Yes I was aware of that and I agree with you.Online market in 3 years is going to be say 4000 Crores (not considering the 8000 crores) and mid and back titles is going to be 20% of that say 800 crores what percent of that market can Repro take being the only player in that space (their claim). 800 crores means nearly 55000 books per day assuming Rs 400 per book, I was just working out Repro’s revenue stream based on capacity against a potential revenue of 800 crores. Yeah you can argue if the demand is there putting up capacity is not an issue and can be done with internal accruals alone. however I was just trying to work out the revenue potential with the current capacity
For mid and back titles what will be the margins …?
thrown clarity caught 
Management interview on BloombergQuint on 12th Feb - Mr. Khera was very vocal about next year focus will be on BOD gaining market share and not margins. However he added the margins will remain same.
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Any links for same interview ?
Capturing market share has its own pros and cons . Widening of profitability/loss with market share expansion will totally depend on mix of fix and variable cost item.i tried to get a sense of fixed and variable cost in one of concalls but did not get much. Now we have enough fixed cost data. The variable cost data need to be broken into line items to build the profitability model. One good thing looks like there are not much discounts etc but we need to arrive at what volume business is/will brrakeven. Positive side because your employee, cost , interest cost etc will be constant and paper price n dispatch cost (though here also volume will be positive to margins) ,so, once they breakeven ,assuming they ve a economically profitable business model , it will become non linearly profitable and then stabilize unless the interested parties fight among themselves on margins. However, if they give some kind of discounts then can lead to what is happening e commerce. So, the economics model has to be a profitable one , the sustainability of that economics across these 3 parties have to ensured and then only the levers of p&l can lead to disproportionate profit for a specific age band in the overall future cycle of business .
Dr. Pramod Khera, ED Repro India Ltd., addressing the delegates during the 32nd International Publishers Congress, New Delhi… 11th to 13th Feb 2018.
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Good set of numbers both on P&L as well as BS side.
Revenue growth momentum is up. Profit margins improving, debt coming down. Online book run rate momentum continuing
Now, with rising crude prices, african export business should get a breathe in terms of better receivable management and may be some revenue opportunity for short term (in case they are interested) and falling paper prices (I am assuming seeing results of paper companies but yet to check), things should look better. More happy with balance sheet coming in shape through P&L improvement
One more thing is now they have started disclosing online book revenues separately Current run rate is 82 Cr/Year
Any idea what kind of margins one can expect in the online BOD business?
Sorry if it has already been posted.
Q4 Result, finance cost down, profit increase. Need to see presentation to see BOD numbers.
Management has said it would be better than traditional business but yet to be seen. So, an educated guess is somewhere between 6-12%. Key point is its a low working capital one with fast cash conversion cycle unlike traditional one
Some interesting points in the notes section of the results:
- One time settlement of 6.64 crores as part of employee benefits for Q4. The employee benefits expense is 14+ cr compared to 8 cr QoQ & 10 cr YoY. From next quarter onwards it may go back to 8 Cr.
- They made a provision of 5.5 cr for FY18 for one time settlement/inventory provisions etc which is part of other expenses. Not sure how much of this 5.5 cr is part of other expenses of this quarter.
- There is a provision write back of 2.28 cr, which is part of other income for this quarter.
- Depreciation has come down by 1 cr. Finance costs have come down. Decrease in finance cost might be partly due to 50 cr company received from warrants & preferential issue etc.
- Can somebody tell me how to read into “Change in inventory…” 11.5 cr vs -19.1 (YoY)? This 11.5 cr will become revenue in next quarter?
a) Rapples disappeared from Presentation.
b) Impressive growth in BoD to 7.24 cr /month (April). Would have been good if they had given weekly rate in May.
Overall pretty good results. If the growth continues in same way, this will be good year for stock price too even at this expensive looking price.
Discl: Invested at 450 rs levels.
The quarter ended, and the year too, were good for the company. Some clarifications from the concall:
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Ingram Titles: Out of the 14-15 million titles that Ingram has, Repro has managed 4 million titles. There is very big repository that is yet to be uploaded on the system. So content-wise, Repro has absolutely no problem. With 4 million titles, I think Repro is already the biggest publisher in the country, without investing in any content.
