navneet education ltd share price Management discussions

GLOBAL ECONOMY

Since the crisis of the Covid-19 pandemic, the global economy has been a mixed bag of risks and opportunities. We saw economies seemingly on the path of recovery, recuperating from the ramifications of what seems like the biggest humanitarian crisis. Prompt and appropriate actions like massive inoculation drives and constant fiscal and monetary support measures adopted by governments worldwide helped bring a ray of hope amid a clouded outlook. Just when the economic stance started looking up somewhat, we were struck by the tragic Russia-Ukraine geopolitical conflict. The war weighs on the growth prospects while also posing a higher threat to emerging and developing economies than advanced ones. The world was already facing increasing inflationary pressures. The war only further intensified price inflation, supply shortages and pandemic several other impacts of the war. These pressures, along with widespread lockdowns in China, including some manufacturing hubs, have clogged up and resulted in another supply chain shock. The disadvantaged populations in low-income countries have been worst affected and in a disproportionate manner. In line with the above, the International Monetary Fund (IMF)’s World Economic Outlook (WEO) lowered the GDP growth projections for global economies in its April 2022 Outlook, over its January 2022 projections. The global growth is now anticipated to slow down from an estimation of 6.1% in CY 2021 to 3.6% for both CY 2022 and CY 2023, which is 0.8% and 0.2%, respectively, lower than the earlier projections made in January. Together, these reflect the overall risks to the economic prospects of nations having heightened, throwing the post-Covid growth recovery expectation into doubt, with the policy trade-offs becoming even more challenging.

Outlook

The global economy can be categorised as being under the state of ‘stagflation’ with the central banks worldwide exploring tightening monetary policies to remove excess liquidity from the systems and reduce inflation and its effects. Even before the war, many economies were flurrying under a cloud of inflation due to rising commodity prices and supply-demand imbalances. However, the war has aggravated the need for trading-off between two difficult policy propositions for all economies first: tackling inflation and safeguarding recovery; second: supporting the vulnerable and rebuilding fiscal buffers. The global economy’s growth and the course of direction depend on the prioritisation of either of these propositions by the governments world over.

In line with the WEO’s projection, the advanced countries are expected to grow by 3.3% in CY 2022 and 2.4% in CY 2023. On the other hand, the Emerging Markets and Developing Economies (EMDE) are anticipated to grow by 3.8 % in CY 2022 and 4.4% in CY 2023. Much of this growth projection depends on how the economies face the headwinds, including further pandemic-related disruptions, additional supply bottlenecks, and de-anchoring the inflationary pressures and financial stress, amongst others.

INDIAN ECONOMY

For the Indian economy, 2021-22 can easily be coined as the year of recovery. The gradual resumption of economic activities, waning out of the after-effects of the pandemic, and reverting demand and consumption patterns to some normalcy collectively marked the economy’s improvement across the board. Further, increasing Government and private consumption are driving the demand to touch pre-pandemic levels. A favourable business environment, high industrial production, and widespread inoculation have contributed to India’s economic growth – anticipated to reach 8.2% in 2022-23.

 

(Source: IMF’s WEO Report, April 2022)

Outlook

The war in one part of the world has sure had a domino effect on the rest of the economies. Despite the looming scenario, India is expected to remain one of the world’s fastest-growing economies over the next decade or so. Broad vaccination coverage, gains from supply-side reforms and regulatory ease, healthy export growth, and the availability of fiscal headroom to increase capital investment are all likely to propel the economy going forward.

INDUSTRY OVERVIEW Education Sector

Education is a human right and a major instrument of growth. It is one of the most effective keys for alleviating poverty, increasing economic efficiency and improving social inconsistencies like gender inequality. It is also a critical component in ensuring equitable opportunities for the people of a nation. With 26.31% of India’s population between the ages 0-14, and about 15 Crores children and youth lacking access to formal education, the education sector holds significant potential for development.

Initiatives of the Indian Government in the Field of Education:

- National Education Policy (NEP) 2020

The Government of India (GOI), through NEP 2020 has undertaken the goal of preparing the ground for revolutionary reforms in the country’s school and higher education institutions. NEP aims to uplift vulnerable, underprivileged, and underrepresented populations through education. The intent is to provide world-class education to all children, regardless of where they live or the economic background they come from.

- Samagra Shiksha Scheme

This Scheme seeks to integrate and treat school education holistically without any segmentation.

The GoI has extended the Scheme for another five years, from 2021-22 to 2025-26. With a total budget of Rs.2,94,283 Crores, the Scheme’s broader goal is to improve schools’ effectiveness in terms of equal opportunities for schooling and equitable learning outcomes. It includes school education from pre-school to class 12th as an integrated programme.

