The Month in B-schools

It has been quite a tumultuous month in the Indian MBA scenario. Proposed changes in the format of the CAT, steep hikes in the cost of MBA education, particularly from the premier institutes in the country, and then the mandate of the Supreme Court in favour of reservations for OBC candidates belonging to a certain economic class – things have hardly been quiet.

CAT to be held online from 2009

The Common Admission Test (CAT) will finally go online from 2009. The Indian Institutes of Management (IIMs), including the Rajiv Gandhi Indian Institute of Management, Shillong, has already issued a pre-qualification bid inviting service providers and IT firms specialising in assessment and testing services, for computerisation of the CAT exam. While much remains to be clarified, from the earliest reports available, it seems that the new model will be similar to American examinations such as the GRE, or GMAT, wherein not all students will be writing the exam on the same date. Once the CAT goes online, aspirants will be given the option of choosing the day of their test from a set of given dates.

Increase in B-school fee proposed

The almost 200% fee hike proposed by IIM Ahmedabad seems like it will go through. After a meeting with HRD minister Arjun Singh, IIM Ahmedabad chairman Vijaypat Singhania told reporters on April 16 that there would be no rollback of the fee hike. Singh had always held the stand that the fee hike was not “unwarranted”. But his chief concern had been the ability of students from disadvantaged sections affording an education that costs nearly Rs 12 lakh. All the other IIMs are also hiking their fees, if not as much, to keep pace at least. The IITs are also planning to increase the fee.

The increase in fees has been received with mixed feelings from the various stakeholders: students, faculty, people – the primary question being ‘is the hike justified?’

So what were the reasons for the hike?

According to Singhania, the fee hike was necessitated by the “sharp increase in faculty remuneration following the Sixth Pay Commission recommendations” and the fact that the IIMA corpus fund was nearing depletion. The IIM A board hiked fees for the two-year management course from Rs 4 lakh to Rs 11.5 lakh. Arguing that IIMA was not “a temple of learning for profiteering”, Singhania said that annual cost per student was Rs 5.5 lakh or Rs 11 lakh for the two-year programme.

Arguments are in plenty for and against the fee hike. “IIMs need to pay their faculty better salaries, not merely to keep it commensurate with graduate (MBA) salaries, but more importantly to ensure that they can attract the best of people both nationally and internationally. And there are many financial institutions that are willing to give loans for students admitted to premier financial institutions,” says one aspiring management graduate. There are others who feel differently. “Last year’s placement report says there has been only a 30% raise in pay packages, whereas the fee hike is more than 50%. So, would the salaries also increase proportionally?” questions another candidate. IIMs and members of the governing body in these schools have maintained a rigid silence on the questions raised. However, addressing the minister’s concern about disadvantaged students, Chairman Singhania said that the institute proposes to increase the number of scholarships. “The amount of subsidy we offer will increase from the current level of Rs 39 lakh to Rs 8.5 crore. Besides, we have also adjusted the eligibility criteria,” Mr Singhania said. At present, students with a family income of Rs 2 lakh per annum can apply for scholarships. This limit has been raised to Rs 6 lakh per annum. The institute proposes six grades of exemptions. These measures, according to Singhania, will increase the coverage to 62% of students.

However, affordability of fees remains a big issue: TT Ram Mohan, Professor of accounting in IIM A, in his blog of April 3, has explained how the fee hike can leave its beneficiaries with a high financial burden. As he writes in his blog, “Rs 8.5 crore for around 360 students would mean Rs 2.4 lakh per student, as against the fee of Rs 11.5 lakh. Qualifying students (the eligibility limit now is family income of Rs. 6 lakh) would have to garner Rs 9 lakh for their education – nearly double the existing fee. That is the extent of help that IIMA’s tuition waiver and need-based scholarship will give. So, where ordinary students face a tripling of the fee, “needy” students face a doubling.” However, the IIMA chairman has clarified that State Bank of India had confirmed that adequate loans would be made available to students. ICICI Bank has also been approached for a similar commitment. Further, IIM A will allow students to apply for scholarships as soon as they are receive notification of admission. This would mean that students would not have to deposit the entire fee at the time of admission; instead, they will be required to deposit only the “net fee” — the amount which is not covered by the scholarship.

IIMs have, however, failed to explain how the institute would provide for the Rs 8.5 crore for scholarships, especially given the argument that the institute’s corpus has been getting depleted.

