S Chand And Company Limited has informed the Exchange regarding Investor Presentation
-'-- � T S.CHAND GROUP
S Chand And Company Limited Registered Office: A-27. 2nd Floor, Mohan Co-Operative Industrial Estate, New Delhi - 110044, India. P:+91 11 4973 1800 I F:+91 11 4973 1801 I E: info@schandgroup.com I www.schand1roup.com
To Listing Department BSE Limited Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai, Maharashtra 400001
Dear Sir,
Date: February 13, 2020
To Listing Department, National Stock Exchange of India Limited Exchange Plaza, C-1, Block G, Bandra Kurla Complex, Bandra (E), Mumbai, Maharashtra 400051
Re: Investors Presentation-Financial Results-quarter and nine months ended December 31, 2019-pursuant to Regulation 30 of The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
The presentation for the analysts and investors for the conference call scheduled to be held on Friday, February 14, 2020 at I :00 P.M. to discuss the financial results for the quarter and nine months ended December 31, 2019 is attached herewith.
The Company shall also disseminate the above information on the website of the Company i.e. www.schandgroup.com.
Request you to kindly take note of the same.
pany Limited
Jagdeep �--� Company Secretary & Compliance Officer Membership No.: A15028 Address: A-27, 2 nd Floor, Mohan Co-operative Industrial Estate, New Delhi-110044
Encl: as above
CIN No. L22219DL1970PLC005400
S. Chand and Company Limited Q3 – FY2019-20 Investor Update 13th February, 2020
SUMMARY
• KEY HIGHLIGHTS - 9MFY20 - TURN OPERATING CASH
FLOW POSITIVE
• KEY HIGHLIGHTS – Q3FY20 • WORKING CAPITAL CYCLE – HIGHEST RECEIVABLE
COLLECTION DURING 9M PERIOD
• WORKING CAPITAL CYCLE – HIGHEST IMPACT IN METRICS
IN RECENT YEARS
• DIGITAL INITIATIVES – LAUNCH OF OUR LEARNING
PLATFORM - LEARNFLIX • DIGITAL INITIATIVES – UPDATE • CONSOLIDATED FINANCIAL PERFORMANCE • SHAREHOLDING STRUCTURE • • ANNEXURES
LOOKING AHEAD
2
KEY HIGHLIGHTS - 9MFY20 - TURNING OPERATING CASH FLOW POSITIVE
34%
Sales Growth (YoY %)
16%
19%
8%
Reduction in EBITDA Losses (YoY %)
Reduction in expenses* (YoY %)
Reduction in PAT Losses (YoY %)
Rs1,016m
Delta in Net cash generated from operations in H1FY20 over last year.
Rs96m
209 Days
133 Days
Turn Operating Cash flow Positive within 9MFY20 (vs. Rs -920m in 9MFY19)
Reduction in receivable days in 9MFY20 (vs. Historic range of 120-140 days)
Reduction in Net Working Capital Days in 9MFY20 (vs. Historic range of 30-70 days)
* Employee costs+ SG&A Expenses + Other Expenses
3
KEY HIGHLIGHTS – Q3FY20
• Operating Parameters - Strong focus on improving balance sheet metrics and cash flows yielding results
• Operating cash flow delta of Rs1,016m vs. 9MFY19. On back of our focus on “S Chand 3.0” implementation, we have
turned operating cash flow positive during the 9MFY20 period. Operating cash flow for 9MFY20 stood at Rs96m (vs.
Loss of Rs920m). This represents a delta of Rs1,016m in operating cash flows over last year.
•
•
Trade Receivables reduced to Rs1,533m in Q3FY20 vs. Rs2,326m in Q2FY20 & Rs4,446 as of Q4FY19. In terms of
receivable days, it stood at 102 days (vs. 311 days in Q4FY19), a QoQ reduction of 55 days during Q3FY20 (vs.
reduction of 32 days in Q3FY19) and reduction of 209 days during 9MFY20 which has historically been between 120-
140 day reduction. This is the lowest level of receivable days achieved in comparison to previous years.
Inventory stood at Rs2,363m (vs. Q3FY19: Rs2826m, Down 16% YoY) at the end of the quarter. Our efforts to enter
the season with controlled levels of inventory to efficiently manage working capital in the company has borne fruit.
This is one of the lowest level of inventory that we have had in past years while entering our peak sales season.
