S Chand And Company Limited · NSE:SCHAND
S Chand And — Q4 FY2018-19 Earnings Presentation
33 slides from S Chand And's earnings presentation, May 28, 2019
Slide 1: Exchange filing cover letter
&. S Chand And Company Limited =~ y= Corporate Office: A-27, 2nd Floor, Mohan Co-Operative Industrial Estate, New Delhi - 110044, India. S.CHAND Registered Office: Ravindra Mansion, Ram Nagar, New Delhi - 110055, India. GROUP P:+91 11 4973 1800 | F:+91 11 4973 1801 | Ezinfo@schandgroup.com | www.sch
Slide 2: S. Chand and Company Limited Q4 FY2018-19 Investor Update
S. Chand and Company Limited Q4 – FY2018-19 Investor Update May 28th, 2019
Slide 3: Summary
SUMMARY • FY19 – CHALLENGING YEAR FOR THE INDUSTRY • FY19 REVENUES ADVERSELY IMPACTED BY EXPECTATION OF NEW EDUCATION POLICY • OTHER QUATERLY HIGHLIGHTS • EARS TO THE GROUND – NEW EDUCATION POLICY • COST SAVINGS MESAURES FOR FY20 • S CHAND 3.0 – FOCUS ON CASH FLOW IMPROVEMENT • CONSOLIDATED FINANCIA
Slide 4: FY19: An Year of Disruption
FY19 – CHALLENGING YEAR FOR THE INDUSTRY Focus on working Cost structure with preferred designed for higher channel partners level of sales lowers impacts current profitability season sales Higher sales returns from channel Paper price increase partners on back of for 2nd consecutive expectation of
Slide 5: FY19 – Challenging Year for the Industry
FY19 – CHALLENGING YEAR FOR THE INDUSTRY Expectation of New Education • We expect the New Education Policy to be rolled out by the new government (See Slide ‘Ears to the Ground’) This hampered the channel sales velocity for the current season as dealers went into the season with a mentality of keepi
Slide 6: FY19 Revenues Adversely Impacted by Expectation of New Education Policy
FY19 REVENUES ADVERSELY IMPACTED BY EXPECTATION OF NEW EDUCATION POLICY • In our view, FY19 reported Revenues of Rs522cr was adversely impacted by -: • Higher Incremental provisioning of Rs. 74 cr. • 28% higher level of sales return vs. FY18 by the channel partners on back of uncertainty around the
Slide 7: Other Quarterly Highlights
OTHER QUARTERLY HIGHLIGHTS • Continuing on the “S Chand 3.0” journey focused on increasing Free cash flow generation • We had shared in 3Q that we had launched “S Chand 3.0” program which is aimed at generating higher free cash flows in the coming years from the business. • We started on this journe
Slide 8: Ears to the Ground – New Education Policy
EARS TO THE GROUND – NEW EDUCATION POLICY • Article - Modi govt will finally announce New Education Policy by 31 May after 4-year delay • Link - https://theprint.in/india/education/modi-govt-will-finally-announce-new-education-policy-by-31-may-after-4-year- delay/240532/ May, 2019 • Article - NCERT
Slide 9: Cost Savings Measures Should Translate into Annualized Savings of Rs60cr to Rs80cr
COST SAVINGS MESAURES SHOULD TRANSLATE INTO ANNUALIZED COST SAVINGS OF Rs60CR TO Rs80CR • The organization has been right sized by over 400 employees (Number of employees as of FY18: ~2200). Full benefits to flow in from 2QFY20 onwards. Employee Costs • The management has decided to not have any sal
Slide 10: S Chand 3.0 – Focus on Cash Flow Improvement
S CHAND 3.0 – FOCUS ON CASH FLOW IMPROVEMENT • Right Sizing of our employee base by over 400 employees (FY18: 2200+) • Rationalization of number of offices and consolidation of warehouses at over Lowering 25 locations operating costs • Focus on manpower optimization through shared services across gr
Slide 11: Consolidated Financial Performance
CONSOLIDATED FINANCIAL PERFORMANCE (₹ in millions) Q4FY19 Q4FY18 Y-o-Y% FY19 FY18 Y-o-Y% Revenue from operations 4,491 6,547 (31)% 5,220 7,944 (34)% Other income 42 67 (37)% 116 126 (8)% Total income 4,534 6,613 (31)% 5,336 8,071 (34)% Cost of published goods/materials consumed 921 1,177 (22)% 2,094
Slide 12: Consolidated Financial Performance
CONSOLIDATED FINANCIAL PERFORMANCE (₹ in millions) (₹ in millions) March 31, March 31, March 31, March 31, Particulars 2019 2018 Particulars 2019 2018 Audited Audited Audited Audited Equity and liabilities Assets Equity Non-current assets Equity share capital 175 175 Property, plant and equipment 1,
Slide 13: Consolidated Financial Performance
CONSOLIDATED FINANCIAL PERFORMANCE • Our strategy of focusing on the cash flows has started yielding results with the Net cash generated from operations of Rs38cr in FY19 (vs. Rs39cr in FY18). This is in spite of the 34% drop in the net revenues for the year. • Debt metrics include-: • Gross Debt: R