Whether the hike will be good or bad for MBA education in the long run cannot be said now. The hike has just shown us that quality education comes at a price. The effect of the price cannot be quantified. There are a lot of intangibles associated and the entire issue still entails a lot of ‘what ifs.’ The biggest question it has thrown up is – Will a middle class/ lower middle class student now aspire to be in the IIMs? Or has this been made less viable? The perception of cost is more important than the cost itself for the lesser privileged. The fee hike has happened. But whether the increase has made education less accessible can only be definitely concluded from the decrease / proportionate increase in the students taking the CAT for the IIMs each year, over a period of years. But has the aspirational value (students aspiring for the IIMs) of the IIMs decreased? And is it measurable? Only time can tell.

Current Fees for 2-year programmes at IIMs

Institute Program Fee

IIM A PGP 1,150,000

IIM A PGP -ABM 450,000

IIM A PGP - PMP 1,200,000

IIM B PGP 900,000

IIM C PGDM 500,000

IIM C PGDCM 500,000

IIM L PGP 450,000

IIM L PGP - ABM 450,000

IIM I PGP 450,000

IIM K PGP 450,000

IIM S PGP 400,000

Supreme Court upholds reservations for OBC candidates

Just as voices debating the fee hikes in the IIMs were gradually becoming softer and the MBA education fraternity seemed to be settling down in acceptance, there was another jolt, this time in the form of a ruling from the highest court in the nation. The Supreme Court on April 10 upheld a law providing for 27 per cent reservation for Other Backward Castes (OBCs) in educational institutions supported by the Central government. This would be in addition to the 22.5% reservations that already exist for SC/ST students. A five-judge Constitution bench headed by Chief Justice KG Balakrishnan ruled that the 93rd Constitutional Amendment Act, which governed the 27 per cent reservation in aided institutions, didn’t violate the basic structure of the Constitution. Following the ruling, the IIMs immediately suspended the publication of their final admission lists, which was due on April 11. At the time that this magazine went to print, although the Institutes had clarified that they would be implementing quotas in a phased manner starting this academic year itself, there were no clear explanations or notice regarding how they would ensure that the minimum seats reserved for OBC candidates would be filled this year, and whether they would revisit the admission process all over again. Neither was there any confirmation of a date on which the final admission list for general and reserved category students would be published. The Institutes are also grappling with the issue of “creamy layer,” arising out of the Court’s ruling that OBC candidates with a family income of over Rs 2.5 lakh per annum will not be eligible for reserved seats.

Life on Campuses goes on…

Meanwhile, B-school campuses continued to be abuzz with regular events and activities. Placements have been concluded in most schools and there has been enough reason for cheer (read Cover story). The usual academic and socio-cultural activities too continue unabated.

In yet another instance of MBA students chasing their dreams, two final year students of IIM Kozhikode- Sreerama Suprath and Ashish Sinha have started their own production house- 12th Man Productions. The first movie from their production house is a silent movie called ‘Deceit’, a fast paced thriller. The movie is written, directed as well as produced by them with actors from the IIMK student community. The movie was premiered at the IIM K grand auditorium on the eve of convocation of the passing batch of 2008 to a packed and varied audience ranging from the student fraternity to the family members of the passing batch to noted dignitaries from the corporate world who had come to bless the convocation ceremony. The movie received rare and positive reviews from the audience and was praised for its sheer professionalism in the face of various constraints faced by the students. K Unnikrishnan Nair, PGP Chairperson, IIMK said,” I am pleased to see the final year students of our PGP program coming up with such an innovative concept. The trend has been to experiment more with ventures in dotcom and other familiar sectors. But a startup in a completely different domain is what truly differentiates this and makes it look promising”. The movie is also being promoted among young executives. Currently, the film’s trailer is being promoted online- http://www.youtube.com/watch?v=LKRMxhkiyAM and also being shown across various campuses.

A team from JBIMS emerged as national winners in the India round of the Global Investment Research Challenge organised by the CFA Institute, USA held in Mumbai on March 29. In an event where teams could participate only by invitation, other participants included teams from institutes like FMS Delhi, IIM Ahmedabad, IIM Bangalore, XLRI, Indian School of Business, Institute for Financial Management and Research, Management Development Institute Gurgaon, and SP Jain Institute of Management and Research. The contest involves the application of best practices in the field of equity research and in the India round, participating teams had to analyse a leading Indian Media company. The local rounds began in September and the team will now move on to the regional round (Asia Pac region) scheduled to take place on April 12, 2008 where it will compete with the winners from Singapore, Indonesia and Hong kong. The other regions include Europe, New York and North America. The top 5 winners will then compete in New York on May 1, 2008.

