MindMap Consulting Limited

Business Plan April 2005 Introduction _______________________________________________________ 4 Business Idea ______________________________________________________ 6 MindMap Today___________________________________________________ 7 Defining Products & Services ___________________________________ 9 English Language Training_____________________________________________ 9 Table 1 : Linguaphone Direct English Courses _____________________ 11 Corporate Training __________________________________________________ 13 Business English & Communication – With Direct English Content _______ 13 Leadership and Management Skills – Certification Programme from ILM __ 13 Bespoke and Non-Qualification Training Material ______________________ 14 International Admissions & Education Service ___________________________ 15 Building Partnerships ___________________________________________ 16 Putting a Project Team Together _____________________________ 18 Figure 1: Project Team Structure _________________________________ 19 Launching Model Centres ______________________________________ 20 Table 2: MindMap Owned Centre Models _________________________ 22 Creating Franchise Centre Models ____________________________ 23 Table 3: Franchise Centre Models ________________________________ 24 Table 4 : Centre Configurations __________________________________ 25 Table 5 : Centre Cost Models _____________________________________ 26 Table 6 : Centre Profitability Model _______________________________ 27 Table 7 : Franchise Support Model & Fees _________________________ 28 Institutional Partnership Centre Model _________________________________ 29 Admission Services Franchising ________________________________________ 29 Corporate Training in Franchised Outlets _______________________________ 30 CONFIDENTIAL 2 Expanding the Network _________________________________________ 32 Table 8: Master Franchisee Proposition for Pakistan & Sri Lanka ____ 33 Table 9: Expansion Plan __________________________________________ 35 Building Effective Franchise Support Systems _______________ 36 The Approach to Franchise Support ____________________________________ 36 Franchise Support Structure __________________________________________ 38 Figure 2 : Organisation Structure as on 1st January 2007 ___________ 40 Technology Based Support ____________________________________________ 41 Growth Areas ____________________________________________________ 42 Risk Factors ______________________________________________________ 43 Competition ________________________________________________________ 43 Competition for English & Corporate Training Businesses __________ 43 Competition for International Education Business _________________ 45 Environmental Risk Factors ___________________________________________ 46 Conclusion: Moving Forward___________________________________ 46 CONFIDENTIAL 3 Introduction South Asia, home of 40% of world‟s poor, is fast changing beyond recognition. The countries in the region are harnessing the power of modern telecommunication and their strong education system to become the service hub of the 21st Century. Soon if not already, as an observer puts it, the region will be known for its young urban professionals, and not its poor people. This change is visible everywhere. The economies of the region have been growing at over 6% for past few years. Young middle-class families have become all too evident in the cities, in the new shopping malls, movie theatres and entertainment complexes. New industries, software, retail, entertainment, consumer finance, banking, insurance, telecommunications and global business process outsourcing, are creating new jobs and increasing affluence. South Asian businesses are venturing abroad – creating global businesses or collaborating with global companies to create new identities in the domestic market. Everything put together, an irreversible transformation is finally on its way. Yet the reach of this dynamism and affluence is still very limited, restricted to a sliver of the population. Millions of well-educated, capable graduates in the region still do not possess the necessary skills to join these new industries. The education system, age-old and bureaucracyridden, does not equip them with communication and behavioural skills required for these new jobs. On the other side of the equation, employers are facing a human resources crunch. A tiny proportion of population, an elite minority, who could afford world-class education, and spoke English well, so far powered the current wave of expansion in retail, business process outsourcing, telecom and other areas. This trend is unsustainable beyond CONFIDENTIAL 4 the current levels, as these sectors are growing rapidly, and the new investment is pouring in. The demand for skilled personnel – who could communicate well and have the necessary business skills – are driving wages up and causing high attrition rates. These factors together make South Asia ideal for a Global Skills training business. A training business, that will empower millions of young graduates to acquire global communication and business skills, and allow them to join the modern work force, is badly in need. This will also enable the businesses to hire skilled workers at a competitive wage, retain them longer and improve service quality. Overall, such a business will help the region to remain internationally competitive by leveraging its work force, improve its global service capabilities and avoid the spiralling of costs by making the opportunity broad-based. CONFIDENTIAL 5 Business Idea One of the key requirements in this context is conversational English Language skill. Despite having an English-driven Business and Higher education culture, very few people in the region actually SPEAK in English. As the popular expression goes, millions of graduates have English „locked‟ inside them. An opportunity in the service industry, especially in the global service roles in Business Process outsourcing sector, requires this ability to be unlocked, and used in a business context. The other, up the value chain, requirement is in the arena of International Education. As businesses become global, more companies are increasingly looking for global skill sets in its people. Sponsoring an employee for an international education course is becoming common, as well as giving additional weight to international qualifications on a candidate‟s resume. There is a significant, and growing, demand for international education – both in an on-campus and distance-learning mode – all across South Asia. The third element in global skills is the „Soft Skills‟, behavioural traits and cultural exposure, which makes an individual ready to face different situations and interact with a diverse range of customers. These requirements can be both generic and business-specific – and needs to be addressed at both levels. Our business idea is to build an Education and Training network in South Asia covering these three areas. This network will have world-class training content and service delivery, and will spread across the region through franchising. This training infrastructure will become the backbone of the service industry of the region, and will continue to prosper as long as skilled people are in demand. CONFIDENTIAL 6 MindMap Today MindMap was started in 2002 with the objective of providing Strategic Human Resource support to fast growing IT and other businesses in Bangladesh. The