Repro india limited

[suru27]

My notes from Q2’FY 19 Concall:

12 Cr/month online books : Able to meet all expenses, still, focus remains on top line to grow
market share for next 12-18 months and capture large market share without bothering much on bottom line as of now

Major focus : Amazon, Flipkart, Paytm

Traditional print : Better predictability, realization and good cash flows happening

Rapples : Continuing in same set of schools and doing break even month over month

India : 10% books old online whereas in USA 50% books are sold online

Bhiwandi,Delhi,Bangalore: 20,0000 one book model (Mumbai up and running at 6000 books per day enhanced to 12000 daily capacity)
Different capacity for advance printing , pre-print: 20k per day in Mumbai and will be adding in Delhi also, will go 40,0000 per day

Current utilization is 60%

Lot of sellers selling online by picking from publisher directly on an inventory based model. As of now, no one doing on demand model

25-30 Crore investment in new facility and warrants will be converted which were done earlier. New business does not need working capital. Old business is stable. So, debt will be maintained or will go down

publishing business margin looks stable and good long term contract in place wit large publishers. Not going to grow and add capacity but some growth through value added capacity

2-30% margin on various books. Overheads wont grow and should add to bottomline

1 book to 1000 book half the cost

School book business : Sales team on ground approaching schools but actua implementation will happen after Dec during Feb, March

Govt policy impacting publisher could be a risk. Trade books like fiction growing. Books going digital is risk but we are invested there through amazon

QoQ Other expense is up due proportional export freight and forwarding charges

From past trend, confident to show good growth and trend should co

35 cr quarter export n 48 cr in H1 n its picking n doing well n we r very conservatively doing well. Trend looks positive for growth. Out of 73 cr order book, 61 cr domestic and 13 cr export

Operating cash flow : for current quarter : 16 Cr

Ingram share of books on demand : 10-15%. Have been able to scale up partnerships with domestic publishers

7 cr loss to 1 cr loss at PBT level. Right? Any spike in loss due to 2 new facility coming up?
How to retain market share?

retention of publisher is key to retain market share

Repro Innovative Digi print Limited: What business? 4.8 cr investment ? no revenue and salary expenses?
macmillan business, stopped operation n all print capacity shifted to surat

Paper prices?
with a lag, will be able to pass it to customers

Share of sales from Tier 1 city and Rest?
19-20% growth, tier 1,2 n 3 contributing. amazon strong in t1, flipkart in t2, paytm n others in t3
growth in e-commerce online book 50-100%

online book 4%

Margin pressure from channels:
We need scale to become large enough so that others cant ignore us and hence building scale and having publishers

Is industry doing anything to fight with piracy?
Big problem in India and with big amazons it is becoming apparent n whenever they see they are taking action. so hoping better future

Investor Presentation : https://beta.bseindia.com/xml-data/corpfiling/AttachLive/96b4e1c0-6051-4afa-af04-8323b75face9.pdf

[sumi00]

The key question to answer is BoD margins.

When exactly BoD will bring margins - for the next 12-18 months , they would focus on growing biz after setting up Delhi and Bengaluru centres. Might tire out investors in the interim.

Quantum : They can reach base business margins eventually but timeline is a risk.

It is important that they they backfill their base business with school, Rappel etc to show growth in coming quarters when the base will not be favourable.

Disc: Invested

[kunal28parikh]

One of the biggest risk in investing in company and is being less discused is the availability of content in future. the discussion in past few months has been on estimating demand, margins and increasing capacity. But there is not much discussion happening about availability of content.

Publishing industry itself is going though a tough phase. All the models that are being developed are based on how much demand will be generated by e-commerce websites. BUt there is hardly any discussion on will the supply of unique content and publishers will grow.

It is something like no one talks of lack of drivers and cars for Ola and uber.

In today’s concall, they said that five million books contribute 15% to Repro. These are high margin books. The contract was for nearly 13 million books so 8 million are still to be uploaded. Once that happens, they will have to focus on indian publishers for their growth and content. And indian publishers give low margin to them. So where will the big supply come from is something the management will have to figure.

This is not an immediate issue but after two years, this will be a major problem in terms of supply of content for their fixed assets and new capacity. Incremental content is very important for a business like Repro.

