Few notes from the Conf call of Aug 2012
1). Growth drivers identified by Mgmt.
20% growth guidance for 2013, and will continue to grow at same rate for 2014 & 15.
)- Curriculum change in MH & Gujarat
)- Government orders because govt. feels students need supplementary products beyond classroom (expect this to be sustainable business)
)- Have already created the content for Andhra Pradesh state syllabus, it will take 2-3 years for completing the full range.
)- started marketing in the northern market and expects that to drive growth by the time MH & Gujarat market complete curriculum cycle change.
)- Already cover 1300 schools & should cover 1700 schools in 2013 for e-learning business.
)- Since the chnage in syllabus is more drastic (alignment to CBSE), both student and teacher will face difficulty and hence a wider demand for supplementary books is expected.
2). Few other data points.
)- Workbooks & Guides contribute 85% sales in curriculum segment & the rest of 15% is contributed by 21 question sets meant for 10th & 12th standards.
)- eSense business supposed to break-even in 2013.
)- Growth in stationary segment is coming from export market. End customer is big retail chain of the developed coutnries which has started giving large volume and year round orders.
)- Govt orders give same margin as others, payment is received within 3 and half months.
)- As a strategy navneet has decided not invest more in fixed asset for stationary business. They hope to grow it 15-20% YoY.
3). Few other points
)- Content creation is the toughest part in this business. Some times new player come and take away some sales. But after user tries their product in 1st year, they mostly come back to navneet in 2nd year.
)- Same thing in eSense, some competitions are just creating some animated stuff or even some ppt and offering them at lower prices, client has difficulty in understanding why eSense is priced higher. So, it needs customer education, but navneet is not going to reduce price to fight this kind of competition.
)- Normally company is able to pass on higher input cost or rise in cost due to inflationary pressure. 2012 there was a price hike of 7% to counter the inflationary cost.