At the national finals of the ‘Tata Crucible Campus Quiz 2008,’ IIM Ahmedabad emerged victorious. The finals were held at Ravindra Natya Mandir, Mumbai, on Thursday, March 27, 2008. The winning team slugged it out in a battle with the regional champions of 11 other cities and won the contest on the very last question. The Chief Guest for the evening, Mr. B. Muthuraman, Managing Director, Tata Steel, handed over the trophy, a cash prize of Rs. 2 lakhs and a host of other attractive prizes to the winners. NMIMS Mumbai was the first runner up team, while ICAI Bangalore were second runners up.

International News

The Wharton Business Plan Competition announced the eight finalists who will vie for $70,000 in prizes at the annual Venture Finals on April 30, 2008 at the Wharton School’s Jon M. Huntsman Hall, at the University of Pennsylvania campus. The Wharton Business Plan Competition (WBPC) is among the leading global university-run business plan competitions. It was launched in 1998 by the Wharton Entrepreneurship Club and is now co-managed by Wharton Entrepreneurial Programs and a specially selected student committee.  This competition, which takes place over a 7-month period, is structured in three phases to help teams develop their plans in both a collaborative and competitive environment. Over the years many participating student teams have gone on to launch successful businesses based on their plans, such as PayMyBills.com, buySAFE, Smart Genetics, NetConversions, Stata Labs, DealMaven, Verge Solutions and MicroMRI. At the 2008 Venture Finals, the eight finalist teams will each make 20-minute presentations to judges drawn from the business and venture capital community, who will then evaluate the persuasiveness and viability of each business plan.  Students will receive $70,000 in cash prizes and in-kind awards including a $20,000 Grand Prize.

The Management Accounting section of the American Accounting Association has declared an award for “Lifetime Contribution to Management Accounting” for former Dean of the Said Business School at Oxford University, Anthony Hopwood. Hopwood, a professor of Operations Management, has written widely on accounting from a broad organisational and managerial perspective. The award was given in recognition of his “significant contributions to management accounting education, research and practice through teaching excellence and educational innovation.”

The Spanish business school IESE will start its first executive programme in the US, in Miami, in October 2008. The programme has been designed for executives who have interests in the Latin American market, and is open to participants from the Americas, Europe and Asia. It will be taught in conjunction with two of IESE’s partner business schools, the Argentinian IAE and Ipade in Mexico. Iese already hosts Senior Executive Programmes in Barcelona, Madrid, Munich, Warsaw, São Paulo, Shanghai and Nairobi. The Miami programme will follow a similar pattern as the above, having four one-week residential modules spanning a six-month period. Three of the modules will take place in Miami and one in Madrid. The typical participant should have 10 to15 years of management experience, an international outlook and a focus on business in Latin America. The School has also tied up with the Harvard Kennedy School to offer an executive programme, that will examine the challenges of political leadership – how public executives can establish goals, revitalize bureaucracies, motivate people, create organizational capabilities, communicate ideas and measure results. The programme, entitled “Driving Government Performance,” will give participants a chance to learn strategies for improving policy effectiveness and organizational performance. It will be offered during June 16-19 at IESE’s Madrid Campus.

In news from yet another European business school, HEC Paris has initiated a Chair in Social Business. The constitution of the Chair was announced following a meeting between French President Nicolas Sarkozy, Nobel Peace Prize Winner Muhammad Yunus, and HEC Paris Dean Bernard Ramanantsoa. The Chair will be charged with developing a two-month training program on social business designed to complement the final-year curriculum of MSc in Management students at HEC or at other business schools and universities. The objective will be to sensitize students to innovative approaches in business that may reduce poverty and exclusion in both developing countries and developed countries such as France. Professor Muhammad Yunus, Nobel Peace Prize winner 2006, founder of Grameen Bank in Bangladesh and also HEC Honoris Causa Professor since 2005, will co-hold the Chair with Martin Hirsch, High Commissioner for Active Solidarities against Poverty in the French government and former chairman of charity Emmaüs France. HEC is also in talks with beauty and cosmetics group L’Oreal over establishment of a centre which will promote innovation in management science and also gather together the school’s activities related to leadership. The Visions of Leadership Center, as it will be known, will examine dimensions of corporate, political and social leadership. Students will find a platform where they can explore their own concepts of leadership through discussions with executives and experts in the subject.

Meanwhile, the Lancaster University Management School (LUMS) in the UK became the latest to receive international accreditation from US-based AASCB. This places LUMS among the small league of business schools who have triple accreditation from the AASCB, EQUIS (Europe) and the Association of MBAs (UK).

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