Disclosure: invested

[sumi00]

Repro is just a enabler. Whoever generates content will sell and probably partner Repro in future. I always considered consumption of knowledge as the most important to transform our society. Enough of text book cramming etc. I see a growing trend in which parents go out and encourage their kids to take up reading as an alternative hobby. Lots of good books particularly international are actually only available online. Let’s see they can squeeze profits here as growing sales is not an issue as such.

[Kuldeepjadeja]

Sales will definitely grow …
But the concern is how they will squeeze margins they have to fight with Amazon’s policy also…
As a seller on Amazon, i dont think it will allow repro to gain any handsome profit…
@suru27 @kunal28parikh

[btunuguntla]

Jamshed J Irani has resigned form the position of director, should we need to think anything about this?

[suru27]

Some insights from Amazon India reading trends 2017 study: * Savvy Indian citizens seem to be preparing for the Civil Services Exam as Indian Polity (5th Edition) ranked as the top selling book across the country

BestSellers

• Sita - Warrior of Mithila was the top selling book from the new releases of the year and the highest selling fiction book of 2017
• Yet another Exam Preparation book Word Power Made Easy by Norman Lewis’s came in close at #3, followed by The Power of your Subconscious Mind and Think and Grow Rich
• Last year’s best seller, Chetan Bhagat’s One Indian Girl, continued to rank among the top 10 bestsellers, holding the spot at #6
• Only 3 fiction books made it to the top 10 most selling books on Amazon.in (Amish’s Sita - Warrior of Mithila, Chetan Bhagat’s One Indian Girl and This Is Not Your Story by Savi Sharma)

Reader’s Poll Results
Amazon.in conducted a Readers’ Poll on its website inviting readers to vote on their favorite book across eight categories. Each category had the top 5 best-sellers of the respective genre and readers were asked to vote for their favorite among these. The poll ran for 10 days (from 13th – 22nd December 2017) and received an overwhelming response from customers.

• This Is Not Your Story by Savi Sharma is the most popular book of 2017 with the highest votes across categories
• Sita - Warrior of Mithila by Amish received the second highest votes followed by Origin by Dan Brown
• Under Biographies, An Unsuitable Boy by Karan Johar was voted as the winner
• I Do What I Do by Raghuram G. Rajan emerged as the winner under the Business category
• Diary of a Wimpy Kid: The Getaway by Jeff Kinney won maximum hearts under Children’s books category
• Under Hindi books - Heera Pheri by Surender Mohan Pathak topped the poll
• Origin: Number 5 of the Robert Langdon Series by Dan Brown won most votes for Literature & Fiction by International Authors; while This Is Not Your Story by Savi Sharma and Sita - Warrior of Mithila by Amish Tripathi placed #1 and #2 respectively under Fiction by Indian authors
• In the Non- Fiction category India’s Most Fearless: True Stories of Modern Military Heroes by Shiv Aroor won the readers hearts
• Our Story Needs No Filter by Sudeep Nagarkar topped the poll in the Romance book category
  • How to Be a Bawse: A Guide to Conquering Life by Lilly Singh was voted as the winner under the Self-Help category

Most Popular Genres

• Exam Preparation books emerged as the most popular genre on Amazon.in. The Top Bestsellers in this genre in 2017 were, Indian Polity (5th Edition), Word Power Made Easy, General Knowledge 2018, A Brief History Of Modern India (Old edition) and Certificate Physical and Human Geography.
• Personal Development & Self Help and Romance books featured as the second and third most popular genres on Amazon.in.
• Children and Young Adults literature ranked sixth in popular genres across all cities. Amazon.in is India’s largest children’s book store comprising of millions of titles offered by over 12,700 sellers. With this vast selection of books, young readers’ changing interests and varying reading levels makes finding the right book particularly challenging for parents as well as children. Amazon.in recently introduced ‘Children’s Bookshelf’, which makes buying the right book for the children easier. Here, parents can discover best recommendations for all the reading needs of their child at one store.
• Indian Language books - Language translations of ‘Rich Dad, Poor Dad’ ranked among the bestsellers in various vernacular languages including Hindi, Tamil, Marathi, Telugu, Bengali and Gujarati. Last year’s bestseller – the translation of ‘The secret’ continued to be favoured in Tamil, Telugu, Bengali and Kannada

Most Well Read Cities
Bengaluru has raced past last year’s third spot to capture the number one position as the Most Well-Read City in India. The city seems to absolutely love their books according to Amazon.in’s Annual Reading Trends Report for 2017. The city was closely followed by Mumbai with last year’s winner Delhi securing the third spot.
Some interesting findings of Amazon.in’s Reading Trends Report 2017 are:

• Exam Preparation books emerged as the most popular genre on Amazon.in while Indian writing gabbed the second spot
• Literature & Fiction, Personal Development and Self Help and Romance categories were ranked #3, #4 and #5 respectively as per the report
• Pune, Kolkata, Gurgaon, Noida and Jaipur also feature in the top 10 cities who have nurtured the love for reading.
We love that reading is being nurtured and here’s wishing that your love affair with books continues!
Happy Reading!

