Existing strengths:
**Types of businesses:**The company has a strong consumer monopoly in Publication of curriculum books(focus pre-primary,primary and higher secondary in regional andEnglish languages) which contribute ~97% to domestic publication revenue and ~60% to total domestic revenue.It has 60% market share in Maharastra,40% in Gujrat and65% share in the whole Western part of India.Thecurriculumbooks have the bestcharacteristicsamongpreferred medium of learning like high penetration, are affordable, better teacher acceptance, higher student usage and are syllabusfocused. Here in this case high penetration of product works in thefavourof the company as book is arecurring need(due to syllabus change) and increasing number of students inexisting and new schools drive volume growth with minimal advertising expenditure.
Its paper stationary derives ~20% of total domestic revenue. The is one of the premium note book brand alongside Classmate of ITC. Its notebooks are priced at a premium to local brands and have decent pricing power.
**Strong distribution Network: **In publication the marketing team size is 300+,which targets schools every year. In stationary segment it has a distribution network comprising of 3 mother deports,16 C&F Agents, marketing team of 425+ in size,1200 distributors and a reach of 85,000 retailoutlets higher than that of"Classmate" which has a distribution footprint of over 75,000 stationeryretail outlets across the country. In E-learning segment 1,400 institutions covering around 7,700 classrooms are using its product as on September 2012.
The companyâs distribution network comprises over 700 direct distributors inMaharashtra and more than 1,100 wholesalers in Gujarat. The network caters to about 28,000 retaileroutlets in each of these states.
**Unique strength:**Navneet has a strong Content Team of 185 + authors . Also, the focus on quality content in the Supplementary Books makes Navneetâs product recommended by the teachers to the students.
Exciting prospects:
**Large Market Size :**There are 8,000 Private Institutions and 16,000 Government Institutions in Western India.TheCurrent Penetration is 1,305 Institutions,this leaves aLarge market still to be tapped.
**Expansion ofexistingmarket:**TheCurrent business is focused in Western India.Total number of schools in India is approximately 13 lacs. Out of which 99% of the schools are governed by respective state boards.The high overlapping ofCurriculum across various states presents a lucrative opportunity to expand the market size and Navneet with its experience in western India is well placed tocapitalize on this opportunity.
Implementation of common curriculum by MHRD is the talk of the town.However it is subject to significant political risk.If at all it materializes,the whole process will atleast take 7-10 years.By then the company would have probably established it self in other regions as well and will be in a position to yield maximum from the transition.
**E-Learning:**TheMarket still at a nascent stage with more than 90% potential still untapped.With theGovernmentâsinvestment ofRs.132 bn to push IT initiatives in Public Schools,issues like shortage of teachers & lack of quality education andHigh returns & Annuity being the key characteristics especially in the multimedia segment the opportunity is mouth watering!
The company has showntremendous growth in its ability to reach institutions in providing multimedia solutions.The no of Institutions have increased from 372 to 937in last 3 years.
**Foray into school management company: **During FY11, NPL forayed into school management services. It acquired ~25% stake in Kâ12 TechnoServices Pvt Ltd, a Hyderabadâbased school management company. Kâ12 serves ~67 state board schoolsrun by several trusts across Andhra Pradesh and run under Gowtham Model Schools (GMS) and theâOrchidsâ brand.This can serve as a whole newdimension for growth and the company will be able to sell its products from itsexisting portfolio to these schools.In a way it looks like forwardintegration.
Triggers
1.Syllabus expected to change from 8th class onwards in Maharastra.
2.Historically major sales in 1st quarter.(50-55%).