 

(Source: https://samagra.education.gov.in/" https:// samagra.education.gov.in/)

- National Initiative for Proficiency in Reading with

Understanding and Numeracy (NIPUN) Bharat Mission

The Scheme aims to ensure that every child in India gains foundational numeracy and literacy by the end of Grade 3 and thereby establishes priorities and a plan of action for States/UTs to attain the same objective.

- Announcements on Education in the Union Budget for 2022-2023

Allocation of Rs.1,04,278 Crores for the education sector – an increase of 11.86% above the estimated gross allocation of Rs.93,223 Crores for 2021-22

Expansion of the PM eVIDYA’s ‘one class-one TV channel’ initiative from 12 to 200 TV channels – acknowledging learning losses due to school closures – will assist state governments provide regional language supplemental education for grades 1 to 12.

Increase in the funding for Samagra Shiksha from Rs.29,999 Crores in 2021-22 to Rs.37,383 Crores in 2022-23andinthebudgetforSTARS(Strengthening Teaching-Learning and Results for States) from Rs.340 Crores to Rs.550 Crores.

Emphasising programmes such as Accelerating State Education Program to Improve Results (ASPIRE) and Exemplar Schools through the allocation of Rs.600 Crores and Rs.1,800 Crores, respectively, for 2022-23.

Adaptation of online teaching techniques to help assure academic session continuation through programs like SWAYAM (study webs of active learning for young ambitious minds), Diksha, e-pathshala,andothersthatencourageeducational establishments, even in remote areas.

 

(Source: https://digitallearning.eletsonline.com/2021/10/ india-poised-to-become-usd-313-billion-education-skills-market-by-2030/ )

Outlook

Further, the increase in India’s education and skills sector backed by Supplemental & Extra-curricular Education, Teacher Training & Development, Affordable Education Loan Platforms, Technology-enabled K-12 Education, Online Test Preparation Platforms-led Inclusion & Development is expected to grow over the next decade from USD 180 billion in 2020 to an impressive USD 313 billion in 2030. Thereby adding 5 million new jobs and covering 429 million students. The Indian education system has improved greatly in recent years, especially in terms of access, which is universally acknowledged. There is a significant need for value education to contribute to national development. A continuing focus on making further improvements is pivotal, with a clear emphasis on enhancing quality and enabling equal access to educational opportunities for all parts of society. The Indian

Government acknowledges the significance of reforming our education system and has even undertaken several initiatives in this direction.

Further, as the Covid-19 infections and consequent waves flared up, the schools and universities closed down and moved online. As a result, the demand for online education soared in India in 2020. This led to a rise in the popularity of online learning, spurring the number of businesses offering educational technology as well. The adaptation of technology in this sector is only expected to transform the sector for good going forward.

EdTech

EdTech is the practice of integrating IT tools into the process of learning to make it more engaging, inclusive and personalised at the same time. For the past few years, EdTech has been gaining high prominence in India. Here again, the Covid-19 pandemic brought about an unprecedented surge in online education and the adoption of virtual job upskilling. This transition spiked at a sudden rate for good and it is likely to stay here for much longer. As per a report, the EdTech market in India is predicted to grow from Rs.22,000 Crores in 2020 to Rs.80,000 Crores by 2025 (Statista)– indicating the massive growth potential EdTech sector is yet to tap in. Over the years, higher and easier availability of internet and smartphone accessibility at affordable rates has paved the way for deeper penetration. This led to the EdTech sector’s rapid growth, which was already on an upward trajectory even before the advent of the Covid-19 pandemic. However, there is no denying that the sector received a huge impetus amid the pandemic – leading to the almost overnight adoption of technological tools in the education sector. As a fruitful outcome of these disruptions, the e-learning initiatives further led to the adoption of the digital mode of learning in a big way. A huge part of this adoption can be accredited to the collaborative effort of all the stakeholders – the Government, private and public schools, tutors, coaching institutes, students, and teachers, who collectively facilitated this growth.

India’s current EdTech landscape mainly entails Pre-K-12/ college learning, test preparation, tutoring, upskilling and technology providers. Technology-enabled learning and understandingcansurelyhelpcoverotherremainingsegments too. It can help plug the shortcomingstransformation in recent years.in our country’s education system by alleviating concerns to make learning accessible, affordable and flexible for everyone. Additionally, and more importantly, it can also help address the eminent gaps arising from lack of proper school infrastructure, teacher absenteeism or unavailability, inadequate training of in-serviceteachers,lackofaccessibilitytolearning,especially in remote areas, amongst many other challenges. The Government’s measures and private participation have paved the way for new-age approaches. As per ‘the-ken.com’, Indian Edtech companies raised USD 285 million between CY 2020 and CY 2021. The K-12 sector, higher education, and upskilling sectors are driving this industry’s expansion. India’s EdTech business is expected to grow at a brisk pace in the next ten years, thanks to the rising popularity of Massive Open Online Courses (MOOCs) and distance learning. Moreover, the supportive efforts from the Government to make education available to anybody, everywhere, have also contributed to providing momentum to EdTech enterprises. India’s burgeoning internet economy – with a very high subscriber base and an increasing number of smartphone users – has helped augment the sector’s growth in multifolds.

