Capital placed in the classroom — sixteen years of reinvesting in Phenol
Why the most disciplined education-infrastructure investing is the kind that happens inside a single institute, year after year, never on a slide deck.
I get asked, sometimes, whether I am an investor. The expected answer is to point at a stock portfolio, a few angel cheques, maybe a piece of someone else's startup. The honest answer is different. I am an investor — but the capital has gone, year after year, into the same institute. The Phenol Institute is the only investment I have made that I would call serious, and it is the only one I would put on a slide. Sixteen years of reinvested earnings have turned a single Rajkot classroom into a multi-room campus, a government-recognised school, a YouTube channel of 526 lectures, a mobile app, and an institute that is opening its second city. That is what education-infrastructure investing looks like when it is done from the inside.
Where the capital actually went
In rough order across the years: more classroom capacity, then a properly built physical-organic-inorganic chemistry library, then the QC of the test series (the printed material, the answer-key discipline, the review templates), then the YouTube channel (camera, lights, post-production), then the mobile app, then the school-recognition process (legal, regulatory, infrastructure required for Class 9-12 affiliation), then the Farrukhabad branch. Each was funded from the previous year's surplus. None was funded by an outside investor, none by a bank loan, none by a tax-saving promise to a family. The institute earned the capital and the institute reinvested it.
How the reinvestment decisions were actually made
Every year, after the NEET / JEE results came in and the next year's cohort had committed, I would sit down with the operating numbers and ask one question: what is the single biggest constraint on the next cohort's outcomes, and what is the cheapest capital expense that removes it? In some years the answer was a new classroom (we were turning students away). In other years it was a better test-series printing capability (the old material was holding back the depth of review). In one year it was the YouTube channel (we were missing the rural-Saurashtra student who couldn't travel to Rajkot). The decisions were small, specific, and always followed the operating constraint — not the marketing constraint.
This is the part most coaching institutes get wrong. They reinvest in marketing because marketing is visible. The compound returns to a coaching institute come from operating discipline — better teaching, better testing, better mentorship — not from larger banner budgets. The institute that reinvests in operating capacity outperforms the institute that reinvests in customer acquisition, every single time, over a decade.
Why education-infrastructure investing beats portfolio investing — for me
I will not argue this for everyone. A young M.Sc. student with a salary and no operating business is right to put their savings into a diversified portfolio. But for an owner-operator who runs a working institute, the highest-returning use of incremental capital is almost always the institute itself. The chemistry is simple: I know my own operating economics intimately, my reinvestment IRR inside the institute is consistently north of 25-30% (concrete capacity additions that produce measurable revenue growth), and the alternative public-market return is mid-teens at best in a good year. The institute is a better investment than the index — for me, with my information advantage and my time horizon.
There is a non-financial argument too. Reinvesting in the institute compounds something the market does not measure — institutional culture. Every classroom built, every camera bought, every faculty hire trained, every alumnus added to the network strengthens the operating asset in a way that a stock portfolio simply does not. The institute will be worth more in real terms in 2035 than any equivalent capital placed in a diversified portfolio in 2026 — and along the way, it will have put 4,000 more students through MBBS.
The school-recognition investment, specifically
The 2025 transition to government-recognised Phenol School was a deliberate investment with a specific thesis. Coaching institutes in India are vulnerable in one specific way — they depend entirely on the family choosing to send the child to TWO places (the school and the coaching). A regulated school avoids that — the family sends the child to one place, the school handles both the regulated curriculum and the entrance prep. The legal recognition, the infrastructure required, and the operating expenditure on becoming a school is significant. The thesis: an institute that owns the full Class 9-12 student journey is structurally more durable than one that only handles the coaching layer. The Phenol School is the answer to that thesis.
What an operator-investor actually optimises
Three things, in order of priority. One — does this expenditure improve the operating outcomes of the next cohort? (If not, it is marketing, not investment.) Two — does this expenditure protect the institute against a structural risk we have identified? (The school-recognition fits here.) Three — does this expenditure widen the institute's reach to students we currently cannot serve? (The YouTube channel, the app, the Farrukhabad branch fit here.)
Nowhere on the priority list is "does this make the institute look bigger." Marketing capital is the easiest capital to spend and the slowest capital to compound. Operating capital is harder to allocate well and faster to compound. Year after year, choosing the second over the first is the entire investment philosophy. It is not glamorous. It is not slide-worthy. But it has produced sixteen consecutive years of growth in students taught, MBBS placements, and the institute's reach. That is the investor track-record I would put on a slide, if I ever made one.
Got a question on what you've just read — or about preparing for NEET, JEE, GUJCET or CSIR-NET? Write directly to the institute.
First-generation Chemistry educator. M.Sc., Ph.D., CSIR-NET AIR-1. Founder and Director of The Phenol Institute, Rajkot — 1,100+ MBBS placements over ten years of NEET, JEE, GUJCET and Board chemistry coaching.