Navneet Education Ltd Management Discussions

GLOBAL ECONOMY

The global economy has shown remarkable resilience despite enduring and overlapping shocks, coupled with unprecedented monetary tightening measures. Growth in the US and several key emerging market economies (EMEs) has outperformed expectations. While, manufacturing activity has remained subdued, services have exhibited strength. The global economy grew by 3.1% and is anticipated to slowdown to 2.9% in 2024.

Following a two-year surge, global inflation exhibited signs of easing in 2023, although it remained elevated compared to the 2010-2019 average. After peaking at 8.1% in 2022, the highest in nearly three decades, global headline inflation declined to an estimated 5.7% in 2023. Projections indicate a further decrease to 3.9% in 2024, driven by the continued moderation in international commodity prices and reduced demand amid monetary tightening measures. While developed economies witnessed a notable slowdown in inflation, core inflation rates remain relatively high, influenced by increasing service sector prices and tight labour markets. Furthermore, inflation in most developing countries peaked in 2023 and is expected to continue moderating in 2024.

Outlook

The global economic outlook appears cautiously optimistic as the impact of positive shocks recedes, while increasing yields and tighter credit conditions take hold. Moderation in inflation is expected to be constrained by persistent supply disruptions and a shift in inflation sentiment. The pressure is likely to be concentrated in the business sector, where margins are likely to shrink, leading to a slowdown in hiring and expenditure.

The trajectory of economic recovery in 2025 hinges largely on the response of central banks to economic constraints as inflationary indicators approach their targets. Vulnerabilities are pronounced in the US and the Euro Area, where real policy rates currently stand at their highest levels since January 2008. Inflation is expected to cool (5.8% and 4.4%), but policymakers must carefully manage its descent to avoid hindering growth.

INDIAN ECONOMY

Over the past three fiscal years, Indias economy has proven resilient in the face of global economic headwinds. The country is expected to maintain its growth momentum. India registered a GDP growth of 8.2% in 2023-24, marking the third consecutive year of over 7% growth.

(Source:https://dea.gov.in/sites/default/files/The%20Indian%20EconomyA%20Review_Jan%202024.pdf,https://rbidocs.rbi.org.in/rdocs/Publications/PDFs/SPF8705042425182A580CFE4F51A4247AA97D5EF40B.PDF )

Indias GDP to Surpass Japan and Germany by 2030

USD Trillion, Nominal Terms

India is projected to outpace Japan and Germany, becoming the second-largest economy in the Asia-Pacific region by 2030 due to its rapid economic growth. This robust economic growth can be attributed to the Governments economic policy agenda centered on revitalising Indias growth potential through various strategies. This includes rejuvenating both the physical and digital infrastructure to strengthen connectivity, boosting the competitiveness of the manufacturing sector and promoting exports.

As per the Interim Union Budget, there has been an 11.11% increase in the allocation for infrastructure capital investment over the previous year. The current allocation stands at Rs. 11.11 Lakh Crores (approximately USD 122 billion), which represents 3.3% of GDP This significant investment underscores the Governments commitment to the modernisation and expansion of essential infrastructure throughout the country.

Source: https://www.bankbazaar.com/tax/union-budget-on- infrastructure.html

In addition, as of April 2024, Indias overall exports for 202324 reached a record USD 776.68 billion surpassing the previous record of USD 776.40 billion in 2022-23. Despite global challenges, this slight growth highlights the resilience of Indias export sector and its adeptness at navigating uncertain economic landscapes.

Source:https://tradingeconomics.com/india/full-year-gdp-growth, https://pib.gov.in/PressReleseDetailm.aspx?PRID=2017942#:~:text=Indias%20overall%20exports%20(Merchandise%20and%20Services%20combined)%20in%20FY%202023,23%20(April%2DMarch), https://www.business-standard.com/industry/news/manufacturing-sector-expected-to-reach-1-trn-by-2025-26-led-by-gujarat-1231213009MJ.html