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Self-Publishing: They said that they are not looking at this opportunity as the current opportunity itself is very huge. I think they should make a small team and a project internally as this might become a big space in 5-10 years when there will be more awareness about this trend with big authors.
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Capacity Utilization: BOD capacity is upto 30-40% and rest is used for digital printing business(Oxford, Macmillan, etc). They are adding capacity and by the end of the year, capex will be done on this front.
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Mhape plant is still close and there is no resolution in sight
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Academic Market: This was one of the interesting details of the quarter. Company is trying to do a pilot with Amazon and Schools where students can order directly online. If this works, it can be massive. Academic market is the biggest segment in the overall book market and Repro will find it challenging if they are not able to penetrate here.
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Revenue Per Title is about Rs. 325 and for the past few quarters it has been in this range. They said that once the e-commerce wars will end, and discounting reduces, this figure should increase. Indian books have typically Rs. 200 RPT and it is because of international books(thanks to Ingram) that we have a higher RPT.
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Export business is now resumed with Africa and with the rise in Crude prices, situation should improve. But I do not think company would be focusing more on this side of business going ahead.
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CapEx: they will be doing capex of 15-25 crore in the coming year and did 13 cr of capex last year.
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Cash Flow: They didn’t have the data
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Growth in online markets: According to their estimate, e-commerce sales is going up by 40% but there is no other study.
Disclosure: Invested
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My novice 2 cents:
- The company may not aggressively pursue/publicize self publishing as it is like going into direct competition with some of their own clients. They will keep it low key, accepting only the low level self publishing offers by rejects of main publishing houses.
- The big schools must be receiving some % commission by distributing text books to kids, who are their captive customers. If the schools buy directly from publishing houses, then it will be hard for Repro to break through into that. If they buy it from local distributor, then Repro can take the place of distributor and still give some commission to the school. Hope it works out.
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Academic Market is big but I don’t think that they have any edge over traditional model in this segment because working capital cycle is short and demand is normally certain (so no cost of obsolescence for book seller). The book seller gets very thin margin in academic, fat margins are enjoyed by schools. Further, the shipment cost should be higher for them as compared to traditional book seller.
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The book distribution is a very painful process for both parents and schools (schools like it though since they earn money). They allocate special day (if I am not wrong it could be weekday too) for distributing books and probably uniform too. The parent has to take at least half day leave (best case they waste a weekend day), travel and wait for long (2 to 3 hrs) to collect the books etc. Since all the parents come to school, that day, there will be lot of traffic and parking issues. I believe parents won’t mind paying some money to get it delivered to home to save the effort. Books being the only heavy thing, the remaining stuff can be collected by kids. Management might be seeing some significant opportunity here. Tough opportunity but worth a serious try.
I am yet to go through this process, so my description might be inaccurate. What I mentioned is what I observed from sidelines.
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Looking at the pace with which BOD revenue is increasing, I think repro would make around 200+ cr revenue for FY19, any views on how much pat it would make on this 200cr? 15-20 cr?
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@15 percent margin, it would be 30 Cr.
Pretty good details con call. Surprising that there were very less questions.
If management knows that they can increase sales (and gain some market share) by putting up capacity in Delhi and chennai, why are they delaying it until 3 more months from now to even start. We have been hearing about this capacity addition since last 6 months at least and they got some money via preferential allotment at least 3 months back. Is the management being over conservative when speed is the necessity? Could they have gone for 10% more dilution to raise funds for quick capacity addition (since the stock was overvalued @675 rs anyway)?
Any thoughts on this are appreciated.
Discl: Invested @450 rs levels.
''Could they have gone for 10% more dilution to raise funds for quick capacity addition ‘’
Source of this information?
It’s a suggestion that they could have gone for 10% more equity dilution to bring up the capacities quicker if management is reasonably sure that putting up the capacities near customer (i.e. planned Delhi & Chennai capacities) will help Repro gain more business. In last concall, management mentioned that, the whole capex for FY2019 is 35 crores which is equivalent to 5% more equity dilution at 675 rs.
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