main investor was the Adcomm Group, a diversified business group having its primary interests in Advertising. The company started with two IT Training centres in Bangladesh – opened through its associate companies, and under license from NIIT Limited, a leading IT Training company. MindMap also built enabling partnerships with leading consulting and training [non-IT] at this stage. MindMap UK office started in April 2004, with a new management team joining the company. We took the decisions to establish a region-wide presence, to focus on ELT and Soft Skills rather than IT, and to build a new set of partnerships over the old ones. With these new goals in mind, we have built a set of partnerships with Content Providers, Technology Companies and Universities and Colleges in UK. At the same time, investments have been made in Bangladesh to consolidate the existing training infrastructure and gradually retire the current partnerships and bring in the new ones. At this time, we run two training centres in Dhaka and Sylhet in Bangladesh, which are primarily focused on IT Training, but these centres were also used to pilot an English Training programme from ELLIS successfully. We also have entered into agency agreements with three UK universities, respectively. Over this period, we have also worked with many English training companies and evaluated their products, pricing and business model. We CONFIDENTIAL 7 and two colleges from Irish Republic and Canada have identified the Linguaphone Group [more about it later] as the most suitable partner, and jointly developed a business model with them. We have also worked with a leading e-Learning company in UK, and explored their products and services for suitability in the region. We have planned to implement a range of qualifications from the Institute of Leadership and Management [ILM], and are developing a suitable business model for this. CONFIDENTIAL 8 Defining Products & Services English Language Training In English Language Training, we chose to focus on conversational English as this is in demand from most employers today. We believe that a right conversational English course will unlock the English „inside‟ the learners, and allow them to achieve their career goals by matching it with the requirements of a growing economy. To this end, we identified the Direct English system, owned by Linguaphone Plc., a leading global language training company, most appropriate for this purpose. Linguaphone Plc also proved flexible and open to build a non-conventional business model to address the needs of South Asian markets effectively. Linguaphone Plc., a company with over 100 years of language training experience, has products in 32 languages, which are sold in 60 countries and taught to over 7 million people. Linguaphone has been operating in India, with its self-taught product range, for last 60 years, and have been a popular in name in language learning. Linguaphone‟s Instructor-led English Training system, however, comes from the company‟s recent acquisition of Direct English brand and methodology, from Pearson Group. This unique, bi-lingual, outcome driven methodology was developed by Louis Alexander, a leading exponent of adult English training, author of many EFL courses, and one of the authors of Council of Europe‟s communicative language standards and courses. The attractiveness of Linguaphone Direct English system – from the South Asian perspective – lies primarily in two areas. CONFIDENTIAL 9 One, Linguaphone Direct English training materials – in the tradition of Linguaphone – is multi-media and extensive. Each level of its course [and there are 9 levels] has its course-book, a bi-lingual companion book, 9 audiocassettes or CDs, A video or PC Disk and three progress tests. Every level also consists of tutor-led classes, conversation sessions and planned social and cultural activities. This blended learning system delivers effective multi-level learning experience, combining tutor-driven milestones with enough space and opportunity for self-driven learning – thus allowing for diversity of learning preferences of the audience. Two, Linguaphone Direct English system, uniquely among all English Learning systems, is based on teaching in Learner‟s mother tongue, which is built into the system through bi-lingual companion books and multimedia exercises. A trainer speaking the local language is supposed to be taking the tutorials as well. This, apart from easing the language learning barriers, makes the model easier to deploy across locations – especially in the inner cities of the region. The Linguaphone Direct English syllabus is broken into eight levels of training, followed by a specialized level [Level 9] leading to Cambridge examinations or TOEIC. CONFIDENTIAL 10 Table 1 : Linguaphone Direct English Courses DE Level 1 2 Competence Level Fundamental Operational Council of Europe‟s WAYSTAGE; Cambridge KEY ENGLISH TEST 3 4 Self-Sufficient Capable Council THRESHOLD, 5 6 Competent Confident Council of Europe VANTAGE, Cambridge First Certificate and Advanced, 7 8 9 Spontaneous Proficient Exam Ready Higher scores Higher scores Exam Prep course – for readiness for IELTS/ TOEFL/ TOEIC TOEFL / TOEIC TOEFL / TOEIC of Europe Cambridge Tests Etc. „Preliminary English Test‟, For the South Asian retail market, however, three levels will be bundled into one semester, and hence the course will be structured into three semesters of approximately 6 months of duration each. We are planning to combine these levels for the retail market to ensure that learners experience significant transformation at the end of each semester, as well as to ensure more efficient capacity utilisation at the centres. In this model, Semester 1 will consist of Levels 1, 2, 3 and will be offered to absolute beginners; Semester 2 will consist of Levels 4, 5, 6 and will be offered to people with some English knowledge, but little conversational exposure. Semester 3 – which will combine Level 7, 8 and Exam Prep – CONFIDENTIAL 11 will be for people aspiring for a global job and qualification, and at a high level of readiness. Some students will also move through semesters to complete the course. While it is expected that 50% of all learners will attend only one semester, about 30% learners may take 2 semesters, and 20% of the learners may go through all three semesters. Each semester will be delivered over 27 weeks. The Course delivery will consist of tutor led classes, self-paced assignments, multimedia sessions, conversation classes and social activities. Taking into consideration the current price levels of other professional courses, and competing products, we have decided to price these semesters at an 8% - 10% premium over other courses available. Thus, the price for each Semester will be US$400 in the metropolis, US$350 in other industrial towns and state capitals, and will be US$ 250 in the smaller cities. In line with the Direct English methodology, for the first three levels [for more, if required, later], MindMap and Linguaphone will develop a bilingual companion book and multimedia material. MindMap has identified 12 major languages for the region, and have drawn up a phased schedule to introduce the language versions over three years. In this effort, MindMap will offer the translation services and Linguaphone will be handling the editing and the production efforts. In consideration of pricing issues in the South Asian markets, Linguaphone has also agreed on a suitable terms of