Outlook

Despite facing various challenges, Indias economic outlook remains optimistic. This can be attributed to robust domestic demand, governmental initiatives, and a steadfast focus on infrastructure development. The Indian economy has continued to exhibit resilience, driven by proactive governmental measures and the countrys intrinsic strengths as it aspires to become a developed nation by 2047. Indias GDP growth is likely to be fuelled by an upsurge in private final consumption expenditure, encompassing both goods (such as food, lifestyle, home essentials, and pharmaceuticals) and services (including food services, education, and healthcare). India benefits from a high proportion of private consumption to GDP which insulates it from volatility in the global economy. Furthermore, the Indian economy has undergone significant structural reforms that have bolstered its macroeconomic fundamentals. This positions it as the fastest- growing economy among G20 nations. Nonetheless, vigilance in monitoring and addressing challenges such as uneven growth, global geopolitical tensions, critical global shipment passages, and inflationary pressures will be imperative. It will help India sustain economic momentum and achieve inclusive growth on a global scale.

INDUSTRY OVERVIEW

The education sector plays a vital role in shaping the future of individuals and societies and serves as a cornerstone for economic development, social progress and cultural enrichment. With advancements in technology and evolving learning methodologies, the sector continues to undergo transformation, offering innovative solutions to address diverse educational needs. From early childhood education to lifelong learning opportunities, the education sector is crucial in nurturing talent, fostering critical thinking skills, and preparing individuals to thrive in an increasingly complex and interconnected world. As societies strive for inclusive and equitable education, there is a need to invest in quality education infrastructure, teacher training, and curriculum development. This will help unlock the full potential of learners and drive sustainable development.

Indias higher education system is among the largest globally, with enrolment surpassing 70 million students. Additionally, capacity for over 40 million students has been created in the past two decades. The growth of the school market in India can be attributed to countrys burgeoning population, second only to China globally. This demographic trend, alongside rising disposable incomes and increasing literacy rates, facilitates the expansion of the education sector. Historically, Indias education system has grappled with issues such as overcrowded classrooms, inadequate

infrastructure, and outdated teaching methods. However, rapid urbanisation and substantial investments from both governmental and private entities have spurred remarkable infrastructure development within the sector.

Moreover, the landscape of education is undergoing a significant transformation due to rapid technological advancements. Traditional teaching methods are giving way to more interactive approaches, leveraging innovations like smart classes, digital libraries, and augmented reality. These initiatives aim to make learning more engaging and enjoyable for students, ultimately enhancing their academic performance and effectiveness of the teaching process.

The growing preference for digital learning and adoption of smart class formats offer substantial opportunities for the continued growth and development of the school market in India in the future.

(Source: https://www.expertmarketresearch.com/reports/india-school- market)

GOVERNMENT POLICIES

National Education Policy

The National Education Policy (NEP), 2020 envisions a transformative shift in education, anchored on five pillars: Access, Equity, Quality, Affordability, and Accountability.

It aims to prepare the youth to tackle current and future challenges, both nationally and globally. The NEP proposes reforms across all school education levels, including improving school quality, revising the curriculum, overhauling exams and assessments, enhancing teacher training, and restructuring the regulatory framework. It also advocates for increased public investment, leveraging technology, and prioritising vocational and adult education. The policy is anticipated to generate a lasting positive impact on the education system. It positions India as a global hub of skilled manpower during the Amrit Kaal, the next 25 years leading up to developed India in 2047.

National Curriculum Framework for School Education (NCF)

The National Curriculum Framework for School Education (NCF) is developed in alignment with the vision outlined in the NEP 2020 to facilitate its effective implementation. Addressing the educational needs of individuals aged 3 to 18 years, the NCF encompasses a diverse range of institutions across India. The framework is structured to cater to the four stages within the 5+3+3+4 framework for curricular and pedagogical restructuring of school education, as envisioned in NEP 2020. The overarching objective of the NCF is to catalyse positive transformation within the Indian school education system by instigating corresponding positive changes in the curriculum, including pedagogy. (Source: https://www.education.gov.in/sites/upload_files/mhrd/files/ NCF-School-Education-Pre-Draft.pdf)

National Initiative for School Heads and Teachers Holistic Advancement (NISHTHA)

The Department of School Education and Literacy has also launched a National Mission to improve learning outcomes at the elementary level. This is facilitated through an Integrated Teacher Training Programme called NISHTHA - National Initiative for School Heads and Teachers Holistic Advancement, under the Centrally Sponsored Scheme of Samagra Shiksha in 2019-20. NISHTHA is a capacitybuilding programme for Improving Quality of School Education through Integrated Teacher Training. NISHTHA training has been extended to secondary-level teachers and to Foundational Literacy and Numeracy and Early Childhood Care and Education (ECCE) for the training of master trainers.

