Unable to manage escalating costs, owners of engineering institutes look to sell property online

‘50 acres of land, well-stocked library, four labs with 40 computers, WiFi facility, canteen, 3 buses, gym.’

A few months ago, this alluring offer was made to potential engineering aspirants. The same features are being highlighted, this time, to woo potential buyers and investors.

Engineering colleges unable to manage running costs are now attempting to find buyers online. Heads of educational institutes say they have been receiving dozens of emails from brokers and college promoters.

Brokers on the prowl

These professional brokers go all out to promote the ‘product’. An online ad goes like this — ‘A Well Running Engineering College is for Outright sale in Chennai. Approved by AICTE & Affiliated to Anna University, Chennai, the college is running four branches with 120 students. Please inform the needy’.

The contact number was of R. Senthil, who has been handling college buyouts for the past two years. “I was a house broker earlier. Now, I deal in colleges with a few students,” he says.

Real-estate websites have a huge listing of engineering colleges on sale, under the commercial land option. “B.Ed colleges are the cheapest. They go for just Rs. 30 crore. But engineering colleges are where the money is. We need to watch out for colleges that began in the past five years. They are put on sale because either the owners have made enough money from capitation without investing much, or they have lost it all,” says R. Uppiliappan, another agent.

‘Good bargain’

He operates from a small office in Choolaimedu and hands out a pamphlet titled ‘Best Colleges for sale’. In it is listed 11 colleges, and each one is said to be equipped with at least 3 buses, two laboratories, 400 students, 50 faculty members. There is also a ‘negotiable price’ option on each of them.

The US dollar is the currency of choice among several brokers. “For a campus of 3,50,000 sq. ft. built-up area with hostel facilities for 1,000 students, the price is US $19 million. You will get 140 teaching staff and 60 non-teaching staff in the bargain,” broker Senthil says.

Depending on the kind of assets and infrastructure they have, engineering colleges can fetch as much as Rs. 200 crore, says Uppiliappan. He offers another ‘vibrant college on the outskirts of Chennai’ and gives two options.

Either an outright purchase at Rs. 180 crore by a new party or a joint venture with an experienced team of professionals from Tamil Nadu, who have above 20 years of experience in creating ‘top rank’ colleges. “The college has a good name. The owners are in no hurry to find a buyer,” he says.

Trusts too, involved

What is interesting is the fact that most of these colleges that have put up assets for sale are non-profit institutions or trusts. Under the existing law, assets from trusts cannot be used for profit making, say experts.

Technically, such a sale can result only in a management change as educational institutions are run by trusts or societies, says S. Vaidhyasubramaniam, dean, planning and development, SASTRA University.

“If it involves financial transactions other than reasonable compensation for services rendered by outgoing trustees, it needs to be interrogated. The sudden spurt in such offers is due to tough regulations, falling demand for seats and rising value of land,” he says.

Former vice-chancellor of Anna University, E. Balaguruswamy, says, at least 100 engineering colleges in the State are looking for buyers. “The normal procedure to shut down a college is straightforward. The college writes to the affiliating university after a resolution is passed in its trust. The university first looks to transfer its students and teachers to other colleges. Not many colleges resort to that, however, because there is no monetary gain in it,” he says.

Going about it the right way is a hassle, some college managements say.

“The land and infrastructure, registered under the trust’s name goes under government control. Even if someone wants to restart the college, there is much hassle involved in getting a fresh renewal from AICTE. Instead, what we do is find potential buyers and replace the trust with new members. The old trust members are given a monetary compensation based on an understanding,” says Raja Simhan, one of the trustees of a ‘college for sale’ in Kancheepuram.