In conversation with Saurabh Mittal, CFO of S Chand and Company Limited

The company has strong brand recognition across subjects, along with the long-standing trust of schools, academicians, teachers, and students, emphasises Saurabh Mittal, CFO of S Chand and Company Limited.

In Q1FY24 revenue grew by 4 per cent on a YoY basis to Rs 111 crore and the net profit decreased by 83 per cent to Rs 1.1 crore. Additionally, gross margins have increased by 2 per cent to 69 per cent. Could you shed some light on what were the significant contributing factors to this performance?

Comparatively, during Q1FY23, the educational landscape witnessed a surge in fresh orders as schools reopened post-Covid, specifically for classroom teaching. During this period, both schools and channel partners adopted a cautious approach towards supply. However, in contrast, there were no such constraints during Q4FY23 and throughout the entire FY23, leading to robust business growth.

The Gross Margins increased due to better production planning and larger print runs despite higher paper prices in Q1FY24 as compared to Q1FY23. The Operating EBITDA was higher on account of higher Revenues and better gross Margins. Net Profit was impacted due to other Income in Q1FY23 on account of Fair Valuation gain on the investment in Smartivity Labs, which is why you see a huge variance.

The working capital metrics of the company have improved drastically, so could you tell us more about how the company was able to achieve this?

The working capital metrics improved on account of continuous focus and strict discipline with respect to several factors such as credit to customers, working with quality customers, lower sales returns, better production planning, and alignment of all employee and customer incentives with quicker collections, along with ensuring that the fixed costs did not escalate post-Covid.

In terms of the future growth trajectory, could you provide an outlook for the business going forward?

The company expects revenues to be in the range of Rs 720-750 crore for FY24. The announcement of the full NCF would provide a 3-year growth trajectory for the business, with new SKUs and a reduction in the sale of second-hand books.

What is the current competitive landscape of the company and what are your plans for enhancing the position?

The company competes with both domestic and international brands in the CBSE and ICSE school markets, along with some brands in the WBSE market. The company has strong brand recognition across subjects, along with long-standing trust of schools, academicians, teachers, and students, by providing updated and relevant content as required by the curriculum. The company continues to work on providing add-on services to schools in the form of workshops, digital support, training, quality products, and round-the-year engagements.

Could you tell us more about the National Curriculum Framework (NCF) and how it would affect the business going forward?

The NCF, which is being revised after a gap of 18 years (last revised in 2005), provides an opportunity for organized content companies to enhance the quality of learning in schools through the latest techniques, activity-based content, support, training, etc. This will enable enhanced engagement with stakeholders and will consequently result in gaining market share. Furthermore, the second-hand market will also initially reduce substantially, which will spur our volumes.