Outlook

Internet education will be as important as traditional education in India in the next few years. The EdTech sector is extremely promising. However, its success will largely depend on the sector’s capacity to adapt to the changing circumstances and provide personalised solutions, catering to various student needs. India has a vast untapped market for EdTech firms to address the challenges of quality and accessibility for education. The market is estimated to grow from Rs.21,560 Crores to Rs.80,080 Crores by CY 2025 (Source: NDTV, India Today, IBEF, Inc42, The Economic Times, Internal estimate). And considering the current scenario, with newer Covid-19 strains emerging at a greater frequency and uncertainty around the pandemic fading off completely, the e-learning initiatives are set to become the default option for convenience bringing cost efficiencies for the educators. (Source:https://www.indiatoday.in/education-today/featurephilia/ story/edtech-the-new-growth-catalyst-of-indian-education-industry-1912116-2022-02-12 )

Changing and Upcoming Trends in the EdTech

With the introduction of digital education and educational applications, the traditional art of teaching and learning has undergone a significant regarded to be a redundant technique of learning information and sagacity, the general public’s perspective is slowly changing.

1. Distance Learning

As the name suggests, distance learning is a model that allows students to attend a school or any institute of learning virtually. Students can attend classes from the comfort of their homes through video and access subject matter and content online. Distance learning, also known as ‘remote learning’, usually employs various technologies such as class forums, discussion sites and threads, video conferencing classes, pre-recorded videos, and solution sites.

Examples: Open online courses and YouTube Edu, among others.

2. Personalised Learning

Nowadays, the sole and most favourite feature of the learning process from a student’s perspective is one which can be tailored to each student’s specific needs.

As a result, learning has become more personalised to meet the requirements of students than ever before. Students can progress through the study material at their own pace via blended learning. It provides a sense of control and increases Gamification self-assurance in students’ approach. Another advantage of adaptive learning is gathering data on students’ learning patterns. It collects data on how students respond to questions and uses the same data to deliver rapid feedback and change/ improve the experience accordingly.

One of the key emerging trends in the EdTech space involves the development of educational applications. These are changing traditional learning methods while allowing students and teachers to communicate more effectively. A few digital education trends that support the apparent influence of online learning and the necessity of applications like these in the ever-changing educational scene entail the following:

An increasing number of students use handheld and mobile devices to study

A large percentage of students believe that technology helps them understand the subject matter better and saves time

A good proportion of students say that progress in technology has helped them improve their grades

A rising number of students feel EdTech is helping them better prepare for classes and exams

3. Gamification was created to make studying more entertaining and interesting for students of all ages. It uses game design for various aptitude activities. Although such exercises frequently feature activities that mimic real-life situations, students must employ technical skills to face them. This, in turn, aids students in developing many areas of their character.

4. Mind Mapping

Mind mapping is a learning method in which highlighted thoughts are connected along lines. It is said to help students grasp the material better and remember what they’ve learned. To make learning easy, mind mapping makes students’ learning simpler by making it easier for the human mind to absorb and retain the material because of the pictorial elements.

INDUSTRY GROWTH DRIVERS Internet Spread in India

India had about 622 million active internet users in 2020, according to the IAMAI-Kantar ICUBE 2020 study. Due to rising widespread adoption in rural India, this figure is further predicted to increase by 45% to 900 million by 2025. India’s urban population accounts for 67% of internet customers, and the smaller cities account for two out of every five active internet users.

Government Initiatives

The National Education Policy emphasised the necessity of using technology in educational solutions and the importance of creating learning content in regional languages. Due to increased Government attention, the Indian EdTech industry is projected to become more policy friendly in the future years. NEP, PMeVidya, National Curriculum and Pedagogical Framework are some of the major initiatives initiated by the Government to boost the sector.

K-12 Segment has a Bright Future

K-12 segment poses a high potential for growth in the future. According to Tracxn, a data analytics company, the K-12 segment raised a very high quantum of investments in CY 2021 – clearly indicating the market potential segment.