(Source:https://pib.gov.in/PressReleseDetail. aspx?PRID=1982422#:~:text=NISHTHA%20is%20a%20capacity%20 building,for%20training%20of%20master%20trainers)

Samagra Shiksha Abhiyan

The Samagra Shiksha Abhiyan integrates school education from pre-school to class XII, aligned with the United Nations Sustainable Development Goal for Education (SDG-4). It supports the Right of Children to Free and Compulsory Education Act, 2009, and aligns with the NEP 2020. The scheme aims to provide equitable, inclusive education, catering to diverse backgrounds, multilingual needs, and varying academic abilities, fostering active student engagement.

(Source: https://dsel.education.gov.in/scheme/samagra-shiksha)

Outlook

Indias educational landscape for 2024 reveals a story of dynamic growth, strategic adaptation, and untapped potential. Various government initiatives, including supplemental education, teacher training, technology adoption, and inclusivity in education, drive the advancement of the educational sector in India. There is also a keen focus on skill-centric education driven by the NEP 2020, as well as a surge in demand for programmes in emerging fields. Additionally, the integration of technology, proliferation of online learning, and the rise of EdTech startups highlight the sectors adaptability to evolving trends.

The significant scale of this expansion predicts a massive market size of around USD 225 billion by 2024-25, showcasing the industrys strong trajectory.

(Source: https://www.imarcgroup.com/india-school-market)

Pradhan Mantri Schools for Rising India (PM-SHRI) Scheme

The Pradhan Mantri Schools for Rising India (PM-SHRI) School initiative, sponsored by the Government of India, aims to establish over 14,500 schools. These schools, overseen by various authorities including the Central Government, state/UT Governments, local bodies, Kendriya Vidyalaya Sangathan (KVS), and Navodaya Vidyalaya Samiti (NVS), prioritise creating inclusive and welcoming environments. They provide secure and enriching learning atmospheres, offer diverse learning experiences, and ensure access to excellent infrastructure and resources for all students.

(Source:https://www.india.gov.in/spotlight/pmschoolsrisingindiapmshri#:~:text=The%20PM%20SHRI%20School%20is,Navodaya%20 Vidyalaya%20Samiti%20(NVS).

The formal education system in India traditionally comprised offline schools and colleges. However, it has undergone a significant shift towards online models across the value chain, from admissions to assessments. Educational technology, or EdTech, has played a vital role in this digital transformation of education delivery. The EdTech industry experienced phenomenal growth during the COVID-19 pandemic and is expected to continue expanding rapidly in the coming years. India ranks as the second-largest market for e-learning globally, trailing only behind the US, boasting a market size of USD 6 billion. Projections indicate that this market is poised for substantial growth, expected to reach USD 10.4 billion by 2025. While the online education sector in India witnessed substantial growth during the pandemic, it is currently at a critical juncture as it seeks to sustain momentum post the reopening of offline educational institutions.

(Source: https://www.cnbctv18.com/education/india-edtech-market-expected-to-grow-to-10-billion-by-2025-startups-unicoms-16391151.htm)

Value of Indias EdTech Market in 2020, with an Estimate for 2025 (in USD billion)

The growth of Indias EdTech industry is driven by a combination of Government initiatives, increasing internet penetration, and a significant number of emerging startups offering online education alternatives. The Government of India, through NEP 2020, is undertaking transformative measures to digitise education and promote digital learning. It aims to bridge the digital divide in the country and has introduced various initiatives in this regard. Some of these include the National Programme on Technology-Enhanced Learning (NPTEL), Digital Infrastructure for Knowledge Sharing (DIKSHA), and Study Webs of Active-Learning for Young Aspiring Minds (SWAYAM) to advance digital education in India.

Outlook

The Indian education market is expected to be a USD 225 billion opportunity by 2025. The online/digital education (EdTech) segment is growing faster (~27%) and is expected to reach USD 5.7 billion by 2025. Specific segments within the EdTech space, such as K-12, skill development, B2B (learning management systems), tech certification, and higher education, are recognised as promising areas of opportunity. The Governments initiatives to democratise education, making it accessible to all regardless of location, have significantly bolstered EdTech enterprises.