supply and flexibility in terms of material pricing – which will allow both MindMap and its centres to operate with a healthy margin. CONFIDENTIAL 12 Corporate Training Business English & Communication – With Direct English Content Our centres will deliver a range of custom-built Business communication programmes using Direct English materials. Any required customisation would be carried out with the assistance of the Direct English design team. We plan to cover Written Business Communication in detail in our Corporate Training range, as many companies that require communication in a written form, may require this as a bridge product with our conversational English training. On our request, Direct English team is also building Business English guides – and supporting training materials – to address the requirements of Business Users of the region. Leadership and Management Skills – Certification Programme from ILM We also plan to integrate a range of training programmes – to be delivered in a blended learning mode – leading to certification programmes from the Institute of Leadership and Management. Such medium term qualifications tend to be particularly popular because of their impact on retention, and we see these to have great acceptance in Business Process Outsourcing units in India. Keeping these businesses in mind, we have identified two ILM qualifications – Level 2 Introductory Certificate in Team Leading and Level 3 Introductory Certificate in First Line Management, which we will deliver in a blended learning mode. CONFIDENTIAL 13 Bespoke and Non-Qualification Training Material With our past experience in working with businesses in the region, we recognise that each corporate customer has a unique set of requirement. To service these requirements effectively, we will set up a content customisation and management facility, which will have the capability to develop corporate training programmes in the areas of communication, soft skills and leadership and management. These training programmes will be developed in a blended learning format, with a large portion of the training being delivered over the web and the corporate intranet, and various tutor-led activities will be built along the way. This facility will work with a variety of training content providers across the globe, and will be able to source and deploy suitable training content in line with the customer requirement. CONFIDENTIAL 14 International Admissions & Education Service MindMap already offers admission related services to colleges in UK through its centres in Bangladesh. As the English training network comes in place, this information services will be available in all the centres. Additionally, a web-based service will be deployed to integrate interested learners across locations. A bouquet of other services – bank loans for learners, visa information and advice, country contact services in UK, travel assistance services – are already available, and will be made accessible across locations. MindMap has a special working relationship with Buckinghamshire Chiltrens University College [accredited by Brunel University, and soon to become a university by itself] and University of Central England, Birmingham. These two institutions have already entered into an agreement with MindMap, and pay a share of first-year student fees for every student admitted with MindMap referral. There has also been an advanced level of discussion with University of Glamorgan and Nottingham Trent University to create similar working relationships. With the creation of the English Language training network and web services, MindMap will be in a position to approach other universities in UK and other countries and enter into similar working arrangements. Beyond admissions, the business opportunity in Global education is to develop in-country Foundation and other distance learning programmes. Such programmes already run in South Asia, and are popular. We will be able to add value to the current offerings with its reach, its technology integration and corporate access. Once the network is in place, and the corporate business alone. CONFIDENTIAL 15 is established, Global Education offering will experience a quantum growth by servicing the existing customer network Building Partnerships Linguaphone Direct English We will become the Direct English Master Franchisee for South Asia – i.e, India, Pakistan, Bangladesh, Sri Lanka, Nepal and Bhutan. The Indian operations will primarily carry the Direct English product line, while, outside India, we will have the option of carrying all product lines of Linguaphone – including their Language Guides and other assisted learning products. Under this partnership agreement, we shall pay Direct English a sign up fee, and pay 2% of all revenues on an ongoing basis. We will also purchase course materials from Direct English for all training courses at a price agreed upon beforehand. We shall be free to appoint sub-franchisees, who will carry the MindMap brand as well as Direct English, and offer our entire range of services. We will also be free to appoint Regional MFs – which we plan to do for Pakistan and Sri Lanka. All signup fee revenue will be MindMap‟s, and Direct English will take no share of this. Learning Resources International & Institute of Leadership & Management We have worked on a partnership model with Learning Resources International [LRI], a leading e-learning solutions provider with more than a decades experience and a track record of delivering effective learning solutions to large public and private sector organisations [Vodafone, Norwich Union, Kuwait Petroleum Company and DfiD, to name a few]. LRI will build and deploy an accredited ILM qualifications model for us. Under this arrangement, we will host these courses on our Learning Portal, and our learners will be able to access these courses on payment of a required fee. We shall also receive Learning Support Guidelines, Portfolio and technical and administrative support from Learning Resources International and Institute of Leadership and Management. CONFIDENTIAL 16 Learning Resources International will also be open to working with us in developing and delivering bespoke corporate courses and e-learning solutions. We will design the Learning Portal to include both Qualification and non-Qualification pathways, and a range of courses will be made available for corporate customers favouring a Non-Qualification set. Buckinghamshire Chiltrens University College [BCUC] A dynamic and forward looking university college, which is awaiting the confirmation to become a full university, BCUC has been working with us since April 2004 with BCUC. Under this agreement, we shall be able to market BCUC courses in South Asia. BCUC will provide us guidance, support, counselling visits and occasional joint marketing in the region to support this activity. Under this arrangement, we shall receive 10% of the first year fees paid by the students referred by us. However, if we get higher numbers [more than 15 students in a year], we shall get 20% of the fees. We expect with the spread of the franchise network, we will be able to move into the higher numbers bracket quite soon. University of Central England [UCE] One of the most popular destinations for overseas students in the UK, we have entered into an agreement with the UCE in November 2004 to recruit students for them from South Asia. The arrangement is similar to that of BCUC. Other Partnerships We have also