Early Learning

The first eight years of a child’s life are the most remarkable and vital for growth and development. These years lay the fundamentals and foundation of all learning. Getting the fundamentals right has enormous long-term benefits like and higher educational achievements. The Integrated Child Development Services (ICDS), a centrally-funded and state-managed early childhood development programme, offers activities that promote education as one of six basic/essential services (along with immunisation, health check-ups, referrals, dietary supplements, growth monitoring) through 1.37 million anganwadi centres across India.

PUBLICATION SECTOR

The publishing sector is experiencing transformation in this digital era. Subscriptions to print newspapers and magazines are declining, but print books are thriving. As per an EY Report, in 2019, the Indian publishing sector was worth Rs.500 Billion, with a potential to increase to Rs.800 Billion by 2024. The sector contributes to India’s economic growth by fostering learning and education and also employs over 1.2 million people. The Indian publishing industry’s primary growth drivers have been highlighted due to Government’s education campaigns and a rise in the total educational spending. With over 9,000 publishers and 21,000 shops, the Indian publishing sector is mainly undefined and competitive, dominated by educational/academic book publishing with a tiny proportion of commerce publications. The Government’s key education greaterunderstandinginschool aims and efforts, the rise of a knowledge-based society, and the international dissemination of Indian culture and history are all critical areas where the publishing business and the Government may collaborate to meet these goals in the coming future.

(Source:https://www.ey.com/en_in/strategy-transactions/the-now-next-and-beyond-of-the-indian-publishing-industry )

Outlook

The Government’s most recent plan, aimed at converting India into a thriving knowledge-based society, is founded on the principles of accessibility, fairness, economy, accountability, and learning quality. Many programmes aimed at achieving these goals, such as the New Education Policy, place a strong emphasis on competency-based education and learning – in line with 21st-century demands. The publishing business will play a critical role in meeting these goals. Some of the essential Government initiatives such as making a huge number of books and materials available in regional languages and providing instructional content are already being aggressively promoted by the publishing business. To properly service a population as huge as India’s, the publishing sector is developing new relationships with the Government and commercial institutions. The publishing business will play a more prominent role in directly contributing to economic production and employment. This, while supporting more than 300 million individuals by 2024 – thanks to the Government’s approval of a proposal to expand public expenditure on education.

 

(Source: https://www.prnewswire.com/news-releases/worldwide-book-publishers-industry-to-2030---players-include-pearson-bertelsmann-and-hachette-livre-among-others-301270535.html)

K-12 SEGMENT

Globally, the K-12 market is gaining traction. As per GII Research, the market is expected to record a CAGR of 31.6% between CY 2021 and CY 2026. The market, driven mainly by schools that are constantly upgrading their technology infrastructure to transform the way learning happens traditionally, is gradually moving away from the blackboard-based conventional approach. The acceptance of technology in imparting education is becoming imperative due to the visible improvement in the educational outcomes of students. The sector’s growth is likely to be driven by various factors – increased focus on the use of technological tools to aid learning, the rising popularity of Big Data to propel the use of analytics for fuelling personalised learning experiences, government support across various countries for improving education quality, higher acceptance amongst parents, and many other factors.

Likewise, in India, the Central Government’s impetus on the segment – an increasing number of private schools pursuing high demand for quality education, FDI in the education sector, technological advancements in the teaching methodologies, and digital learning modules – has boosted its growth prospectus in the last few years. A technologically advanced education system can immensely help augment the interaction between the students and teachers for effective learning. It can go miles in helping the students make learning more interactive, develop skills, gain knowledge, and get support to keep up with the needs and expectations of modern-day living.

With more content being consumed online because of the pandemic, schools have been compelled to fast-track the adoption of e-learning technologies. In order to take the quality of education to the next level, some private Indian players are collaborating with international brands to impart high-quality international standard education. In addition, schools are also heavily investing in information and multimedia education technologies to provide high-quality education. Besides, even EdTech companies have been using Augmented Reality and Virtual Reality measures to deliver learning-heavy content for K-12 students. This is likely to drive the growth of the segment going forward.

COMPANY OVERVIEW

At Navneet Education Limited (‘NEL’, ‘we’, ‘the Company’), we are known for our quality in terms of value and content we provide. As a human right, we believe education must be provided to every child at an affordable price to not deprive any child of the opportunity to make his/her life bright. In line with this vision, we have always striven to provide quality products at an affordable price to people. Today, we have established ourselves among the leading companies in education products. Our Company’s first product, ‘the Digest’, was initially available only in Gujarat, which we later expanded to Maharashtra as well. Realising the importance of regional languages, we also started publishing these books in other languages for each grade. The fact that ‘Navneet Guides’/ ‘Digests’ are now widely used by the fourth generation speaks volumes of the reliability and popularity of our product. It indicates how we have retained our market position backed by our trustworthy and quality content.