Indias thriving internet economy, characterised by a substantial subscriber base and an increasing number of smart phone users, has further accelerated the sectors exponential growth.

(Source: FICCI EY-Parthenon EY Report December 2022, K-12 Education in India: Vision 2047)

EVOLUTION OF EDTECH

Open-Source Learning

Open-source learning has transformed the way students learn and study. With the advent of You Tube and other online platforms, they now have access to a vast repository of information at their fingertips. You Tube is particularly popular among students as it provides a wealth of knowledge and information on virtually any topic. From academic lectures to tutorials, students can easily find videos that cater to their learning needs. These videos are often produced by experts in the field and are a great resource for students who want to learn at their own pace. In addition to You Tube, open online courses have also gained immense popularity among students. These are offered by top universities and institutions and accessible to students around the world. Open online courses allow students to learn at their own pace and convenience. They are also designed to be interactive, with quizzes and assignments that help them test their understanding of the material. Open online courses are particularly useful for those who lack access to traditional classroom-based learning or want to supplement their education with additional learning opportunities.

Immersive Learning

As technology advances, learning experiences have become more immersive and collaborative. Students now have access to interactive simulations and virtual worlds through VR and AR technologies. These help students in comprehending complex subjects and topics. According to ABI Research, the global education sector is projected to invest over USD 6 billion annually in AR and VR technology by 2023, with India leading the way.

Personalised Learning through AI and MI

The integration of AI and ML technologies is poised to revolutionise education, particularly through adaptive learning. These advanced technologies will be leveraged extensively to develop tailored content that caters to the unique capabilities of each student. Recognising that no two students learn alike, the EdTech sector, empowered by innovative digital platforms, is shifting its focus towards delivering customised learning experiences. This move away from traditional classroom teaching signifies a new era where educational content is meticulously curated to meet the specific learning needs of individual students.

GROWTH DRIVERS

Government Policies and Education Reforms

Government initiatives such as the NEP 2020 and the Samagra Shiksha Abhiyan are pivotal in reshaping education to meet industry demands. They emphasise on holistic, flexible approaches aligned with 21st-century needs. By fostering critical thinking, creativity, and innovation, these policies aim to uplift educational standards. They also strive to bridge the academia-industry gap through multidisciplinary learning, vocational training, and experiential opportunities.

Expanding Internet Access in India

By January 2023, Indias population reached 1.42 billion, with 692.0 million people using the internet, at a penetration rate of 48.7%. Projections indicate that this is likely to increase to 900 million users by 2025, due to growing internet adoption in rural areas. This is likely to substantially expand the student demographic accessing internet for educational purposes, thereby presenting ample opportunities for EdTech firms to innovate and capitalise on the trend.

Meeting Industry Needs through Skill Development

There is an increased emphasis on skill enhancement as educational institutions prioritise vocational training. This strategic move aims to bridge the gap between academic knowledge and industry requirements. There is an increasing integration of skill-based courses into academic curricula to enhance employability in the corporate landscape.

Demand for High-Quality Education

The burgeoning youth demographic has led to an increasing recognition of the value of superior education. A notable surge in the demand for higher education has propelled expansion and diversification within the sector.

Early Learning

The first eight years of a childs life are crucial for their development and future growth, laying the foundation for all subsequent learning. Establishing their fundamentals properly during this period can yield significant long-term benefits. This includes improved academic performance and educational attainment. The Integrated Child Development Services (ICDS), a central government-funded programme administered by the states, plays a crucial role in early childhood development. It provides a range of essential services, including immunisation, health check-ups, referrals, dietary supplements, and growth monitoring, through 1.37 million Anganwadi centres across India.

K-12 Segment

The Indian school market comprising kindergarten through 12^th grade, is expected to achieve a CAGR of 12% from 2023 to 2028. Within Indias K-12 sector, approximately 261 million students are enrolled across roughly 1.5 million schools, with about 46% attending private institutions. Notably, enrolments in Classes 11^th and 12^th make a significant contribution due to preparations for board exams and subsequent entrance tests. The adoption of digital education and Government initiatives like PM e-VIDYA, DIKSHA, SWAYAM, and ePathshala have strengthened K-12 e-learning, leading to a surge in EdTech startups in India. The innovative and interactive learning methods deployed by K-12 EdTech companies not only facilitate easy learning but also have a lasting impact on students.

