The Hyderabad-based Indian School of Business, promoted and backed by well-known corporates, foundations and individuals, is suffering from a debt overhang (poor debt : net worth ratio) with outstanding debt crossing Rs 125 crore (Rs 1.25 billion) against a net worth of Rs 73 crore (Rs 730 million) at the end of fiscal 2003.
In fact, ISB's executive board in a meeting in April proposed to raise up to Rs 60 crore (Rs 600 million) through a loan syndication.
The three-year-old management school with top-notch management gurus on its governing board has suffered a cash loss of Rs 50 crore (Rs 500 million) thus far.
In 2002-03, the second year of operations, it recorded a net deficit of Rs 31 crore (Rs 310 million), including an interest cost of Rs 12 crore (Rs 120 million). Its revenue for the year stood at Rs 25 crore (Rs 250 million). ISB, however, hopes to achieve operating surplus after two years.
Though ISB officials declined to comment on the financials, sources told Business Standard that ISB has thus far mobilised over Rs 120 crore (Rs 1.2 billion) in donations and is working on a strategy to get fresh donations of Rs 170 crore (Rs 1.7 billion) over the next few years, in addition to the present donor commitment of Rs 65 crore (Rs 650 million).
The youngest business school in the country, which claims to have achieved a major success in placing its students with highest pay scales compared with other business schools in the country, also has a proposal to increase the fee of its flagship one-year post-graduate programme to the extent of 15 per cent from 2004-05.
ISB, which has formal affiliations with the Kellogg School of Management, Wharton School and London Business School, is currently charging Rs 10.22 lakh (Rs 1.02 million) from Indian students and $20,450 from international students for its PGP.
While it rolled out 126 students in the first batch and 168 students in the second batch, the latest class has a strength of 220. It proposes to admit about 260 students next year. At peak capacity with about 560 PGP students, ISB hopes to become the largest business school in the country soon.
The executive board at its meeting in April is understood to have decided to identify new funding methods and targets, in addition to identifying possible donors and sub-donors for its proposed centres of excellence. For the fund-rising purpose, the school will soon come out with membership clubs, corporate affiliation programmes.
"ISB is a brand new management school whose vision is to be counted among the top B-schools of the world as soon as possible. The school runs on an endowment and service Model. The school will raise funds by offering its services as well as through contributions from corporates and individuals.
"Thanks to the generous support of our patrons, we have built the school in a record time of one-and-half-a-years and continue to evolve rapidly," Bhuvana Ramalingam, director (communications), said in response to Business Standard's queries.
"We will not be able to share finance-related information without the consultation of the executive board," she said, adding, "ISB has a robust plan of development and will grow steadily over the next few years."
© 2025