Slide 14: Working Capital Cycle – Metrics Marred by One Off Year
WORKING CAPITAL CYCLE – METRICS MARRED BY ONE OFF YEAR • Debtors reduced from Rs6,312m as of Q4FY18 to Rs4,446m as of Q4FY19 (vs. Rs5,016m in Q1FY19 & Rs3,866m in Q2FY19 & Rs3,085m in 3QFY19) • Inventory increased to Rs2,048m as of 4QFY19 (vs. Rs1,562m in Q4FY18) on back of higher sales returns from
Slide 15: Digital Initiatives – Synergies to the Core Business
DIGITAL INITIATIVES – SYNERGIES TO THE CORE BUSINESS • Digital Revenues grew to Rs 37 cr (vs. Rs32cr in FY18) • Continued investments in digital during the year. • Major initiatives which have carved a niche segment in the markets they operate in include-: • Destination Success – Enabling Digital cl
Slide 16: Shareholding Structure
SHAREHOLDING STRUCTURE Market Data As of 29th May, 2019 Key Institutional Investors - March 2019 % Holding Market Capitalization (Rs Mn) 4,700 Price (Rs) 134 Everstone Capital Partners II LLC 9.5% No. of shares outstanding (Mn) 34.95 International Finance Corporation 8.0% Face Value (Rs.) 5.0 HDFC M
Slide 17: Going Ahead
GOING AHEAD • FY20 • Target EBITDA/FCF generation ratio of 50%. • Higher EBITDA margin levels on back of cost savings driven from “S Chand 3.0” implementation. • Target at least 35%-40% lower Sales returns vs. FY19 on back of controlled sales to channel. • Better terms of trade with channel partners
Slide 18: Annexure
Annexure: - China vs India – A Case Study in Education Sector - Indian Education Sector - Overview - S Chand Group 17
Slide 19: China – A Case Study in Growth – India Expected to Follow Suit
CHINA - A CASE STUDY IN GROWTH - INDIA EXPECTED TO FOLLOW SUIT CHINA 2006 INDIA 2017 • GDP per capita US$ 2,100. • GDP per capita US$ 1,940 • Private education market < US$ 50 Billion*. • K-12 market growing at ~ 20%. • Private education market ~ US$ 30 Billion*. • Education market expected to doubl
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 - Seasonal Nature of Our Business
S CHAND GROUP - SEASONAL NATURE OF OUR BUSINESS Less than 10% of annual Less than 5% of annual Less than 5% of annual 80% to 85% of annual revenues; revenues; revenues; revenues; Negative WC Negative WC Peak Inventory Peak Receivables Q1 April - June Q2 July - September Q3 October - December Q4 Janu
Slide 26: 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 • Social Media Connecting with Teachers with • Teacher Conclaves and Awards • Over 2000 Workshops • The Progressive Teacher magazine Connec
Slide 27: 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 28: S Chand – Historical Financial Performance
S CHAND – HISTORICAL FINANCIAL PERFORMANCE Figures for FY 2017 & FY 2018 are as per IND-AS. Prior year figures are as per Indian GAAP. Numbers in Rs million Revenue Growth EBIDTA 2,054 1,705 7,945 1,281 6,833 798 1,040 4,785 5,407 5220 599 3,710 271 2,816 -195 1,746 FY12 FY13 FY14 FY15 FY16 FY17 FY1
Slide 29: 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
Slide 30: Press Release
PRESS RELEASE • FY19 was a challenging year for the whole industry on the back of the expectation of announcement of the New Education Policy (NEP) which has been awaited for the last 4 years. • Despite the sluggish offtake during the season, the company continued its earlier stated strategy of sale
Slide 31: Press Release (continued)
the early initiatives on their agenda. The new education policy is long over-due since the last comprehensive education policy came out in 2005 when the NCF was also formed. The expectation of New Education Policy led to -: • Destocking of Inventory by the Channel Partners. Since the Channel Partner
Slide 32: Press Release (continued)
5. Focus on improving internal efficiency and reducing operational costs. We have turned our focus on eliminating inefficiencies from our business. This would include working on improving the efficiency and productivity of our sales force and delivery teams, eliminate non- core projects and investme
Slide 33: About S Chand
should lead to a period of strong & sustainable growth for the company in the medium term. Ears to the ground on Expectation of New Education Policy About S Chand S. Chand is a leading education content company delivering content across the length and breadth of the country. We provide content, solu
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