By Xavier Kong
The Otomotif College opened its doors in 2004. It has since grown from an initial batch of 10 students to having five intakes annually. Here, KINIBIZ speaks to founder Adelaine Foo about their branch campus in Gold Coast and other plans moving forward.
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As The Otomotif College (TOC) continues to grow, both in terms of student numbers and capability, the next logical step moving forward seems to be expansion. In the case of TOC, that expansion has already begun, with the college opening up a branch campus in Gold Coast, Australia.
So why Australia?
KINIBIZ was curious as to the choice to expand to Australia first, rather than into the Asean region, and asked as much of Adelaine Foo, the founder of TOC.
Foo explained that the Australian education system represented the best of both US’ and UK’s education systems, as well as being geographically nearer than either the US or the UK.
Another part of the reason, however, was that Australia is recognised as a First World nation, which in turn provides additional prestige for the technicians that hold TOC’s certificates.
“Also, Australian qualifications are recognised everywhere. By expanding to Australia, we actually provide added value to the certificates held by our graduates, and this allows them to find a job anywhere in the world,” said Foo.
At the same time, Foo explained that there is also a minimum wage for technicians in Australia, which requires a minimum of A$4,000 (RM12,412). This, according to Foo, would definitely help technicians. She also noted that there are technicians in Malaysia that command salaries of less than RM1,000, and stated that it is part of the college’s mission to change that.
Adelaine Foo
Foo also revealed that the college has, so far, spent about RM20 million in building up the Australian campus, and has also recently received the licence to recruit international students at the Australian campus.
“This coming September/October intake, we will be seeing our first international students in Australia, due to how their school year is, with September being the start of the school year,” explained Foo.
Regarding finances, Foo noted that the college had achieved its target for 2014 and, while TOC had seen problems at the start of 2015, Foo remains confident that the upcoming intakes will be enough for TOC to reach its target for the year. Foo is also optimistic about 2016, citing internal strategies as the root of her confidence.
Students first
Of course, having arrived at the topic of financials, KINIBIZ felt inclined to ask about the college’s revenue and profit numbers. But here was where surprise caught KINIBIZ, as Foo explained the college’s budgeting and numbers.
“At the beginning, the shareholders had agreed to commit 50% of revenue to the students, to maintain a clarity of purpose. This policy acts as a sort of safeguard for us and the students, as the quality of the college is shown through the quality of its students,” explained Foo, adding that the college stuck to a profit margin cap of 10%.
TOC recorded a revenue of RM11.7 million for its 2014 financial year (FY14), with a pre-tax profit of RM102,000. Foo also noted that the system of four quarters to a year sometimes made keeping the books in check difficult.
“There are five intakes in a year, and four quarters. We recognise the enrolment fee as revenue for that portion of the year. Sometimes, this clashes with the financial quarter system,” said Foo.
2014 was also, as Foo put it, not a very good year.
“In FY13, our revenue was at about RM13.9 million, and our pre-tax profit was at RM2.2 million. 2014, well, sales were not doing that well,” said Foo, adding that the break-even point for the college is about RM12 million in revenue.
KINIBIZ then enquired about the budgeting system employed by the college, which saw 50% of the college’s revenue channelled back to the students.
“Twenty five percent of our after-tax profit is maintained as profits, while 20% went to our foundation. Another 20% goes to our capital expenditure for the next year. Another 10% is used for debt reduction and to lower our gearing, while the last 25% is channelled back to the business as retained earnings,” explained Foo.
She also noted that the college had reached operational break-even in 2007, which was also the year they moved to their current campus which they own.
Of course, KINIBIZ enquired about the foundation mentioned, and Foo explained that the foundation referred to TOC’s Foundation Scholarship, which was instituted two years ago.
The scholarship represents part of the college’s corporate social responsibility (CSR) initiative, which stems from Foo’s belief that “the college is not just a business to cover a skill shortage, but is an area that can create social impacts”.
As such, TOC runs a number of CSR projects, such as a day out for children at an orphanage, with a lot of sponsorship for those projects coming from the college’s partner motor companies. Foo noted that “people are willing to give, they just need the proper avenue”.
The college also runs community programmes, such as offering free checkups for vehicles every Saturday morning, or workshops that instruct vehicle owners on basic maintenance and care for their vehicles.
Student quality
Foo also explained the system they have in place for their students.
Over the course of two years, students have tests every three weeks, which they are required to pass to be able to apply for working internships with the college’s partner motor companies.
“The working internships, which have options all over Malaysia as well as in Singapore, allow them to gain working experience in an actual working environment,” noted Foo, adding that there is also a major examination at the end of the year.
Foo also revealed that the vehicles that the students work on are all roadworthy vehicles that belong to their instructors, which she noted as helping to bring home the point that they are being trusted with lives, and in the cases of the practice vehicles, the lives of their instructors.
At the same time, the college is also in a partnership with UK’s Caterham Cars, where the students serve as crew members for a fully functional racecar, which takes part in races at the Sepang International Circuit.
“This is to give them the experience of working as a racing crew. The students have to start gaining experience somewhere,” noted Foo, confiding that there were some professional crews who were not pleased with the concept.
What’s next for TOC?
According to Foo, the challenge now is to sustain and expand the TOC brand, with the expansion to Australia part of a grander scheme.
“The plan is to have a campus in every country, and hopefully set in place a programme to allow our students to be able to spend semesters at campuses of their choice. This would allow them to travel and experience different cultures and places, and provide a more holistic approach to their education at TOC,” said Foo, adding that the immediate task is to get the Australian campus steadily on its feet.
Following Australia, Foo revealed that the college hopes to establish itself more firmly in the Asean region, with the aim of building brand recognition as a stepping stone towards having a campus in every country.
Foo explained that she has a five-year plan in place, where each stage of the plan is given a timeline of five years.
“First was survival, and now until 2020 is about building recognition. After that, TOC plans to strengthen relations with the automotive industry, then aim for a university campus for a more holistic learning experience for our students. After that, TOC would hopefully have campuses in most countries, and would allow its students to go ‘campus-hopping’,” explained Foo.
“And in the final stage, I hope that TOC would have become a trust foundation that belongs to the people, though I’m still trying to convince my shareholders about that,” laughed Foo.
Budding entrepreneurs, take heed!
When asked if she had any advice for those looking to start up their own businesses, Foo advocated the importance of learning.
“Keep learning. Even to this day, even with any doubt and worry, I always remind myself to never get into the situation where I stop learning. Part of this is to remember humility, that there is always something to learn,” said Foo.
Foo also stressed the importance of teamwork, putting forth her own time when TOC had just started out as proof.
“While it was very fun, multitasking as we were, no one can do everything alone, and there is no way for one person to know everything. Teamwork is important, to make sure all the angles are covered,” said Foo.
Yesterday: TOC: A fresh beginning
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