Business Growth Strategies

- Introduction of NEP

With the advent of the new National Education Policy, any changes in the curriculum of the school syllabus are likely to directly impact our business positively, acting as a strong growth driver. Students discarding the old and second-hand books to buy new supplementary books basis the revised syllabus or a revised curriculum is likely to propel the growth of our business going forward.

- Conversion of Schools

With an increasing number of schools converting from State boards to CBSE, there lies an opportunity in CBSE Board schools since the market for these books is expected to grow rapidly. Besides, as more and more English Medium Private State Boards start repositioning as CBSE pattern schools, there will be an increased need to utilise private publishers’ textbooks up to grade 8, aiding our publication business’ growth.

- Investments in EdTech

With an aim to accelerate our growth prospects, we have strategically undertaken various measures that entail investments or acquisitions to strengthen our aggressive foray into the EdTech space. Through due diligence and committed investments that bring in the multiple facets of technology in education, we are aiming to make learning more effective, efficient and fun for the end-users i.e. the students. Besides, we are also exploring investments that are extended to but not limited to counselling, teacher training and sports management – supplementary to education. These measures will enable us to build a parallel business in EdTech in addition to being a respected publication player.

- Phygital

With our innovative products and services to different markets via phygital platforms, we push new offerings through our EdTech platform.

- Stationery Exports

With our continued focus on growing our export markets through vertical and lateral expansion strategies, NEL will continue to launch newer products in the business. Thus, achieving further market penetration as we aim to expand into newer markets. With Indian stationery being preferred in terms of quality and timely delivery, we enjoy being the partner of choice over other countries – giving us a competitive edge. Having been in this space for over two decades now, NEL is the highest exporter in the of stationery category at present. A significant our business comes from the USA – a strong platform for us to leverage other markets’ opportunities and further export our stationery.

NEL SEGMENTS – OPERATIONAL & FINANCIAL HIGHLIGHTS Educational Content Publication Segment

At NEL, the educational textbooks and related supplementary material (including Guides, Workbooks, and 21-Most Likely Question Set) – created using the syllabus published in the textbooks – form the core of our offerings. Our business is seasonal in nature, and the majority of our business sales occur at the commencement of an academic year. However, sometimes, as per the state’s direction, revisions/updates/ subsequent changes in syllabus/curriculum are required to be implemented in the textbooks. And so, these updates/ changes offer twofold benefits for our business. They help the students receive the correct information periodically while also motivating them to buy the latest books to keep themselves updated. However, speaking of 2021-22, it continued to be marred by the after-effects of the pandemic. Online dissemination of education was a norm for most of the year, with minimal or no change in syllabus for the state-run schools in Maharashtra and Gujarat. With schools not being open for most of the year, our business was impacted. Looking at our performance for the year, we have experienced a recent uptick with the reopening of schools in a staggered manner. On a standalone basis, the revenue from the publication segment witnessed a growth of 26.1% from 29,464 Lakhs in 2020-21 to Rs.37,151 Lakhs in 2021-22.

Stationery Segment – Domestic & Exports

We have traversed a long way as far as the stationery business is concerned. We commenced the business in this segment in the early 1990s with exports to the Middle East and some African countries. Subsequently, we expanded into other regions and became India’s biggest exporter in the stationery category. While India continues to be a priority market today, the US contributes the largest to our export market. We have created a brand that offers an all-encompassing range of stationery products – both paper and non-paper. Our proposition is simple – offering premium products at a price which the buyer would consider ‘value for money’.

The revenue from Domestic Stationery segment for 2021-22 stood at Rs.19,220 Lakhs witnessing a growth of 63.4% compared to previous year. The corresponding revenue for the Exports segment stood at Rs.49,239 Lakhs, showcasing a 26.5% growth compared to the previous year. Better traction was witnessed during the previous financial year, owing to resumption of economies, which further led to the gradual reopening of offices and schools. Likewise, the revenue from the export market was also propelled by this uptick. Furthermore, we shall continue to grow in this space, backed by a healthy order book, improved quality, and an expanding product line.

Indiannica Learning Pvt. Ltd.

Indiannica Learning Pvt. Ltd., a subsidiary of NEL, is part of our educational content and product portfolio. The subsidiary is a pioneer in creating products that encourage exploratory learning and guide learners to attain the right attitude toward seeking knowledge. The innovative products offered through this company comprise curriculum-based learning solutions and need-based technology solutions for institutional and individual use. We strive to continue pursuing new geographies through this business alongside the accelerated CBSE-based curriculum publishing.