tied up with two smaller colleges, namely the Royal Irish Business School based in Cork, Republic of Ireland and Canadian Business School in Ontario, Canada – with the objective of providing students a greater choice of pathways. We are also talking to a number of other UK universities to enter into similar arrangements at this point in time. CONFIDENTIAL 17 Putting a Project Team Together As we get the partnerships in place, our next step will be to put together a core team to execute this project as planned. Our plan is to put two offices together – one in the UK and the other in India – to get this operations started. The UK Office will primarily be involved in building content, service and strategic partnerships and handle interfaces with current and prospective partners. This team, which will consist of two full time directors, will handle all business development efforts at the initial stage [2005-2006], and will appoint the two country master franchisees for Pakistan and Sri Lanka. They will oversee all marketing activities throughout the network in this period. This team will also work on creating a detailed Support system – and detailed process manuals and systems covering Recruitment and Training, Centre Operations, Marketing Operations, International Admissions and Corporate Sales & Franchisee Development will be put in place. The Regional Office, which will be set up in Calcutta, India, will – in the initial stages – work as a project team to set up company-owned model centres in Dhaka & Sylhet [in Bangladesh], Calcutta, Delhi and Bangalore [in India]. This team will also oversee the trial run of the English course, adoption of the methodology and the translation activities. CONFIDENTIAL 18 The project team in India will be led by a Regional Manager, and will have six members. The configuration of this team will be as follows: Figure 1: Project Team Structure Regional Manager Finance & Admin Head Training Manager IT & Systems Manager Commercial Executive Senior Trainer [To Train the Trainers] Learning Portal Manager Academic Advisor [Translations] The academic advisor in this structure will be an external advisor, who will handle the language translation activity – first one by him, and oversee the subsequent language translation activities. This regional team will be based in our office in Calcutta, but will travel to the project locations as the work happens. In each of these locations, the team will put in a self-sustaining Centre Team [which will report to the Regional Manager, and functional heads], and install the management systems and controls. Once all the company owned model outlets are up and running – which will happen by September 2006 – this project team will then merge into the Regional Management Team, which will be set up to drive franchise expansion and support the network. We have already identified some of the candidates in the project team – and will be able to recruit them within a 45- to 60-day period. CONFIDENTIAL 19 Launching Model Centres At the first phase of establishing this business, we want to set up model Training Centres, which will showcase our entire range of services, and act as the skills development base for the franchise network. We plan to set up these model centres in key locations in India and Bangladesh, keeping in mind that in future, these centres will become the Regional coordination bases. These centres will also serve as the launching point of any new product or service in future, and will be the people development bases for the network. We plan to structure these model centres as autonomous profit centres, managed by the centre team leader, who will report to the Regional Manager directly. These centres will have their own expense budgets, and have to meet their own profit targets. These will also be responsible for own territorial development, like any other franchise centre. This operational independence will be designed to encourage enterprise and team spirit in these centres – while audits and other control mechanisms will ensure the compliance to norms and company-wide requirements. But, in all, in terms of marketing, delivery, infrastructure, customer service and popular image, these centres have to become the Centres of Excellence and models to follow for the rest of the franchised network. Immediately after the launch of the business, we shall convert the two MindMap outlets in Dhaka and Sylhet in Bangladesh into full English Training centres, and put the curriculum on trial. We shall also put the initial batch of trainers – for Bangladesh and Calcutta centres – under training, and after that, trial runs in these two centres. At the same time as this Bangladesh trial takes place, we shall work towards the first language version of the Companion Books in Bengali, CONFIDENTIAL 20 and build the first company-owned outlet in Calcutta, India. The project team in this stage will be spread in Dhaka and Calcutta, which, due to the geographical proximity, will be convenient. We expect to put the Language version and Centre Infrastructure in Calcutta. Following this, we shall launch the centre in Calcutta, and conduct the formal launch of Dhaka and Sylhet centres with the vernacular workbooks, in a space of 30 days. While the launch of the first set of centres take place, work will start in the other two locations – Delhi and Bangalore. A similar sequencing of events will happen – first for Delhi and then for Bangalore. The team will undergo training in Calcutta and Dhaka, and the language versions in Hindi [required for Delhi] and Kannada & Tamil [required for Bangalore] will be developed. We expect to launch the Delhi centre by 30th April 2006, and Bangalore by 31st August 2006. CONFIDENTIAL 21 Table 2: MindMap Owned Centre Models Head Installed Capacity Details 1800 seats – can be scaled up to 3600 seats per year Team 1 Centre Leader, 4 [to 8] Sales and Customer Support Personnel, 1 Senior Trainer, 4 [to 8] Trainers, 1 Administration Executive, 1 Technical Support Executive English Training Courses Levels 1 – 9, Exam Preparation, Business English, Bespoke courses Should also have assessment facility for some international exams Corporate Training Courses Full range of Leadership and Management Training and bespoke courses International Admission One Customer Service Exec fully trained to run the Admissions Desk Will have access to OnDemand Central Training Resource centre Will have separate budgets for promotion for International Education Distance Learning Programmes Will always get introduced through Company-owned outlets 1 Customer Support Exec and 1 Trainer will get trained with the course facilitation mechanism Other Facilities Conference Room, Regional Office, Resource Library Remarks 3 Classrooms – with a provision of going up to 6 A team of guards and cleaners will also be employed from a staffing agency CONFIDENTIAL 22 Creating Franchise Centre Models We have also drawn up a range of Business Models to establish a network of centres through franchising, once the model centres are successfully established. Depending on the demography and economy of the region, we have envisaged four categories of centres, and drawn up business models for these: 1. Metro Centre Model 2. Network Centre Model 3. Extension Centre Model 4. Institutional Partnership Model The key aspects of these models are given in Table 3 - 6 overleaf. The support structure of these centre models are detailed in Table 7. CONFIDENTIAL 23 Table 3: Franchise