said,”This is a truly price inelastic market. If you look at most people’s share of wallet, what they are willing to spend on their children’s education tends to be an inordinate amount of their wallet.”

Little wonder then that the pre-school market is estimated to be nearly Rs 4,000 crore in size. Organised players have a mere 5% of this pie. But while some nationwide players will not divulge their revenues, Eurokids leads the pack in terms of numbers pre-schools followed by KidZee and Kangaroo Kids. But almost all pre-school chains are built on the franchising model except Tree House, which owns and operates 48 of its 55 schools. But limited franchising means limited scalability. So just how important is scale?

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