The Subsidiary recorded total sales of Rs.5,457 Lakhs during 2021-22, compared to Rs.3,106 Lakhs recorded in the previous year – showcasing a growth of 75.7%. With the increased adoption of products that resolve the ultimate learning quest of students, the subsidiary witnessed growth with its revenues reaching around the pre-pandemic levels.

We will continue to work with schools, parents and educators to develop products that meet the needs of evolving learning environments.. We will also continue to expand our product range and further accelerate in the curriculum business through organic and inorganic routes.

Navneet TopTech

Under the aegis of Navneet Futuretech Ltd, our Company has enjoyed being a pioneer in offering innovative solutions in the e-learning segment. We aim to build a platform that contributes to making the learning process more engaging by introducing interesting and novel methods to provide interactive and tailor-made solutions. Under eSense, we have the following products:

- Top-Class: A first-of-a-kind digital classroom approach that has improved students’ entire educational experience by providing a digital room that clarifies and logicalises subjects.

- Top-Scorer: An audio-visual learning method aimed at simplifying difficult topics for learners. Top Scorer also has a teaching function that offers practice tests and analytics to help students prepare for examinations.

- Touch: An Easy-to-use app interface for students and parents and a web-based interface for management and

- TopSchool: A smart and simple LMS system built with ultimate sophistication to simpliy studies with an intuitive and interactive learning platform.

Leapbridge

Unlike other big cities and towns, Tier 2 and 3 cities lack sufficient infrastructure for early childhood education. Recognising the need to fill this gap, through Leapbridge an early learning platform to enable children to learn and prosper at an early age.

Partnerships and Tutoring Genext

We bought a 51.8% stake in Genext Students Pvt Ltd. – a Mumbai-based Edtech company – in September 2021. The company is rightly positioned to provide tech-based products for the tutor community. It aims at strengthening and expanding its tech ecosystem further with the help of its innovative solutions.

Investments

We acquired a 14.29% stake in SFA Sporting Services (SFA) in December 2021 through our wholly-owned subsidiary, Navneet Futuretech Limited (formerly known as eSense Learning Private Limited) SFA is engaged in sports tech & sports management. Through this partnership, we are expecting to improve our Company’s offering of EdTech products to schools and educational institutes. The idea is to help make it easier for children to connect with sports.

Others

School Management through K12 Techno Services Private Limited (K12 Techno)

K12 education model offers elementary education to students from kindergarten to 12th grade. When combined with technology, it becomes a powerhouse of efficient offerings. This model aims to provide education for students of all ages before moving to higher education using unconventional means.

Keeping in line with our objective of offering tech-enabled K12 education, we invested in K12 Techno through our subsidiary – Navneet Learning LLP, with a 27% stake in the company. K12 Techno operates ‘Orchids, the International School’ group of schools. This group is fast emerging as a dominant player in providing management services in the field of direct education. As on 31st March, 2022, 42 schools across 7 locations were under the purview of our services via

K12 Techno, catering to 29,200+ students.

NEP Guidelines mapped against Our Products NEP GUIDELINES & OUR PRODUCTS

Sr. No. Areas	NEP Guidelines	Navneet TopTech Products
1 Curriculum Syllabus/ Textbooks	Circular and pedagogical, designed to optimise learning for students, based on the cognitive development of children & teaching-learning strategies.	Rise Series Rise series teacher’s manual
2 Methodology	Teaching-learning process will be more holistic, inquiry-based, discovery-based, discussion-based, and analysis-based learning.	Recommended lesson plans, curriculum plans
3 Content Delivery	Integrated Education	Concept-based 2D, 3D digital content (all major subjects)
4 Competency-based education	Classroom transactions will shift, towards competency-based learning and education will also be aligned with the learning outcomes.	Extended learning assignments
5 Multidimensional-report card (Technology-based)	360-degree multi-dimensional reports that reflect in great detail the progress as well as the uniqueness of each learner in the cognitive, affective, and psychomotor domains.	3600 report card with competency mapping of each child
6 Art	Art-Integration is a cross-circular pedagogical approach that utilises various aspects and forms of art and culture as the basis for learning concepts across subjects.	We are currently exploring ways of offer- ing this service to Schools & Tutors
7 Sports	Sports-Integration is another cross- circular pedagogical approach. It serves to foster holistic development by promoting physical and psychological well-being while also enhancing cognitive abilities.	Through Sports For All, we will offer Sports Management & SportTech to Schools
8 Contemporary Subjects	Introduction of Contemporary, Subjects such as Artificial Intelligence, Design Thinking, Holistic Health, Organic Living Environmental Education.	Through Leapbridge, we will develop products in some of these areas for our customers
9 Teachers Training	Each teacher will be expected to participate in at least 50 hours of CPD opportunities every year for their own professional development.	TopTech is focused on Teacher Training for ensuring that Teachers are not left behind implementation of technology platforms from NFL

