Demand for degree shrinks, engineering colleges up for sale

Trusts owning engineering colleges in the states of Andhra Pradesh, Karnataka, Kerala and Tamil Nadu are putting these institutions up for sale due to a shrinking demand for the degree. At least half a dozen colleges are on the lookout for buyers in Andhra Pradesh, which alone produces the largest number of engineers in the country. These four states have more than 1,500 engineering colleges, with 500,000 seats. Andhra alone has 700 colleges.

“Since 2005 there has been a spurt in engineering colleges in Andhra and Karnataka. But due to shrinking demand, many trusts are now looking for buyers,” said Sandeep Aneja, Managing Director of Kaizen Private Equity, a firm focused on the education sector. “The problem with many of these institutions is they have no brand name; they manage to meet the most basic requirements set forth by AICTE (All India Council for Technical Education). They have the licences, but bare infrastructure development and zero brand name. They produce engineers who do not find jobs,” Aneja said.

The Kollam-based Travancore Engineering College, for example, has been on sale for six months, according to a broker, who is incharge of the sale. Established in 2002, the college spreads over 25 acres and has 1,350 seats. Its promoters denied they had put the college on sale, but sources said they wanted to set up a school, which they believed might be a more profitable proposition. The promoters are believed to be demanding Rs. 100 crore (Rs. 1 billion). Another college affiliated to the Anna University is also up for sale with an asking price of Rs. 120 crore (Rs. 1.2 billion), according to an advertisement on a classifieds website. The college, spread over 54.5 acres, has 1,850 seats.

Vocational education, including engineering and management, is regulated by AICTE which allots each educational institution the number of seats it can allot in a given course. A sale would entail the transfer of the AICTE licence. “Broadly, there should be no problem in the transfer of seat permits because they will come under the Property Act and would fall in the category assets being transferred by one owner to another owner,” said an official of the Ministry of Human Resources Development (MHRD).

In 2010, the National Association of Software and Services Companies (NASSCOM) had said 75 per cent of engineers were unemployable. The problem of vacant seats came to the limelight earlier this year, when fears surfaced that over 150,000 seats might remain vacant in Andhra Pradesh and Karnataka alone.

Several private equity (PE) players, along with trusts and non-educational buyers, are in the fray. But PE players will not be able to make any headway because of hurdles in exit. “While many engineering college trusts in Andhra and Karnataka have put up assets, including land and licence, on sale, most of them are non-profit institutions. Under the existing law, assets from these trusts cannot be used for profit making,” said Jacob Kurian, partner, New Silk Route. Kurian’s New Silk Route is a PE fund with assets worth $1.4 billion under management. “The advantage for the buyer would be to re-brand existing infrastructure and work through present licences,” Kurian said.

The buyer will gain land which is increasingly becoming difficult to acquire. Also, there is the lure of existing seat allocations that bigger private universities believe can be filled with their own brand name. A player involved in a deal said there was no problem in PE players getting into the space. “I do not see the not-for-profit issue a hurdle because we can put up the money and our experts in charge of operations, and exit at a later date. As long as we do not take money out of the college itself, there should be no problem,” the investor said.

Buyers, who have been approached, told Business Standard a typical deal could range between Rs. 30 crore (Rs. 300 million) and Rs. 200 crore (Rs. 2 billion), depending on the kind of assets and infrastructure.

Source: Business Standard, August 14, 2011

5,000 engineering seats go abegging

More than 5,000 seats – nearly a sixth of the seats available in engineering colleges across West Bengal – have not found any takers after the counselling of the State Joint Entrance Examination concluded here this past Friday and authorities are looking at alternative ways in which the seats might be filled up. Of the nearly 120,000 candidates who appeared for the examination, 90,000 were short-listed for the nearly 32,000 seats.

The All-India Council of Technical Education (AICTE) has relaxed the qualifying criterion of 50 per cent marks in Physics, Chemistry and Mathematics to 45 per cent in the three subjects for general candidates. Despite the large number of candidates and relaxation of qualifying criteria, more than 5,000 seats have gone abegging. Last year, about 6,000 seats remained vacant.