Centre Models Model Metro Population & Other Key Factors More than 500,000 population; significant educational infrastructure; Industry and Commerce – MNC exposure; High Technology Usage; Annual GDP Per Capita >= US $3000 Other Considerations High Population Mobility; Exposure to modern lifestyle; government offices and employment; engineering colleges India New Delhi, Bombay, Madras, Calcutta, Bangalore, Pune, Ahmedabad, Chandigarh Bangladesh Dhaka, Chittagong Pakistan Karachi, Islamabad, Lahore Sri Lanka Colombo, Kandy Network More than 100,000 population; Significant education infrastructure and student population; domestic industry and administration hub; closeness to other metros; Annual GDP Per Capita >= US $2000 Extension Centre Small town on any population, some education infrastructure and student population Growing population; new industrial, technology hub; special efforts by governments to develop the town; significant real estate, construction activity Ability to pay, accessibility from nearest network town, local economy India Simla, Ludhiana Bangladesh Barisal, Bogra Pakistan Muree Institutional Partnership Bolt-in Centres inside a school or College, can be located anywhere, including metros. As long as it can be supported by another centre As a dedicated facility inside Pailan Engineering College, Calcutta India Bhubaneswar, Lucknow, Hyderabad Bangladesh Sylhet, Khulna Pakistan Lahore, Rawalpindi Typical Example CONFIDENTIAL 24 Table 4 : Centre Configurations Max Cap Class No. of Rooms 3 2 2 1 Installed Working Hrs/ Seats 60 32 24 12 Year 3600 3600 3600 3600 Sem (no. of Centre Type Metro Network Model Extension Model Institutional Partnership Size 20 16 12 12 Hours students) 117 117 117 117 1846 985 738 369 Details of Configurations Sign-up Fees in USD / 5 yrs Space Required Square Feet Manpower Total - Centre Leader - Sales & Customer Service - Senior Trainer - Trainer - Admin Metro 12000 2000 11 1 4 1 4 1 Network 6000 1500 8 1 3 0 3 1 Extension Inst. Partnership 3000 1200 7 1 2 0 3 1 2000 600 5 1 1 0 2 1 CONFIDENTIAL 25 Table 5 : Centre Cost Models Start-Up Costs (USD) Build-up Costs Space Acquisition Costs Marketing Costs Total Start Up Costs Metro 72000 16000 10000 98000 Network 43500 7500 5000 56000 Extension 24600 3600 3000 31200 Inst. Partnership 9200 0 0 9200 Manpower Costs City Type Super Metro/ Metro Network Model Extension Model Institutional Partnership Salaries+ Per Person Per Month USD Sales Manager & CS 1357 698 465 349 349 233 186 186 Senior Trainer 1260 930 698 465 Trainer 1163 698 465 349 Accts & Admin 233 186 186 186 Fixed Costs City Type Super Metro/ Metro Network Model Extension Model Institutional Partnership Rent 1.8 0.5 0.5 0.3 Costs Per Square Feet USD Utilities 0.8 0.4 0.3 0.25 Maintenance 0.5 0.3 0.3 0.25 Other 0.3 0.25 0.15 0.15 Operating Cost Per Month (USD) Premises & Infrastructure People Marketing Total per Month Costs USD 17695 7349 4919 2489 Metro 6800 8895 2000 Network 2175 3674 1500 Extension 1500 2419 1000 Inst Partnership 570 1419 500 CONFIDENTIAL 26 Table 6 : Centre Profitability Model Minimum Revenue Requirement Per Year USD Metro Set Up Costs [Amortised] Operating Costs/ Year Interest Etc 19600 212344 1568 11200 88193 896 6240 59023 499 1840 29863 147 Network Extension Inst Partnership Annual Revenue to Recover Investment 233512 100289 65762 31850 Centre Profitability & Capacity Utilisation (USD) Metro Average Fees Per Student Per Semester 400 350 250 200 Network Extension Inst Partnership Courseware & Royalty Payout 30% 120 105 75 60 Centre Yield Per Student 280 245 175 140 Required No. of StudentSemesters per year 834 409 376 228 Capacity Utilisation Level 45% 42% 51% 62% CONFIDENTIAL 27 Table 7 : Franchise Support Model & Fees Metro Model Per Student Fee Our Share Our share in Dollar Terms Support from MindMap To be collected from Courseware Support Visits Door delivered 2 Man-days/ Quarter Door Delivered 1 Man-day/ Quarter Regional Hub 1 Man-day/ Qtr $400 30% $120 Network Model $350 30% $105 Extension Model $250 30% $75 All-country campaigns covering TV, Internet & Marketing/ Promotion Support Newspaper Levels 1 – 9, Custom Curriculum Support Initial Training Support Site Selection Support Initial Recruitment Support Team Induction Support Centre Management System Public Relations Support Courses Included Included Included Included Free Installation & Telesupport Included All-country campaigns Newspaper Levels 1 – 9 Included Included Included Included support Included All-country campaigns Newspaper Levels 1 – 6 Included Included Included Included support Included covering TV, Internet & covering TV, Internet & Free Installation & Tele- Free Installation & Tele- Ongoing Mktg. Training Technical Training Staff e-learning Extranet Other Support Marketing Material Design Support Ongoing Recruitment New Staff Training Conferences Monthly Reviews License Fees 5 Years At cost Free Yes At Cost Travel Cost Travel Cost US$ 12,000 At Cost Free Yes At Cost Travel Cost Travel Cost US$ 7,000 At Cost Free Yes At Cost Travel Cost Travel Cost US$ 3,000 Travel cost on Partner Travel cost on Partner Free Access Free Access Travel cost on Partner Travel cost on Partner Free Access Free Access Travel cost on Partner Travel cost on Partner Free Access Free Access CONFIDENTIAL 28 Institutional Partnership Centre Model The Institutional partnership centre will be a bolt-on infrastructure within an existing educational or corporate entity – wherein we will tie-up with the host organisation, and run these programmes. In this arrangement, a private college or an university will take up a franchise, provide all the facilities like any other franchisee and receive support from MindMap. The only difference between a franchised centre and such entities will be in marketing – these centres will primarily market to its own captive audience of students. Our model has been designed accordingly – with slightly lower fees than the retail market, and significantly less start-up investment, given the immediacy of business and dual-use infrastructure. Admission Services Franchising While our centre network will primarily be established for English Language Training, such a network will provide us with significant reach and depth in terms of its admission services. Over a period, admission services will be offered to select franchise outlets – based on their interest, integrity, commitment to processes and financial ability to effectively promote such services in the territory. Admission services will become an additional revenue stream for MindMap Franchisees – and will require no extra start-up investment other than a market-spend commitment and a trained staff to run the admission services desk. In this relationship, we will centrally administer all the admission related services, and universities, also develop and maintain key relationships sponsors and with travel financing institutions, corporate CONFIDENTIAL 29 agencies. The franchisee will be responsible for local promotion, counselling and guidance, and student assistance at the ground level. Franchisees will have access to the whole range of MindMap Admission Services, including Web Services, In-Country Support, University Liaison, Travel and Visa Advisory Service and Bank Finance Assistance. For each referral, the franchisees will be entitled to to a portion of the student‟s first year fees to the university [typically $400 - $500 per referral]. We expect to establish an Admission Services desk in at least 