S Chand And Company Limited · NSE:SCHAND
S Chand And — Q2 FY2019-20 Earnings Presentation
27 slides from S Chand And's earnings presentation, Nov 12, 2019
Slide 1: Letter to stock exchanges on investor presentation
©. § Chand And Company Limited a —a— | ; ; _—_ | Registered Office: A~27, 2nd Floor, Mohan Co-Operative Industrial Estate, New Dethi - 110044, India. S.CHAND . | P:+91 11 4973 1800 [ F:+91 11 4973 1801 | E:info@schandgroup.com | www.schandgroup.com 2aza22 aE GROUP | ! Date: November 12, 2019 To To L
Slide 2: S. Chand and Company Limited Q2 FY2019-20 Investor Update
S. Chand and Company Limited Q2 – FY2019-20 Investor Update 12th November, 2019
Slide 3: Summary
SUMMARY • KEY NUMBERS - TURNAROUND VISIBLE, STRATEGY BEARING FRUIT • KEY HIGHLIGHTS – Q2FY20 • CONSOLIDATED FINANCIAL PERFORMANCE • SEASONAL NATURE OF OUR BUSINESS • WORKING CAPITAL CYCLE – SHARP REDUCTION VISIBLE IN METRICS • WORKING CAPITAL CYCLE - HIGHEST IMPACT IN METRICS IN RECENT YEARS • S CHA
Slide 4: Key Numbers - H1FY20 - Turnaround Visible, Strategy Bearing Fruit
KEY NUMBERS - H1FY20 - TURNAROUND VISIBLE, STRATEGY BEARING FRUIT 29% 66% 28% 8% Sales Increase in Reduction Reduction Growth Gross in EBITDA in PAT (YoY %) Margins Losses Losses (Rs m) (YoY %) (YoY %) 20% 154 Days 79 Days Rs508m Reduction Reduction in Reduction in Net Delta in Net receivable days W
Slide 5: Key Numbers - Turnaround Visible, Strategy Bearing Fruit
KEY NUMBERS - TURNAROUND VISIBLE, STRATEGY BEARING FRUIT Q2FY20 H1FY20 Revenues from Operations (Rs M) Revenues from Operations (Rs M) 266 UP 151% 879 UP 29% 683 YoY YoY 106 Q2 FY19 Q2 FY20 Q2 FY19 Q2 FY20 REVENUES REVENUES EBITDA (Rs M) PAT (Rs M) EBITDA (Rs M) PAT (Rs M) -627 -902 -981 -758 -571 -
Slide 6: Key Highlights – Q2FY20
KEY HIGHLIGHTS – Q2FY20 • Highlights for Q2FY20 • Consolidated Revenue from Operations stood at Rs 266m for the quarter, up 151% YoY • Consolidated EBITDA loss reduced to Rs627m vs. Loss of Rs758m in Q2FY19 - Reduction of EBITDA loss by 17%. • Consolidated PBT loss reduced to Rs808m vs. Loss of Rs87
Slide 7: Key Highlights – Q2FY20
KEY HIGHLIGHTS – Q2FY20 • Operating Parameters - Strong focus on improving balance sheet metrics yielding results • Trade Receivables reduced to Rs2,326m in Q2FY20 vs. Rs3,202m in Q1FY20 vs. Rs4,446 as of Q4FY19. In terms of receivable days, it stood at 157 days (vs. 311 days in Q4FY19), a QoQ reduc
Slide 8: Key Highlights – Q2FY20
KEY HIGHLIGHTS – Q2FY20 • “S Chand 3.0” journey focused on increasing Free cash flows showing results in Q2 • Employee costs at Rs313m (vs Rs367m in Q2FY19) reduction of 15% on a YoY basis. • SG&A expenses at Rs135m (vs. Rs209m in Q2FY19) reduction of 35% on a YoY basis • Reduced sales returns from
Slide 9: Consolidated Financial Performance
CONSOLIDATED FINANCIAL PERFORMANCE (₹ in millions) Q2FY20 Q2FY19 Y-o-Y% H1FY20 H1FY19 Y-o-Y% FY19 Revenue from operations 266 106 151% 879 683 29% 5,220 Other income 10 17 (42)% 33 42 (20)% 116 Total income 276 123 124% 912 724 26% 5,336 Cost of published goods/materials consumed 125 305 (59)% 323 5
Slide 10: Consolidated Financial Performance
CONSOLIDATED FINANCIAL PERFORMANCE S Chand and Company Limited (₹ in millions) As on 30th Sep 19 As on 31st Mar 19 Consolidated Balance Sheet as on 30th September 2019 Equity and liabilities (₹ in millions) As on 30th Sep 19 As on 31st Mar 19 Equity Equity share capital 175 175 Assets Other equity N
Slide 11: Consolidated Financial Performance
CONSOLIDATED FINANCIAL PERFORMANCE (₹ in millions) Sep 30, 2019 Sep 30, 2018 Mar31, 2019 (₹ in millions) Sep 30, 2019 Sep 30, 2018 Mar31, 2019 6M 6M 12 M 6M 6M 12 M A. A. A. B. Cash flows from investing activities (Loss) before tax (1,260) (1,535) (953) Purchase of property, plant & equipment (153)
Slide 12: Seasonal Nature of Our Business
SEASONAL NATURE OF OUR BUSINESS 5% - 10% of annual revenues; Less than 5% of annual Less than 10% of annual 75% to 80% of annual Negative WC revenues; revenues; revenues; Negative WC Peak Inventory Peak Receivables Q1 April - June Q2 July - September Q3 October - December Q4 January - March o Conten
Slide 13: Working Capital Cycle – Sharp Reduction Visible in Metrics
WORKING CAPITAL CYCLE – SHARP REDUCTION VISIBLE IN METRICS • Debtors reduced to Rs2,326m as of Q2FY20 from Rs4,446m in Q4FY19. Receivable days reduced by 65 days to 157 days (vs. 311 in Q4FY19) and by 154 days in H1 which is the highest reduction the period. • Inventory levels maintained at Rs1,920m
Slide 14: Working Capital Cycle – Highest Impact in Metrics in Recent Years