Link: https://www.amazon.in/b?ie=UTF8&node=14471127031

[suru27]

Some interesting perspective on industry growth numbers:

The 30% dilemma: Is Indian publishing really growing that fast?

[Kuldeepjadeja]

Please conclude the entire report…
Whether it is growing at rate of 30% or not?

[Birsha_Haldar]

Good results from Repro for Q3 - BOD business shaping up well. Not sure why Management has sent out a press release touting themselves " Uber of printing business " . the growth nos has just started and they are yet to monitise this on a larger scale…
Management has given guidance for 80 Cr pending order for start of Q4, if this does not include BOD business then total revenues should be around 115-120 crores in q4 , which is quite a big jump from last years Q4.
Valuations still on higher side… Hopefully will correct some more for entry…

Disc : Invested and looking to add more…

[parth_dalal]

Any one with the concall highlights?
Saurabh ji?

[rupaniamit]

Few things I noticed from this quarter result:

• Lower gross margin compensated by tighter operational expenses.

• Income tax deffered for entire first 9 months of FY. Need to get tax guidance from the management.

• Last quarter monthly runrate was 12cr with 12000 books. This quarter management has shared only monthly runrate of units of 14000. Why would they not share monthly revenue runrate?

@parth_dalal - concall is tomorrow.

[parth_dalal]

My bad! Thanks Amit. Please share call highlights if possible.

[Birsha_Haldar]

They have shared monthly revenues of 13 cr / month in one of the slides

[rupaniamit]

Just went through con-call recording and below are my notes:

Q3 FY19 Repro India Earnings Conf Call Notes

BoD Business

• Monthly run rate of 13cr of BoD business.
• Fine tuning in operations of e-retailers impacted their business model which have slowed QoQ growth a little bit.
• Repro not impacted by policy changes for e-retailers. Offline sales channel where e-retailers had investments will not be able to compete with Repro in future which should be positive in long-run. Management confident of getting growth back of track once Delhi and B’lore plants are up.
• According to management - no one doing one-book model in India so far.
• Currently 1.25lacs books are sold online per day. Around 11% market share as currently doing 14000 books per day.
• Bhiwadi BoD capacity is 12000 per day. Adding Delhi and B’lore total capacity will go to 20,000 per day.
• More than 5 million Ingram titles listed. Current value contribution of Ingram is 15-20%.
• North, South, and West forms 80-85% of the market. North and South are approximately 55%; Mumbai is 25%. Figures vary for Flipkart and Amazon.
• Will have better understanding of sustainable margins in 12-18 months once proper scale has been reached.
• Can print up to 1million books a day in offset and digital, if need be.

Non BoD Business & Exports

• 83cr of open order book which will be executed in coming quarters.

General

• Past MAT credit still available. Will start paying taxes from 2020.
• Consolidated debt stands at 127cr.

[sumi00]

Only clarity we got was sales growth will be robust post new rules in the e-commerce biz. Hopefully there won’t be competition from the platform (Amazon etc) itself going forward. BoD is shaping well but sans clarity on steady state margins. Sadly, that will be still 12-18 months away. Hopefully they would use K-12 etc to show some PAT growth. It is clear that interest in the stock is pretty low after going through the concall.

Disc: Holding.

[parth_dalal]

they also stated they are looking for offline distribution in future…

[kunal28parikh]

Hi Kuldeep,

I was on the concall but did not have any questions. I am also invested in the stock but please do your own research before investing. I am just learning the art of investing and I am not an expert in the field.

Thanks,
Kunal

[dapkani]

Repro India has signed new agreement with Mc Millian — A very positive new for companyRepro india 28.3.19 agreement with Mcmillion.pdf (110.7 KB)

[Kuldeepjadeja]

How it is so positive for the company ?
There is no details about what kind of settlement they have executed ?
They are suppose to build POD facility in chennai so now they are leasing it?