The Hyderabad Schools Parents Association (HSPA) has alleged that several top schools have floated subsidiaries and ‘shell’ companies to divert profits earned through the school fee and denying the benefits to teachers even as they continued to hike the fee exorbitantly suppressing actual spendings.
At a press conference here HSPA president N. Subrahmanyam said that they had obtained details of these subsidiaries of several schools and would submit it to the authorities soon.
He said schools have devised a ‘clever’ form of corporate structuring wherein the license is taken in the name of a ‘not for profit’ society but the entire management is shown as run through a subsidiary set up to by-pass the “not for profit” restrictions.
Leased out
Giving details of some top schools, he said subsidiaries were set up for land and building rent, facilities and infrastructure management, transport management, food or canteen management, school teacher management and for books, stationery, uniform and so on.
He said investigation done by HSPA based on the balance sheets of the schools found that money was cleverly diverted like leasing out the school building to a subsidiary at exorbitant rents, some running into crores of rupees.
It was also found that 20% of income is paid as salaries including crores paid to the directors while law says it should be a maximum of 50%.
High expenses
Only 3% was spent on employee benefits as against government specified limit of 15%.
The HSPA also alleged that administrative expenses were shown up to an extent of 63% as against Government specified limit of 15% and all these indicate the there was diversion of funds.
Showing papers that the association had managed to secure, Mr. Subramanyam said they were clear proof that school managements were making huge profits even after filing affidavits when they formed a trust before starting the school.
He wanted government to ensure that GO Ms. No. 1 of 2001 and GO Ms. No. 91 of 2009 were implemented.
The members of the parents association said government orders stipulated that schools shall not post a profit of more than five%.
Committee
Mr. Subrahmanyam regretted that the Prof. Tirupati Rao committee constituted by government to submit a report on the status of school education in the private sector was given three extensions. Parents, he said, were of the opinion that they were being cheated. Among others present included Aravinda, Venkat, Pavan, Ramanjeet, Hirdesh and Sachin.