• Net Working Capital reduced to 184 days (vs. 238 days in Q2FY20 & 317 days in Q4FY19) which is a reduction of 54
days (vs. reduction of 12 days in Q3FY19). We also reduced NWC by 133 days in 9MFY20 which has historically been
around 30-70 days reduction.
4
KEY HIGHLIGHTS – Q3FY20
•
“S Chand 3.0” journey focused on increasing Free cash flows showing results
• Delta of over Rs1,016m in operating cash flows on a 9M YTD basis.
•
•
•
Employee costs at Rs948m is lower by 16% on a YTD basis.
SG&A expenses at Rs390m is lower by 39% on a YTD basis
Reduced sales returns from Channel partners during 9MFY20.
• Gross Debt & Net debt stood at Rs2,247m and Rs2,075m respectively. We are at a comfortable Debt to Equity ratio of 0.25x and we
expect debt levels to reduce going ahead on back of higher free cash flow generation from business. Our working capital debt stands
much lower at Rs1,260m vs 1,924m in Q3FY19 & Rs1,409m in Q4FY19.
•
Launched extensive marketing campaign for Learnflix, our all-in-one learning platform for the Gen X student during January with full
page advertisement in leading journal of NCR, Delhi – Times of India. Learnflix has already been downloaded over 5K times and we
are looking at adoptions in the coming year in schools by over 10,000 students in coming months.
5
HIGHEST RECEIVABLE COLLECTION DURING 9M PERIOD
Q3 Receivable days & Net working capital at lowest historical levels
6
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.
Q3: Oct – Dec Qtr
9M: April – Dec
7
DIGITAL INITIATIVES – LAUNCH OF OUR LEARNING PLATFORM - LEARNFLIX
•
•
Launched extensive marketing campaign for India’s most affordable learning platform, Learnflix (Android & Apple iStore), our all-in-one learning
platform for the Gen X student during January with full page advertisement in leading journal of NCR, Delhi – Times of India.
Learnflix has already been downloaded over 5K times and we are looking at adoptions in the coming season in schools by over 10,000 students.
8
DIGITAL INITIATIVES – UPDATE
• Mylestone – Have signed up approx. 300 schools YTD for FY21. Looking to grow Mylestone business strongly during this upcoming sales season.
•
Test Coach – Our mobile mock exam App saw 5x spike in installations on a MoM basis on back of change in sales strategy. Monthly installations have
moved up 5x from 700+ to 3.5K+ in recent months.
• MyStudygear App – Provides blended learning with our books with over 1 Mn + users. This app has been steady in terms of adding approx. 400K users
on an annual basis.
•
Two of our investee companies – Smartivity & Testbook saw strong follow-up round of fund raising. Our investments in these companies are valued at
10x of our original investments based on latest rounds of investments.
• Our other inhouse digital offerings include-:
•
•
•
VRX – Virtual Reality with books with over 50,000 + users
Chhaya Learning App – Bengali/English Learning with books with over 100,000 + users
Destination Success – Enabling Digital classrooms
• Nuri Nori, Risekids, Smart K - Early Learning
S Chand digital solutions downloaded over 1.5m times by students. We look forward to increase this multifold with our newly launched Learnflix –India’s most affordable Learning Solution.
9
CONSOLIDATED FINANCIAL PERFORMANCE
9MFY20
Employee Costs: Down 16% YoY
S&D Exp: Down 39% YoY
EBITDA Loss: Down by 16%
10
CONSOLIDATED FINANCIAL PERFORMANCE
11
CONSOLIDATED FINANCIAL PERFORMANCE
Our efforts showing its benefits in 9M by generating higher operating cash flows to the tune of Rs1,016m on a YoY basis.
12
As of 12th February, 2020
Key Institutional Investors - As of December 2019
% Holding
SHAREHOLDING STRUCTURE
Market Data
Market Capitalization (Rs Mn)
Price (Rs)
No. of shares outstanding (Mn)
Face Value (Rs.)
(Source: www.bseindia.com)
Ownership as of Dec, 2019
6.6% 4.4%
2,650
75
34.95
5.0
Everstone Capital Partners II LLC
International Finance Corporation
HDFC Mutual Fund
Volrado Venture Partners Fund
19.4%
47.2%
Aditya Birla Sun Life Mutual Fund
26.8%
Sundaram Mutual Funds
Aadi Financial
Promoter
Others
FPI & Foreign Company Mutual Funds
AIF
BNP Paribas
(Source: www.bseindia.com)
(Source: www.bseindia.com)
9.5%
8.0%
2.6%
2.4%
1.9%
1.6%
1.5%
1.1%
13
LOOKING AHEAD
•
Short Term
•
EBITDA to FCF generation ratio of over 50% for FY20.