(Source: https://india-century.com/school-education.html)

The global stationery and art materials market, valued at USD 192 billion in 2022, is projected to reach USD 220 billion by 2027, at a CAGR of 2.8%. The Asia-Pacific region leads this market, followed by North America, with a significant shift towards Asian countries in recent years.

By 2027, Asia is expected to contribute over 50% of the global market, driven by key players like China, Japan, India, and South Korea. India, boasting a flourishing stationery industry and abundant raw materials, has emerged as a key export hub. This segment is further buoyed by Government initiatives such as the Make in India programme. Indian manufacturers prioritise detail, craftsmanship, and quality, appealing to discerning customers worldwide. India has also made significant strides in offering eco-friendly and sustainable stationery products which aligns with the growing demand for environmentally conscious stationery products worldwide.

The Indian stationery industry reached a valuation of USD 4 billion in 2022 and is projected to expand at over 10% yearly to surpass USD 6 billion by 2025. The demand for stationery products is growing rapidly in developing countries like India, with an increase in the number of educational institutes, corporates, and offices. There is a significant increase in disposable incomes with the expansion of the Indian economy, leading to a shift in consumer preference towards higher quality, premium and branded stationery options. Moreover, leading organised players are developing and introducing innovative products including sustainable and eco-friendly variants to retain their competitive edge. The rise of e-commerce platforms like Amazon and Flipkart has transformed consumer behaviour, offering a wide range of products at competitive prices with doorstep delivery. Government initiatives for improving literacy, such as the New India Literacy Programme (NILP) and the Right to Education Act (RTE) 2009, along with schemes like Sarva Siksha Abhiyan and NIPUN Bharat Scheme, are making significant contributions. Increasing investments in education by the Central and State Governments are further bolstering the growing literacy rate. With an increasing literacy rate and population growth, the Indian stationery and art materials market is poised for substantial expansion in the future.

Outlook

Indias stationery exports have been growing steadily in recent years. This can be attributed to several Government initiatives to promote exports, the China +1 strategy, favourable market trends, and the industrys commitment to innovation and quality. With the global stationery market projected to grow steadily, Indias strategic position as a key export hub is set to strengthen further.

The Indian stationery market is projected to achieve a CAGR of 8.2% during 2023-2029. Key factors that will continue to drive demand in India are increased urbanisation, increasing penetration of e-commerce, a young population, growing literacy rates, and rise in disposable income. All these factors have created a conducive environment for the growth of the stationery market. This growth has resulted in companies in the stationery sector experiencing overwhelming over subscription rates, reaching up to 93 times.

(Source:https://greenportfolio.co/newsletters/Stationery-and-Printing-Sector-in-India-The-PenMightier-ThanTheSword/#:~:text=The%20stationery%20and%20printing%20sector,educational%20institutions%20and%20various%20offices,https://www.imarcgroup.com/india-school-stationery-supplies-market, https://www.prnewswire.com/news-releases/india-stationery-market-2023-2029-market-forecast-by-types-paper-stationery-non-paper-stationery-and-applications-educational-stationery-office-stationery-others-301999712.html)

Amidst continued socio-economic and technological advancements, the publishing industry continues to be a medium of preserving knowledge, facilitating education, and fostering personal growth. India ranks third globally in English language publications, underscoring its significance in the global arena. However, the onset of the digital age has sparked a transformative shift within the industry. While subscriptions for printed newspapers and magazines have declined, books have seamlessly navigated the digital era, highlighting the industrys adaptability.

The Indian publishing industry was valued at approximately Rs. 500 billion in 2019. With a significant growth potential, the segment is projected to reach Rs. 781 billion by 2024. Beyond its economic impact, the industry plays a major role in driving Indias economic development, providing employment opportunities for over 1.2 million individuals. However, it also faces challenges due to high fragmentation and intense competition, with over 9,000 publishers and 21,000 retailers vying for the market share.