West Bengal Joint Entrance Examination Registrar Dibyendu Kar said the remaining seats would be thrown open to applicants of the Board’s JELET, the examination for lateral entry to engineering colleges. “The JELET examination is conducted for those who hold diplomas in engineering disciplines for admission to second year of engineering colleges.

Some applicants who may not have qualified for second year will be given the option of admission in first year,” he said. He stated that private engineering colleges have the option to fill up their vacant seats. These colleges will have to advertise vacant seats and the applications they receive will be assessed to draw up a merit list, Mr. Kar said.

This year the State Government has allowed colleges directly to admit students with minimum qualification prescribed by AICTE even if the student has not taken the Joint Entrance exam. Director of Technical Education Sajal Dasgupta, while announcing the State Government’s decision, had said that it was taken to fill seats in the private engineering colleges that are not finding it economically viable to operate.

Source: The Hindu, August 9, 2011

Why engineering seats find few takers

Mushrooming engineering colleges have outpaced the number of students they can take in. Today, an estimated 10 to 12 per cent of 1.4 million seats lie vacant in the country’s nearly 3,500 engineering colleges. The absence of enough eligible students is only one part of the problem. Efforts to address it by lowering the eligibility criteria have only compounded the other, larger problem — that of quality.

In the space of three years, the number of engineering colleges doubled from 1,668 in 2007-08 to 3,241 till 2010-11, and the seats from 650,000 to over 1.3 million. An estimated 100,000 seats have been added for 2011-12, with 281 new colleges approved so far.

The All India Council for Technical Education (AICTE) says it cannot turn down a proposal to open an engineering college. “We can’t deny them their right to a profession. If they say opening an engineering institute is their profession, we can’t say no citing the large number of such colleges already existing,” said AICTE Chairman S.S. Mantha.

Seats, Students
Standardising the eligibility criteria at 50 per cent in Class XII physics, chemistry and maths, and 45 per cent for reserved seats, made it even more difficult for states such as Maharashtra, Karnataka, Tamil Nadu and Andhra Pradesh, already struggling heavily with empty seats. Following appeals from some states, the AICTE lowered these cut-offs to 45 and 40 per cent. In any case, the revision will not plug the seat-student gap. In a country that has been adding 100,000 or more seats a year, the AICTE estimates 50,000 students will benefit from the lowered cut-offs.

States have individual norms and exams for selection but the cut-off will apply to all. Last year, Maharashtra had 22,000 seats vacant in a total of 114,000. This year, the state has 13,000 newer seats and Director of Technical Education S.K. Mahajan says 13,000-14,000 students will benefit from the relaxed norms. The original gap is, however, expected to remain, with only 104,000 applications so far for the 127,000 seats.

In Karnataka, the number of unfilled seats last year was 8,067 out of 80,000, the vacancies matching the rise in seats from the 72,000 of 2009. “Seats in engineering colleges tend to go unfilled because a large number of new colleges don’t have basic facilities and infrastructure. As a result there is a flight to quality colleges among students,” says former senior Infosys HR executive T.V. Mohandas Pai who has been closely associated with higher education in Karnataka. Seats are going empty in spite of entrance examinees rising by 2,000-3,000 every year, a Karnataka Examination Authority official said.

In Andhra Pradesh, 70,000 of 290,000 seats went vacant last year; 207,000 have qualified for the same number of seats this year, a vacancy of 83,000. Andhra Pradesh State Council for Higher Education Secretary Dr. Rajasekhara Reddy says the cut-off relaxation will benefit 3,000 students. State Council of Higher Education Deputy Director Venugopal Rao agrees only a few extra seats will be filled up, though colleges are still waiting for the the state government to issue the order on the relaxed cut-off.

The Telangana agitation has contributed to the vacancies, with students avoiding colleges in the region that includes Hyderabad, which accounts for nearly 250 of the state’s 698 colleges. Till the agitation began last year, 94 per cent seats were filled up. Mantha cites another reason for the vacancies — too many streams. “The common perception is that branches like civil, mechanical, computer science, electronics would entail them to better jobs. This perception creates demand for certain courses and not so much demand for other courses.”

The AICTE says the number of seats needs to keep growing, pointing out that only 5 million of 8 million students who passed XII in 2008 went on to enter any course, professional included. “With a growing young population we need to provide for even more professional and other institutions in future,” Mantha said, while stressing the importance of quality.