Financial Review

Particulars	2021-22	2020-21	2019-20
Total Income	1,08,071	81,749	1,46,719
Operating Expenses	(89,036)	(69,164)	(1,12,368)
EBITDA	19,035	12,585	34,351
Depreciation	(3,270)	(3,473)	(3,529)
EBIT	15,765	9,112	30,822
Financial Cost	(368)	(684)	(1,307)
Exceptional Item	4,580	0	0
EBT	19,977	8,428	29,514
Tax	(5,315)	(2,265)	(7,579)
PAT	14,662	6,163	21,935
Tangible Capital Employed	1,21,682	1,06,491	1,18,778
Net Capital Employed	1,12,714	1,03,886	96,572
Return on Capital Employed (%)	12.96	8.56	25.95
Return on Net Worth (%)	13.01	5.93	22.71

Revenue:

Our Company’s overall total income increased to Rs.1,08,071 Lakhs for 2021-22 from Rs.81,749 Lakhs for 2020-21. This increase in revenue mainly attributed to opening up of schools and increase in exports of stationery.

Operating Expenses:

Our Company’s overall operating expenses increased to

89,036 Lakhs for 2021-22 from Rs.69,164 Lakhs for 2020-21. This increase in operating expenses can be attributed mainly to the increase in business volume as seen from increase in revenue.

EBITDA:

Our Company’s EBITDA increased to Rs.19,035 Lakhs for FY 2021-22 from Rs.12,585 Lakhs for FY 2020-21.

Depreciation:

Our Company’s depreciation decreased to Rs.3,270 Lakhs for FY 2021-22 from Rs.3,473 Lakhs for FY 2020-21.

EBIT:

Our Company’s EBIT increased to Rs.15,765 Lakhs for FY 2021-22 from Rs.9,112 Lakhs recorded in FY 2020-21.

Finance Cost:

Our Company’s finance cost decreased to Rs.368 Lakhs for FY 2021-22 from Rs.684 for FY 2020-21. This decrease in financial cost can be attributed mainly to efficient fund management.

Exceptional Item:

DuringtheFY2022-22,ExceptionalItemsincludesCapitalGain of Rs.6,813 Lacs on Sale of Property reduced by Impairment of Indiannica Learning Private Limited Investment of Rs.2,233 Lakhs.

EBT:

Our Company’s EBT increased to Rs.19,977 Lakhs for FY 2021-22 from Rs.8,428 Lakhs for FY 2020-21.

PAT:

Our Company’s PAT increased to Rs.14,662 Lakhs for FY 2021-22 from Rs.6,163 Lakhs for FY 2020-21.

Capital Employed:

Our Company’s capital employed increased to Rs.1,21,682 Lakhs for FY 2021-22 from Rs.1,06,491 Lakhs for FY 2020-21.

Net Worth:

Our Company’s net worth increased to Rs.1,12,714 Lakhs for 2021-22 from Rs.1,03,886 Lakhs for 2020-21.

Financial Ratios

Ratios	2021-22	2020-21
Current Ratio (Current Assets/	3.58	4.39
Current Liabilities)
Debt-to-Equity Ratio (Net Debt/	0.08	0.03
Net Worth) * net cash position
Debtors Turnover (Net Sales/	6.28	4.53
Average Accounts Receivables)
Operating Profit Margin (Profit	12.96%	9.54%
Before Interest and Taxes/Net
Sales)
Net Profit Margin (Net Profit	13.83%	7.68%
After Tax/Net Sales)
Return on Net Worth (Net Profit	13.01%	5.93%
After Tax/Net Worth)
EPS	6.45	2.69
Fixed Asset Turnover Ratio	6.63	5.13

Return on Capital Employed: Our Company’s return on capital employed ratio increased from 8.56% for FY 2020-21 to 12.96% for FY 2021-22. Return on Net Worth: Our Company’s return on net worth increased from 5.93% for FY 2020-21 to 13.01% for FY 2021-22.

Dividend Policy

Considering several internal and external factors, we may continue to pay a minimum of 25% of profit after tax as a dividend to the shareholders. For FY 2021-22, Rs.1.50 (75%) per share has been recommended, subject to the shareholders’ approval. Once approved, the same would amount to Rs.3,393

Lakhs constituting to 23.14% of the net profit.

Below is the dividend history for the last five financial years:

Year	Dividend Type	% Dividend Declared
FY 2021-22	Final*	75
FY 2020-21	Final	50
FY 2019-20	Second Interim	25
	First Interim	125
FY 2018-19	Final	50
FY 2017-18	Final	75

* recommended.