• Reduce Q4FY20 Net debt by 30%.
•
•
Improve Receivable days, Inventory days & Net Working Capital vs. historical results.
Target over 100k downloads and over 20K subscriptions of ‘Learniflix’, India’s most affordable Learning Platform.
• Medium term – 3 years
• Debt free in 3 years from the increased focus on free cash flows.
•
•
Increasing the share of Digital & Services segment to 20- 25% over the next 3 years.
Target over 1m downloads of ‘Learnflix’, India’s most affordable Learning Platform and over 5m downloads across S
Chand digital properties.
14
Annexure: -
Indian Education Sector - Overview S Chand Group
-
15
INDIAN EDUCATION SECTOR - LARGE & GROWING ADDRESSABLE OPPORTUNITY
US$90 BN Market Size for the Indian Education Sector
Early education Test prep
Vocational
Tutoring
Higher Education
6 2 5
5
8
15
K-12
50
Informal Education Segment
o US$20 BN
o Comprises of test prep, tutoring, early education and vocational training.
o Less regulated; no restrictions on profit
distribution.
Formal Education Segment
o US$65 BN
o Comprises both K-12 schools and higher
education institutions (colleges, engineering institutes, etc.).
o Regulated segment, institutions cannot be
set up on a ‘for profit’ basis.
India education sector
(Source: Technopak Research Report. Technopak Outlook on India’s Schooling Segment June 2017. Nielsen: India Book Market Report 2015)
US$6 BN Ancillary Education Segment
S. Chand operates in this segment (K-12/ Higher Education content).
➢ Supports formal and informal education segments.
• Comprises of content, digital content & services like curriculum management.
• Mostly caters to K-12 & higher education institutions.
➢ Less regulated; no restrictions on profit distribution.
➢ K-12 ancillary market is a fast growing segment.
1.6
1.9
2.3
2.7
3.2
FY2011
FY2012
FY2013
FY2014
FY2015
(K-12 ancillary market, US$ in billion)
➢ Robust growth drivers.
• Eligible K-12 population of about 296 MN students in age group 6 to 17 years.
• Private unaided schools increased at average rate of 10.4% during 2011-15.
•
India has largest education system in the world with over 750 Universities & 35,000 colleges.
➢ Highly fragmented segment providing room for growth.
16
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)
Potential Market of 492 MN = 41% of total population
9%
113
11%
11%
10%
9%
127
133
121
111
500
450
400
350
300
250
200
150
100
50
0
29%
348
40%
30%
20%
10%
0%
-10%
-20%
-30%
16%
188
6%
66
0 to 4
5 to 9
10 to 14 15 to 19 20 to 24 25 to 44 45 to 64 above 65
No. of people (mn)
Percentage of total people
(Source: Technopak’s Outlook on India Schooling Segment)
Level of Education
Illiterate Literate but no formal schooling School - Up to 5th standard School - Up to 10th standard School - Up to 12th standard Some college but not graduate Graduate Postgraduate Literate Total
Estimated Population
% 2017 (MN) 269 27 471 242 148 67 81 40 1076 1345
20% 2% 35% 18% 11% 5% 6% 3% 80% 100%
% 2022 (MN) 250 14 501 250 153 70 97 56 1141 1391
18% 1% 36% 18% 11% 5% 7% 4% 82% 100%
Decrease in drop-out rates for primary education in India
S. Chand well positioned to benefit from sector tailwinds
(Source: Nielsen Report)
10.00%
5.6%
4.7%
9.00%
8.00%
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
• Gross enrolment
ratio and students completing primary &
secondary education gradually improving in India.
4.3%
• Falling dropout rates and increased girls participation led to
improvement in literacy rate.
2012
2013
2014
• Government promoting education through various schemes with
budgetary support.