Quality Control
Mantha says time and competition will put the poorer quality colleges out of operation. “We expect that in time, poor quality institutes will shut down simply because they can’t attract enough students to break even,” Mantha said. Pratap Bhanu Mehta, President, Centre for Policy Research, agrees there is an element of truth in the argument that competition will ensure accountability, but stresses the need for creating quality institutions.

“Whether you have less or more institutions, faculty shortage is the bigger problem. Nobody has a strategy of fixing this,” he said. Production of faculty is not related to supply and demand, he said, adding one needs to create a supply of quality faculty. He said public universities too have deteriorated and unless they are fixed, there will be no relief in the supply pressure.

Mantha disagreed with the general belief that the AICTE is not cracking down firmly enough on poor quality colleges. Describing the system in place, he said the AICTE can, and does, withdraw approval given. “Based on an authenticated complaint, a showcause (notice) is given, a surprise visit conducted, a hearing and an appeal provided and then the decision is ratified in the council for implementation,” he said, adding 700 institutions had been served notices for violation of AICTE norms and 20 had their approval withdrawn.

The Government is in the process of setting up an NCHER Act to set standards for universities and accreditation agencies. It will gradually replace the UGC Act, the AICTE Act and the NCTE Act. The bill will be tabled in the next Parliament session.

Jobs
Surveys have shown 75 per cent of technical graduates are unemployable by India’s industries, including information technology and call centres. In Andhra, only eight per cent find jobs, a NASSCOM study has shown. “Employability and employment are two different concepts,” Mantha says, calling for a national perspective plan compiled from inputs from universities and states. “Similarly, mapping needs to be done for the industry, service sectors or the infrastructure sector and consequently the jobs sector. The two put together would give an idea of how many professionals are required in each sector and a supply chain then can be designed,” Mantha said. “Merely saying that the graduates are unemployable is not tenable.”

Source: The Indian Express, July 12, 2011

>Qualified faculty eludes engineering colleges

> Engineering colleges in the country, especially those in the minor league, may be popping up like mushrooms and even churning out graduates by the thousands, but when it comes to faculty quality, most colleges are forced to make do with relative freshers who do not even hold a Ph.D. degree.

Consider this: Since 2008, the number of engineering colleges in the country has almost doubled from 1,668 to 3,241, and along with it the shortage of Ph.D.-holders has also gone up from 54,839 in 2008-09 to 72,524 in 2010-11, according to figures from the Ministry of Human Resource Development (MHRD).

This shortage is being felt acutely by these new colleges, which have difficulty attracting experienced staff. For instance, the Dehradun Institute of Technology (DIT) and Delhi Technological University (previously the Delhi College of Engineering) both have 200 faculty members, but while over 50% of DTU staff hold Ph.D.s, being among the top ten tech colleges in India, DIT has only 25% Ph.D.s.

DIT Director Krishna Kumar pleads helplessness. “It is difficult to attract experienced teachers given the numerous opportunities they have these days. So we are forced to opt for less experienced and qualified teachers. Currently we have just 20-30% senior teachers,” he says. And when it comes to top colleges, they are not ready to compromise on qualifications. “We do not hire plain B.Tech. graduates and the minimum qualification required is M.Tech. or its equivalent,” says a DTU official.

Interestingly, there is a shortfall of faculty holding M.Tech. degrees too. The number of M.Tech.s required in engineering colleges has significantly increased from 90,000 in 2008 to approximately 120,000 in 2010. Because of this, regulator AICTE allows B.Tech.s also to teach, but on the condition that they complete their M.Tech. within three years.

“The average age of teachers with a B.Tech. is around 22 years and with a Ph.D. is 27 years. Why would a Ph.D.-holder go to a smaller town to teach when he is in demand in a metro city?” reasons an AICTE official. Agrees Amit Bansal, CEO at PurpleLeap, an Educomp and Pearson joint venture, “There is a marked difference in the experience of faculty of top-rung colleges and the rest. While the average faculty experience in top colleges is between 10 and 15 years, the average faculty experience in other colleges is 0-5 years.”

Source: The Financial Express, April 23, 2011