WORKING CAPITAL CYCLE – HIGHEST IMPACT IN METRICS IN RECENT YEARS • Highest reduction seen in receivables and Net Working Capital days. • This improvement is on back of our renewed focus on improving our collection efficiency and focus on effective working capital management. Reduction in Receivable
Slide 15: S Chand 3.0 – Target Higher Free Cash Flows in FY20
S CHAND 3.0 – TARGET HIGHER FREE CASH FLOWS IN FY20 Lowering operating costs • Right Sizing of our employee base by over 400 employees • Rationalization of number of offices and consolidation of warehouses at over 25 locations • Focus on manpower optimization through shared services across group com
Slide 16: Digital Initiatives – Update
DIGITAL INITIATIVES – UPDATE • We had successfully launched Learnflix, our all-in-one learning platform for the Gen X student, on the Android/IOS platform during Q1. This quarter saw 3 successful adoptions in schools of our learning platform in Middle East and Eastern India for over 5000 students. •
Slide 17: Shareholding Structure
SHAREHOLDING STRUCTURE As of 11th November, Market Data 2019 Key Institutional Investors - As of September 2019 % Holding Market Capitalization (Rs Mn) 2,620 Price (Rs) 76 Everstone Capital Partners II LLC 9.5% No. of shares outstanding (Mn) 34.95 International Finance Corporation 8.0% Face Value (R
Slide 18: Going Ahead
GOING AHEAD • FY20 • EBITDA to FCF generation ratio of over 50%. • Improved working capital metrics from better terms of trade with channel partners and inventory rationalization. • Medium term – 3 years • Debt free in 3 years from the increased focus on free cash flows. • Increasing the share of Di
Slide 19: Annexure: Indian Education Sector - Overview
Annexure: - Indian Education Sector - Overview - S Chand Group 18
Slide 20: Indian Education Sector - Large & Growing Addressable Opportunity
INDIAN EDUCATION SECTOR - LARGE & GROWING ADDRESSABLE OPPORTUNITY US$90 BN Market Size for the Indian Education Sector 6 US$6 BN Ancillary Education Segment Early education 2 Informal Education Segment S. Chand operates in this segment (K-12/ Higher Education content). Test prep 5 5 o US$20 BN ➢ Sup
Slide 21: Indian Education Sector: Inflection Point, Strong Potential
INDIAN EDUCATION SECTOR: INFLECTION POINT, STRONG POTENTIAL Age-wise population distribution in India : S. Chand target market Literacy rate improving with higher participation from students (Source: IBEF Report) (Source: Technopak’s Outlook on India Schooling Segment) 500 40% 450 Potential Market o
Slide 22: Preference Towards Private, Central Curriculum Schools
PREFERENCE TOWARDS PRIVATE, CENTRAL CURRICULUM SCHOOLS Private schools market share increasing every year Indian K-12 education infrastructure (Source: IBEF Report) 120% (Source: Technopak’s Outlook on India’s Schooling Segment) Number of Schools: 1.5 MN 100% 20.0% 21.2% 21.5% 22.1% 23.0% Government
Slide 23: Preference Towards Private, Central Curriculum Schools
PREFERENCE TOWARDS PRIVATE, CENTRAL CURRICULUM SCHOOLS Target Market is 3,00,000 schools – growing at 8-10 % annually and student strength growing at 7-8% • Currently covering 38,000 schools in the target market • Target market growing at 8-10% annually in the no. of Intl 25-300 Schools schools Scho
Slide 24: S Chand Group - Leader in Indian Education Content
S CHAND GROUP - LEADER IN INDIAN EDUCATION CONTENT Delivering content, services and solutions… ➢ Long operating history of over seven decades. ➢ Offerings spanning entire the ➢ High brand equity across multiple brands. education spectrum …across the ➢ Strong author relationships. education o Early l
Slide 25: S Chand Group - Powerful Brand Connect
S CHAND GROUP - POWERFUL BRAND CONNECT Connecting with Learners • Art of Book making tour of the Printing Facilities • Mystudygear App / VRX App / Learnflix App / Test Coach App • Social Media Connecting with Teachers with • Teacher Conclaves and Awards • Over 2000 Workshops • The Progressive Teache
Slide 26: S Chand Group - Digital Initiatives – Synergies to the Core Business
S CHAND GROUP - DIGITAL INITIATIVES – SYNERGIES TO THE CORE BUSINESS In-House (Revenue Stream) Digital Investments (Inorganic) • Focused on investing in early stage digital companies. • Offerings include digital classroom learning solutions, • Total investments in digital investee companies is appro
Slide 27: Disclaimer
Disclaimer This presentation and the following discussion may contain “forward looking statements” by S. Chand & Company Limited (“S. Chand” or the Company) that are not historical in nature. These forward looking statements, which may include statements relating to future results of operations, fin
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