70% of all its outlets – including Institutional partnership outlets – by the end of 2007. Corporate Training in Franchised Outlets MindMap‟s Corporate Products team will drive Corporate Training operations; both in handling large region-wide accounts and developing bespoke products and services for corporate clients. All MindMap franchisees will be able to approach local companies for training. They will also be able to execute such training if they already have the necessary resources and expertise in their local centre to deliver the same [usually the standard product lines]. However, for Bespoke requirements, they must work with MindMap‟s Corporate Products Team for the sales effort. The Corporate Products Team, in some cases using the franchised centres‟ infrastructure, will also handle the delivery of such training. For all standard orders, where the marketing and delivery is completely done the franchisee, they will operate under the standard revenue share agreement. However, in cases where they are only involved in marketing, they will be entitled to 10% of the order value as marketing fees, and in CONFIDENTIAL 30 case their infrastructure is also being used, they will get an extra 25% as the infrastructure charge. In cases where MindMap Corporate Products Team wins the order, and it gets executed by the franchisees, an extra 10%, over and above the usual revenue share, will be payable to MindMap for its marketing services. In all cases, corporate training will be governed by a separate agreement with its own terms and conditions. CONFIDENTIAL 31 Expanding the Network With these business models in place, MindMap expects to grow the network of English training centres through franchising. The big drive for franchising is set to start at the end of first 18 months of operation, and a sizeable network will be in place by the third anniversary of MindMap‟s launch. The core team of MindMap has long and varied experience in Education Franchise development and management in the region, as well as in other countries. In the initial period, the core team will focus on developing franchise network in a Cluster Franchising mode. Under this strategy, our main drive of expansion will centre around the location of our model centres, and will move forward with the establishment of model centres in new geographies. The first phase of franchise development, starting 1st September 2005, will cover Pakistan and Sri Lanka in the main. These two countries, strategically important parts of the network, will be operated through local Master Franchisees. These local MFs, which will be prominent business groups engaged in other businesses, will set up their own centres first and clone our expansion strategy in their own markets. Table 8 below captures the key aspects of the MF offer for these countries. CONFIDENTIAL 32 Table 8: Master Franchisee Proposition for Pakistan & Sri Lanka Pakistan MF Term MF Fees MF Centres Addl. MF Centres MF Entitlement 5 Years $40,000 3 Free Centres – owned and run by the MF 50% Discount on Signup for MF‟s own centres beyond the free centres     Support MindMap from 50% of all sign-up fees 8% Margins on courseware 3% Royalty Distribution rights/ Margins on Linguaphone Products Product Support Business Dev support Custom product development Training Logistics Support Admission Services Integration Quality Systems and Mgmt Technology Support Target Date of Sign-up Target Date for Centre Launch 1st July 2006 1st October 2006 1st January 2006 Sri Lanka 5 Years $25,000 2 Free Centres –owned and run by the MF 50% Discount on Signup for MF‟s own centres beyond the free centres     50% of all sign-up fees 8% Margins on courseware 3% Royalty Distribution rights/ Margins on Linguaphone Products Product Support Business Dev support Custom product development Training Logistics Support Admission Services Integration Quality Systems and Mgmt Technology Support 1st March 2006 These sign-ups will be handled by MindMap UK office, but will draw from the network of contacts and references that Adcomm Group has in these countries. CONFIDENTIAL 33 In this phase, once the Model centres in Bangladesh are launched and operating, we will leverage our presence and market experience to launch a franchise expansion campaign. The target for this campaign primarily will be IT and other training centres having the requisite infrastructure – so that the cost of entry remains low. The second phase of franchise expansion will start soon after the launch of Calcutta and Delhi centres in India, and will cover all major metro areas of India, and Eastern and Northern Parts of the country. During this period, MindMap Regional Team will also be active and will contribute significantly in expanding the network. The Third, and final, drive for franchising will start with the launch of MindMap Centre in Bangalore in August 2006, and will cover the smaller cities of Southern India. The overall franchise network expansion picture, in line with the above plans, is enclosed below in Table 9. CONFIDENTIAL 34 Table 9: Expansion Plan 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Company Owned Centres – India Metro Centres – India Network Centres – India Institutional Partnerships – India Extension Centers – India Total Operational Centers - India Metro Centres – Pakistan Network Centres – Pakistan Institutional Partnerships – Pakistan Extension Centers – Pakistan Total Operational Centers – Pakistan Company owned Centres – BD Metro Centres – BD Network Centres – BD Institutional Partnerships –BD Extension Centers – BD Total Operational Centers – Bangladesh Metro Centres –SL Network Centres – SL Institutional Partnerships – SL Extension Centers – SL Total Operational Centers - Sri Lanka Metro Centres – Other Network Centres – Other Institutional Partnerships – Other Extension Centers – Other Total Operational Centers - Nepal & Bhutan Total Operational Centres - GeoWide 4 50 134 231 306 381 455 529 611 651 701 0 1 9 16 20 20 20 20 20 20 20 0 0 0 0 0 2 1 0 0 0 18 2 2 3 2 32 2 2 8 4 38 2 2 12 4 52 2 2 12 4 54 2 2 12 4 56 2 2 12 4 66 2 2 12 4 66 2 2 12 4 66 2 2 12 4 2 0 0 0 0 16 2 0 0 0 32 2 4 6 6 50 2 6 12 12 54 2 6 18 12 56 2 10 24 16 64 2 10 26 16 64 2 10 28 16 72 2 10 30 24 72 2 10 30 24 72 2 10 30 24 0 2 0 0 0 0 2 2 4 8 2 0 16 2 6 8 10 6 28 2 6 10 20 12 38 2 6 10 24 12 54 2 6 12 24 12 62 2 6 12 32 12 70 2 6 12 32 12 74 2 6 12 40 12 74 2 6 12 40 12 74 2 6 12 40 12 1 1 0 0 0 2 0 0 0 0 3 6 12 4 4 29 2 0 0 0 3 12 16 16 12 59 4 4 4 4 3 16 20 30 36 105 6 6 8 8 3 20 28 45 60 156 6 8 12 12 3 24 36 60 76 199 6 12 16 20 3 24 48 80 100 255 6 12 20 24 3 24 52 100 140 319 6 12 24 28 3 24 52 120 180 379 6 12 24 32 3 24 52 140 200 419 6 12 24 32 3 24 52 170 220 469 6 12 24 32 CONFIDENTIAL 35 Building Effective Franchise Support Systems One key challenge in establishing such a vast network is to be able to provide effective support to maintain the consistency in service delivery level and ensure business growth. However, there are successful examples of large training network in India, and therefore, it is possible for us to derive useful lessons from their experience. The Approach to Franchise Support Relevant research and experience point to six key success factors in building and maintaining a large franchise network, which we will build into our strategy of franchise expansion and support: 1. Getting great franchisees to work with – Being a path-breaking franchise opportunity definitely attracts the more entrepreneurial franchisees. There is also a prestige factor attached with being a franchisee of an UK-based international education company. Given these, MindMap stands a good chance to attract great franchisees. However, MindMap will adhere to the principle of never settling for the „Second Best‟ for the choice of franchisee, and would always have a more long term approach to franchise recruitment. We have long experience in working with franchisees and we plan to personally recruit every single franchisee that we sign up with. We will also build in a detailed and transparent franchise recruitment process to facilitate this approach at every level of interaction. 