Despite its dominance in educational book publishing, the sector grapples with inefficiencies across its value chain. Some of these include intricate distribution networks, elevated costs, and operational challenges. Furthermore, an unforeseen surge in paper prices has led to an increase in the MRP of books, fuelling the demand for more budget-friendly alternatives like second-hand books.

In response to these challenges, the publishing sector has spearheaded innovative strategies, diversified formats, and re-imagined business models to maintain resilience. Embracing digital content, bundled offerings, and open- access materials, the industry continues to connect with a broader audience base, navigating through the dynamic shifts in the market landscape. As audience continues to evolve, the industrys ability to embrace emerging paradigms will be crucial in shaping its future trajectory and maintaining its relevance in the digital age.

(Source:=https://www.statista.com/statistics/1309057/indiapublishingsectormarketsize/#:~:text=The%20publishing%20industry%20of%20India,about%20781%20billion%20Indian%20upees.https://www.ey.com/en_in/strategy-transactions/the-now-next-and-beyond-of-the-indian-publishing-industry)

Outlook

The publishing industry has a major role in shaping Indias future by contributing significantly to educational enhancement, fostering a knowledge- driven society, and promoting Indian culture globally. The NEP presents a remarkable opportunity in terms of prioritising teacher education, increasing higher education Gross Enrolment Ratio (GER), and fostering research and innovation through initiatives like the National Research Foundation.

To address the needs of Indias vast population, the publishing sector is forging strategic partnerships with both government and commercial institutions. These collaborations aim to facilitate the accessibility of educational materials in regional languages, ensuring inclusivity and catering to diverse linguistic communities. Additionally, the industry is poised to make direct contributions to economic growth and employment generation. The Government of India allocated around Rs. 1.13 trillion to national-level education spending, covering school and higher education, in the Interim Union Budget.

The NEP brings several significant benefits to the education system. Firstly, it emphasises on the importance of foundational literacy and numeracy, focusing on how well the students are learning and achieve their maximum potential. This ensures that the quality of education is measured by students achievements. Secondly, the NEP aims to enhance teacher effectiveness by improving their skills, reducing unnecessary demands on their time, and implementing merit-based structures for tenure and salary. Thirdly, it addresses challenges posed by small and spread-out schools by optimising resources and infrastructure. This leads to better governance, pedagogy, and cost-effectiveness, thus enhancing the overall quality of education delivery.

However, there are challenges in implementing the NEP particularly at the state level, due to heavy reliance on state governments. This dependence often leads to the continued use of the same textbooks. The lack of significant curriculum changes hampers the achievement of the goals set out in the policy. Ensuring adequate infrastructure and resources in schools is vital for NEP implementation, as is providing comprehensive training and support for teachers to adopt new teaching methods outlined in it. Securing sufficient funding is crucial to support proposed initiatives and reforms, while updating the curriculum to align with NEP objectives and cater to diverse student needs remains a significant challenge. Establishing robust monitoring and evaluation mechanisms is essential to track progress and identify areas for improvement in NEP implementation. In conclusion, addressing these challenges and fostering effective collaboration among state governments, educational institutions, and stakeholders are imperative for the successful implementation of the NEP and the transformation of the Indian education system.

(Source: https://opportunities-insight.britishcouncil.org/blog/ india%E2%80%99s-national-education-budget-2023-24, https:// therise.co.in/i5538/challenges-in-implementing-nep-2020/)

K-12 SEGMENT ^

The K-12 education system is transforming teaching methods, covering a childs entire school journey from KG to the 12th grade. Teachers prioritise interactive learning over rote learning, utilising technology to customise their approach to students individual learning stages. This helps in enhancing the effectiveness of the educational interventions. This curriculum integrates academic and extracurricular activities to promote holistic growth, with the aim of producing well-rounded individuals equipped to tackle lifes challenges. The K-12 segment provides substantial advantages such as personalised learning paths, customised teacher training, unlocking individual potential, nurturing social skills, and fostering deep knowledge and interest. According to the FICCI EY-Parthenon Report 2022, K-12 Education in India: Vision 2047, India currently has approximately 254 million K-12 students and around 1.5 million schools. The NEP 2020 represents a significant departure from the 34-year-old National Policy on Education of 1986, positioning itself as Indias first education policy of the 21st century.