Credit Rating

During the year, CRISIL Ratings reaffirmed its ‘CRISIL A1+’

 

(pronounced as CRISIL A One Plus) rating on the short-term bank facilities and commercial paper programmes. The rating, considered to have a very strong degree of safety with regards to honouring financial establishes the comfortable financial risk profile of the

Company, backed by a strong gearing and debt protection metrics. It continues to reflect the established market position of NEL in educational books segment and a healthy global presence in the stationery segment.

Besides, during the year, CARE Ratings revised its ratings from

CARE AA+ (pronounced as CARE Double A Plus); Negative / CARE A1+ (pronounced as Negative / CARE A One Plus) to

CARE AA; Stable / CARE A1+ (pronounced as CARE Double A; Stable / CARE A One Plus) for its Long Term / Short Term Bank facilities. The rating favourably factors in the healthy financial risk profile of NEL, aided by strong liquidity position and absence of any long-term debt. This, on the back of the long-standing experience of the Promoters, well-established market presence and strong brand recognition.

RISK MANAGEMENT

Our Company has established a well-structured risk management system. Every year, the risk framework is assessed, and the required amendments, if any, are duly carried out.

Risk	Impact	Mitigation
Enterprise Risk	These are the risks that a company faces at the enterprise level.	Our Company uses Enterprise Risk Management system (ERM) – a leading method for identifying, assessing, and preparing for possible losses, risks, threats, and other forms of damage that might disrupt our organisational framework and goals, leading to losses. It helps us identify and assess possible threats and, therefore, help mitigate them.
Process Risks	A revenue loss resulting from inadequate and/or unproductive procedures is known as process risk. Different types of process risks include infrastructure, IT, human error, process quality and machine failure, amongst others.	Our Company’s internal audit department ensures the efficacy of commercial and investment controls and procedures in all critical operations across our business through process risk management.
Compliance Risk/ Integrity Risk	An organisations potential exposure to legal fines, monetary forfeiture, and material loss due to failure to comply with the business rules and regulations, domestic laws, or recommended best practices are the compliance or integrity risks associated with a company.	Our Company manages the compliance risk by entailing a complete verification method for conformity to all laws and regulations. A powerful reporting procedure overflows upwards from accountable business line executives to our Company’s Audit Committee and the Board of Directors.
		The annual internal audit examines key aspects of corporate operations recognised by a team of specialists. Internal auditors, the Audit Committee, and the Board of Directors examine each area. The Audit Committee reviews the internal auditors recommendations and advices methods to improve internal controls on a regular basis.
Digital Risk	EdTech security hazards with virtual learnings include malware, user account takeovers, and information safety concerns.	Our Company has undertaken a cloud application security which is a tool used to identify and fix cloud security vulnerabilities. Along with this, we also conduct a 24/7 security review to keep our data safe.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

We live up to our social responsibility by participating in various CSR initiatives in the field of rehabilitation, disaster assistance and animal welfare. The company keeps an eye on the use and channelisation on the ground level activities, by making use of resources in the most efficient way possible and an aim to guarantee that the benefits of these programmes are distributed to the appropriate persons. We continue to employ environment-friendly materials for the majority of our key projects. This year, we donated Rs.457 Lakhs towards CSR initiatives.

INTERNAL CONTROL SYSTEMS AND IT’S ADEQUACY

Our internalcontrolsystemisreliable,efficientand crucial to the success of our Company. We review our numerous segments and sales operations with the help of the internal control system. We have deployed an effective internal control system, through which we review our sales operations and numerous sectors. This system assures proper maintenance of internal audit controls, like observing various operations, protecting assets and complying with regulations. The yearly internal audit covers important areas of business operations identified by a team of experts. Each area is reviewed by internal auditors, the Audit Committee and the Board. The Audit Committee considers the inputs from the internal auditors and advices ways to enhance the internal controls, time and again.

CAUTIONARY STATEMENTS

Statements in this Management Discussion and Analysis describing the Company’s objectives, projections, estimates and expectations may be forward-looking statements within the meaning of applicable laws and regulations. The Management has based these forward-looking statements on its current expectations and projections about future events.

The Management of NEL has prepared and is responsible for the financial statements that appear in this Report. These are in conformity with the accounting principles generally accepted in India and, therefore, may include amounts based on informed judgements and estimates. The Management also accepts responsibility for the preparation of other financial information that is included in this Report. Such statements involve known and unknown risks, significant changes in political and economic environment in India or key markets abroad, tax laws, litigation, labour relations, exchange rate fluctuations, interest and other costs and may cause actual results to differ materially.