2. Building a win-win system – A long-term vision and a shared sense of purpose will be at the core of our franchising approach. MindMap business model stands on its franchise network, and therefore, franchisee profitability and comfort will be given top priority. The key to building this system will be to define the core values and objectives clearly from the start, and to ensure that an agreement on these – and not just the financial terms – have been reached at the start of the business. While it will remain the CONFIDENTIAL 36 franchisee‟s responsibility to build a profitable business, a clear, ethical relationship framework will always be maintained by both sides. 3. Building Robust Processes – The MindMap system will be built on a closely knit set of processes, which will also be web-enabled as much as possible. These processes will be in place before the start of operations, and not as and when. However, MindMap recognizes that the most significant three processes in such a framework relate to monitoring process effectiveness, capturing and acting on feedback, and ensuring quick and effective revisions when needed. The MindMap process framework will be modeled for discipline with flexibility, and will help in building a common identity. 4. Building Market Driven Products Continuously – Along with processes, the same approach will be adopted in product design and delivery. It is important for any service franchise network to adhere to delivery standards and discipline. However, it will also be a priority for MindMap management to build an effective system of flexible product design and development, to cater to the needs of the market place on a continuous basis. MindMap Content Development and Management Team will work with the sole objective of feeding the channel with relevant products all the time. 5. Keeping the focus on end customer – The key focus will always be on the learner or the company sponsoring the study. Once the entire network, everyone and every process in the system, is focused on maximizing satisfaction of the end customer, it will be easier to build a shared purpose and work for it. Such a philosophy will be instituted in the MindMap system and everyone will be integrated into the same. This will also be facilitated by an extensive information system, capturing all aspects of the customer service, which will build an effective and transparent way of keeping everyone‟s focus on the deliverables to the customer. CONFIDENTIAL 37 6. Getting great people in the frontline – Actually, everywhere. We accord highest priority to the ethics, professionalism and commitment of its team members. The key to this is to build a great HR system, which is focused on development of every member [including the franchisee staff] and enabling them with resources to do their job well. This will be facilitated by an integrated, technology-enabled super-Intranet - MindSpace - which will integrate all front-liners and build an integrated, effective and focused platform for all front-liners. MindMap franchise support system will be built on these principles, and will continually strive for improvement. Franchise Support Structure After six months of operation, but within 18 months, when the five company-owned centres start functioning and first MF deals in Pakistan and Sri Lanka, as well as first few franchise centres in India are signed, we will merge the project team into a Regional Operations Team based in Calcutta, and a put together a Business Development Team based in our facility in Delhi. The Regional Operations Team will include a Regional Operations Head, a Finance Manager, a Commercial Manager, a Training Manager, an International Admissions Executive, and a full team for Content, Training & Technology Support. This team will be headed by the Regional Operations Head, and will look after Training delivery and Customer Support across the network. The Regional Operations Head will report to The Global Operations Director based in UK. The Regional Business Development Managers, who will be joined by a two Corporate Sales Managers during this period, will head the Regional CONFIDENTIAL 38 Business Development team. This team will be responsible for marketing activity of the entire channel as well as sales of Corporate Training through the network. They will also have a dedicated functionary for Franchise Development in India and Bangladesh. The Business Development Manager will report directly to Global Business Development Director in UK. After 18 months, when the network will have reached an optimum level, MindMap will recruit a team of franchise support managers, who will be reporting to the Regional Operations Head and will be based across three locations – Calcutta [supporting Eastern India and Bangladesh], Delhi [supporting North and parts of Western India] and Bangalore [Supporting Southern and parts of Western India]. The Business Development team will expand to include Regional Product Managers in charge of Education, Corporate Training and Global Education Services. A projected organisation structure – as of January 2007 – is in Figure 2 below. CONFIDENTIAL 39 Figure 2 : Organisation Structure as on 1st January 2007 Board of Directors/ CEO Director, Global Business Development [May 2005] Director, Global Business Operations [May 2005] Regional Business Head [December 2005] Project Coordinator -> Regional Operations Head [July 2005] Finance & Admin Corporate Sales Manager [Mar 2006] Franchise Development Manager [Sep 2006] Manager [July 2005] Commercial Executive Corporate Sales Manager [Mar 2006] Product Manager Education [Jan 2007] Logistics Executive [Jan 2007] [July 2005] Product Manager – Corporate Training [Jan 2007] Product Manager Admissions [Jan 2007] Business Auditor [Jan 2007] Own Centre Teams [September 2005] Training Manager [July 2005] International Admissions Executive [July 2005] Content Team Leader [Mar 2006] Content Expert [Mar 2006] Training Support Team [Jan 2007]    4 Franchise Support Managers 2 Training Support Managers 2 Trainers Design & Development Team [Mar 2006]    2 Developers 1 Graphic Designer 1 Instructional Designer CONFIDENTIAL 40 Technology Based Support The second element in the support structure will be the technology. Every student will be put on a Customer web Site, which will not stop at compulsory registration and information tracking, but will be kept active by continuous stream of community activities, learning opportunities and interactions. Similarly, MindSpace - the corporate intranet for MindMap - will be the common platform for all MindMap team members, including team members at franchise centres, to meet, learn and grow and do better. A complete plan for this implementation has already been drawn up, and is technical specifications and timelines have been defined. There is nothing new in this plan. Each one of these ideas are tried and tested, and hence proven to increase the effectiveness of a franchise network. However, these are usually designed as Business Support systems, and hence accorded a proportionate priority. In MindMap, these systems and processes will be at the heart of the business – in fact, these will be our business. CONFIDENTIAL 41 Growth Areas We see this business idea as a gateway to many possibilities. With a technology-enabled franchise network in place, this business can grow into many areas – and it will. Some of these possible growth areas are: 1. Admission Service to Distance Learning: The International Admission services can be moved up the value chain by offering parts of the course – if not the whole – in-country, in a blended learning mode. We can offer the partnering institutions technology backup, facilitation services, contact infrastructure and necessary administrative support. 