17
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)
100%
80%
60%
40%
20%
0%
20.0%
21.2%
21.5%
22.1%
23.0%
80.0%
78.8%
78.5%
77.9%
77.0%
FY11
FY12 Government schools
FY13
FY14
Private Schools
FY15
Number of Schools: 1.5 MN
Government: 1.1 MN
Private: 0.4 MN
Number of Students: 260 MN
Government: 150 MN
Private: 110 MN
No. of Teachers: 9 MN
Government: 5 MN
Private: 4 MN
Government: 10 MN
Private: 8 MN
Annual Intake: 18 MN
Additional Capacity Required: 36 MN Additional Requirement of Teachers: 2 MN Additional Resources: USD 55 BN
CBSE & ICSE increasing faster amongst affiliated board schools
Preference towards private schools continue to rise
Board
2010-11
2011-12
2012-13
2013-14
2014-15 2015-16
2016-17
CAGR
CBSE
11,349
12,337
13,898
14,778
15,933
17,474
19,446
9.4%
1,461
1,565
1,678
1,798
1,927
2,181
2,295
7.8%
ICSE
State Boards
13,16,401 13,63,862 14,47,487 14,65,871 14,60,455
Total
13,29,211 13,77,764 14,63,063 14,63,447 14,78,315
(Source : Nielsen Research Report, School Board reports, DISE)
•
Student share of private schools increasing consistently despite subsidised fees and free meals/ books in government schools.
• Government schools losing favour even amongst the rural and not so
affluent population.
• CBSE and ICSE schools are preferred for their superior curriculum and better
NA
NA
NA
NA
pedagogy.
NA
NA
•
S. Chand is a key beneficiary of increasing number of CBSE and ICSE schools, being the leading content provider to such schools amongst the private publishers.
18
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 schools
Total student strength in India is est. 260 million
Students strength in the target market is est. 120 million and growing at 7-8 annually.
25-300 Schools
Intl Schools
CBSE + ICSE Schools
20,000 schools
55,000 -60,000 schools
Unaffiliated Private English Medium Schools
Private Unaided and Large Govt. State Board Schools in Tier 1 and 2 cities
Govt. Aided State Board Schools with Low Student Population
Total Schools in India ~ 15,00,000 schools
220,000 -240,000 schools
32,00,000 schools
19
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.
…across the education continuum
education spectrum
o Early learning
o K-12
o Higher education
…with Pan India reach
➢ Pan-India sales and distribution network
driving deep market reach.
➢ Presence in Central (CBSE, ICSE) and State
Board affiliated schools across India.
➢ Strong author relationships.
➢ Keeping pace with time - transition from print into digital
content and services.
80
10,000+
Years of operating history
Active book titles
~ 2,400
90 TPD
Author relationships
Print Capacity in number of sheets
Strong content, multiple best-sellers.
Portfolio of brands focused on print / digital content.
20
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 Teacher magazine
Connecting with School Leadership
•
•
Best Practices in Education Tour to Europe
The Progressive School magazine
Connecting with Channel Partners
•
Dealer Meets , Events and Awards
• Monthly mailer “Sampark”
Increasing Brand presence
•
•
•
Brand Ambassador
Strategic Advertising
Digital Marketing
21
S CHAND GROUP - DIGITAL INITIATIVES – SYNERGIES TO THE CORE BUSINESS
In-House (Revenue Stream)
Digital Investments (Inorganic)
• Offerings include digital classroom learning solutions,
• Focused on investing in early stage digital companies.
• Total investments in digital investee companies is approx.
learning management
systems
and
curriculum
Rs.300m.
management which contribute to the revenue streams in
the business.
• Currently, Investment portfolio commands a valuation of around 2X as per the last funding rounds for respective companies.
• Focus is on establishing synergies with core business
• Approximated Investments is in excess of Rs1300 million.
along with investment returns.
22
Saurabh Mittal Chief Finance Officer Contact No : +91 11 4973 1800 Email : investorrelations@schandgroup.com
Atul Soni Head – Investor Relations, Strategy & M&A Contact No : +91 11 4973 1800 Email : asoni@schandgroup.com
Corporate/Registered Office: A-27, 2nd Floor, Mohan Co-operative Industrial Estate, New Delhi 110044
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, financial condition, business prospects, plans and objectives, are based on the current beliefs, assumptions, expectations, estimates, and projections of the management of S. Chand about the business, industry and markets in which S. Chand operates.
These statements are not guarantees of future performance, and are subject to known and unknown risks, uncertainties, and other factors, some of which are beyond S. Chand’s control and difficult to predict, that could cause actual results, performance or achievements to differ materially from those in the forward looking statements. Such statements are not, and should not be construed, as a representation as to future performance or achievements of S. Chand.
In particular, such statements should not be regarded as a projection of future performance of S. Chand. It should be noted that the actual performance or achievements of S. Chand may vary significantly from such statements.
23