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

We are one of India’s oldest homegrown education content companies and take pride in the quality of the content of our products, asserts Saurabh Mittal, CFO of S Chand and Company Limited

In FY23, the company posted strong performance on all parameters. What were the contributing factors to the company’s outperformance?  

FY23 was a milestone year for S Chand on all parameters. Just to summarize, on the P and L front, we delivered the highest operating revenue, highest EBITDA and the highest PAT over the past five years and are back above the pre-covid levels. On the Balance Sheet front, we became a net debt-free company in April 2023 and our working capital metrics are at historic 5-year lows. On the cash flow front, we have maintained strong operating cash flows and we remained free cash flow positive as well.

This performance was driven by many internal and external factors including-:

• Covid free operations during FY23. FY23 was the first year of operations for the company (after 3 years) which was not impacted by Covid or any other disruptions. This happened after FY19 thus we were able to secure strong volume and revenue growth for the year. 
• Increasing admissions in private schools. We saw the trend of students moving from private schools to government schools during covid times. Since things have normalized, we are seeing the return of students back to private schools which also aided volume growth for us.
• Focus on quality customers. We have rationalized the number of distributors and focused on quality customers improving the Trade receivable days substantially. 
• Profitable exits from minority investments. We made 2 very profitable exits in FY23 through the sale of our minority stake in Testbook and iNeuron which brought in incremental Rs 32 crore liquidity. This further enhanced the company’s profitability. 

The is a certain level of stickiness in the education publishing business wherein the schools tend to remain loyal to specific publishers for extended periods. How do you plan to tackle this?  

We are one of India’s oldest homegrown education content companies. We take pride in the quality of the content of our products. Schools which are looking for quality content continue to adapt our products for their students. We have long-standing relationships with schools considering our 80-year legacy with quality content which has resulted in strong brand recognition amongst all stakeholders being students, teachers and school administrators. Our author base is very strong and many of our authors are brands in themselves as well like Lakhmir Singh, RS Aggarwal, Wren and Martin, RS Khurmi, SK Gupta, Mahitha Ranjit, Pradeep Jain, VK Sharma etc. 

We focus on providing quality content and product. We also work on developing long-lasting relationships with the entire education ecosystem of school owners, school management, principals, teachers, educators etc. We further enhance the learning process by providing additional features along with the books in terms of teacher workshops, learning management systems, teacher support tools, digital content, assessments etc.

What will be your key growth triggers in FY24? 

We saw the launch of the National Curriculum Framework (NCF) covering the Foundation Stage (classes Kindergarten to Class 2nd) last year in October 2022. We look forward to more such announcements for the other classes coming through in 2023. This would be the biggest growth driver in FY24-FY26. We expect that this announcement would lead to strong growth for 2-3 years. Do take note that the new NCF is coming after 18 years since the last NCF was announced in 2005. 

The NCF opens up a large opportunity to provide engaging and innovative content to students, teachers and schools, to make learning more experiential. The NCF focuses on activity-based learning and provides flexibility to students to choose between subjects. This will help more organized content providers to gain market share with their strong product portfolio. We expect to launch hundreds of new SKUs in the school segment this year which will drive growth for us over the next few years. 

At the moment, what are your top 3 strategic priorities?  

1. 1. 1. Develop new content adhering to the new National Curriculum Framework (NCF). We have been working on developing content which adheres to the guidelines issued in the new NCF. We are targeting our content to be ready for the sales season of January 2024 to March 2024 which would be used in the Academic Session from April 2024 onwards. 
      2. Capitalise on the sales opportunity given by the new NCF. We would like to increase our engagement with schools around the changes brought in by the NCF and how our products are positioned to help improve learning outcomes as per NCF. Increased engagement would lead to deeper penetration in the key markets and can lead to higher adoption rates for our content and services which can be sticky in the coming years as well. 
      3. Focus on enhancing digital offerings. On the Digital front, our Youtube Channel “S Chand Academy” continues to have phenomenal success. We have now launched over 1,200 videos focused on Higher Education topics covering Science, Engineering and Test Preparation so far and the channel has already notched up over 13 million views and 136k subscribers. This enables the promotion of our content, further spurring demand in that segment with the blended offering. This channel enables students to learn critical areas through top-notch educationists which may not be available in Tier 2 and Tier 3 colleges. We expect to add another 800 videos for both the School and College segment this year and reach over 2,000 videos on the channel.