2. Corporate Training to Corporate Partnerships: The corporate training division can gradually offer full service induction programmes for large corporate clients, significantly reducing the cost and efforts associated with such programmes. In other cases, it is possible to participate in the recruitment process of the big employers, including many BPO entities, wherein we keep a manpower pool in place for these employers to recruit from. The third possible opportunity is to gradually develop incompany qualifications, by facilitating the interactions between corporate partners. 3. E-Learning Content Development: Setting up a content-hungry chain will make us keep content design and deployment capability – in partnership with our partners in UK. We will extend this partnership in outsourced content development over a period of time. 4. International Expansion: This business model – once successful – will present significant possibilities of extension in other parts of Asia. CONFIDENTIAL 42 clients, international universities and content Risk Factors Competition Competition for English & Corporate Training Businesses Scott McNeally, the CEO Sun Microsystems, Inc. says, “The only thing I'd rather own than Windows is English.” Such a clear and apparent opportunity is bound to attract competition – and so it has in India.  All established training companies are trying to enter English training market. NIIT, the market leader in training, has tried to enter the English Training Market in 2003, but failed due to its predominant commitment to IT Training. Due to the rapid decline in their core business of IT Training, and falling profitability in their centres, NIIT could not get its act together, despite huge resource commitments to this product line.  Other large players in Training, namely APTECH and SSI Education, has also tried to establish a English training brand, but failed due to the decline in their core business of IT education. However, while the established players in training in the subcontinent are constrained by their brand perceptions, decline in core business and lack of acceptance of new initiative, there are a set of new, largely local players, who have moved into the English training market recently. These centres are running full capacity across the region, offering low quality materials and inconsistent teaching, but capitalizing on the absence of a global brand in English teaching in these markets.  The primary competition to MindMap will come from these players, and a few, higher cost, more quality conscious players in specific metropolitan markets. This is primarily why success of MindMap brand will depend crucially on multi-country franchise-driven expansion: this will give MindMap the scale and the capacity to CONFIDENTIAL 43 present and project the superiority of its offerings to its audiences. The strategy to enter all markets simultaneously, and to build a Business support structure quickly and effectively, will pre-empt other players into expanding geographically and exploiting the benefits of scale. In such a context, many of the better quality English Training providers will be expected to buy into MindMap‟s franchising formats and adopt its methodology to English training.  However, the other competition that can come from global English training brands like Berlitz, Linguarama, inlingua and ELLIS will have to be addressed by MindMap‟s flexibility and innovation with its range of services. Inlingua is already operating in India with great success, but their product range is limited and corporate training capability is minimal. In the face of this global competition, MindMap‟s own resource commitments, apart from Direct English and other partners, into content development and market research will set it apart. CONFIDENTIAL 44 Competition for International Education Business  Current Agents: Though large and been in existence for some years, the business model is archaic, and lacks credibility. The most glaring weakness of these players is in the area of relationship building, and therefore, they may not be in a position to win family loyalties.  Current Web-based/ larger players: Not many such players are around currently. These suffer from the lack of reach. However, some [like www.studyukguide.com] have an impressive array of partners and services. This company will be our model to follow for the web services.  Current Players in Education & Training: Like NIIT and APTECH. They pose the biggest possible competitive threat, though they are not in this business. However, they already have all possible ingredients of this business, including reach, feet on ground, credibility and web services. A merger, buyout or a strategic partnership of/ between a web services like studyukguide.com, for example, by/ with a player like NIIT or Aptech may create a strong player in this area. CONFIDENTIAL 45 Environmental Risk Factors 1. War between India and Pakistan: Always a possibility, but at this moment, peace process looks irreversible. 2. Political instability: India seems to be stable, and will remain so in the next ten years. The political climate in Sri Lanka and Bangladesh is improving, and will get better after next year‟s elections. The only country in the region, which faces an uncertain future, is Nepal. 3. Currency Crisis: Looks unlikely. The only country, which may face this threat, is Nepal, but with little trade in the region, it may not affect other currencies. 4. Economic Downturn: Highly unlikely in next three to five years. Economies in India, Pakistan and Sri Lanka are growing and healthy, and it is expected to pull all other countries in region. Conclusion: Moving Forward In all, a clear and present opportunity exists in the field of professional training in the skill-hungry economies of South Asia. As these economies grow to provide the world with its back-offices, and its entrepreneurs aspire to build global enterprises – we will build a training company which will propel its millions of capable, educated and hard working graduates into a career in global services. Our efforts to upscale the operation and to reach out to cities and towns of South Asia will require significant investment in support infrastructure. We are seeking investment from a business partner to take this project forward. A detailed financial projection is attached at this end of this document – which details out the path to this $100+ million opportunity. CONFIDENTIAL 46 Summaries of financial projections are appended here for your reference. CONFIDENTIAL 47