With a comprehensive vision for revamping the educational landscape, it aims to overhaul the entire educational value chain, encompassing K-12 education, higher education, and teacher training. Central to its ethos is a focus on fostering critical and experiential thinking, heralding a new era of transformative learning experiences.

COMPANY OVERVIEW

At Navneet Education Limited (hereafter referred to as NEL, We, the Company), we are dedicated to ensuring that quality educational content remains accessible at affordable prices, driven by our belief in education as a fundamental human right. Our commitment to this vision has propelled us to offer top- notch educational products at competitive prices. Expanding beyond our strong foothold in the educational books market, we have ventured into the education technology (EdTech) sector, investing in innovative technology solutions to enrich the learning experience. The vision is to offer phygital education solutions enabling the expansion of both our publication and digital product offerings. Furthermore, we hold a minority stake in K12 Techno Services Private Limited, which manages 96 schools under the Orchid international brand. In addition to our publishing and EdTech ventures, we have also emerged as a prominent supplier of scholastic and office stationery products worldwide, further solidifying our presence in both domestic and international markets.

Business Restructuring

The decision to demerge the EdTech business of Navneet Futuretech Limited into the Parent Company Navneet Education Limited signifies a strategic restructuring aimed at simplifying the Company structure and fostering collaboration among our various business segments. This comprehensive arrangement not only streamlines operations but also amplifies synergies between our traditional print business and digital offerings. Through the consolidation of resources and the utilisation of NELs workforce for both product lines, we can achieve operational efficiencies and significant cost savings. Additionally, we foresee future growth for the EdTech business through the integration of digital offerings with our physical book business. This strategic alignment reflects our commitment to expanding and diversifying our traditional publication business while seizing innovative opportunities in the EdTech sector.

BUSINESS STRATEGY

The implementation of the new NEP is anticipated to positively affect our business as it proposes reforms in primary, middle, and higher education systems as well as technical education. The changes made to the school curriculum are expected to act as a significant catalyst for our business growth. This will be an outcome of students replacing their old and second-hand books with new supplementary materials that adhere to the updated curriculum or syllabus. This is expected to bode well for NELs publication vertical where our business strategies are aligned. Furthermore, within the EdTech business landscape, this presents an ideal environment for us to pioneer cutting-edge products and solutions, uniquely designed to meet the dynamic demands of schools and educators.

Conversion of Schools

With an increasing number of schools transitioning from state boards to CBSE, there is significant potential in the CBSE Board schools market, which is expected to rapidly expand further. Additionally, as more English medium private state boards shift to CBSE pattern schools, the demand for textbooks from private publishers up to grade 8 is expected to rise. This will contribute to the growth of our publication business.

Stationery Domestic

The stationery business in India is experiencing a period of consolidation, with organised players gaining market share. This trend presents a significant opportunity for our growth trajectory as we strategically capitalise on emerging prospects within the domestic market. NEL is poised to introduce a range of innovative domestic products tailored to meet the evolving needs of consumers in this new landscape.

Stationery Exports

NELs focus on broadening export markets through vertical and lateral expansion strategies, including the launch of newer products in paper and non-paper segments has facilitated market penetration. With a reputation for quality and timely delivery, NEL holds a competitive edge in the Indian stationery market, making us the preferred partner over others. With over three decades of experience, we are the largest exporter in the stationery category, with the US accounting for a significant portion of our business. This serves as a strong platform to explore opportunities in other markets. Additionally, we have successfully introduced a new stationery item to NELs export portfolio for the US market.

OPERATIONAL AND FINANCIAL OVERVIEW

Publication Segment

Our publication business operates seasonally, with peak sales typically aligning with the start of each academic year. However, we also encounter occasions where revisions, updates, or changes to the syllabus or curriculum are necessary based on state directives. These updates offer two-fold benefits for our business: they ensure students receive accurate information regularly and incentivise them to invest in the latest books to remain updated with their studies.

For 2023-24, the publication business consistently faced external challenges, including lower-than-expected uptake of channel inventory, a significant increase in paper prices, and a rise in the resale of second-hand books. These issues are largely due to the absence of major curriculum changes over the past six years. In our SSC State Board publishing business, we are awaiting curriculum change announcements from the state boards of Maharashtra and Gujarat, which we believe will drive improved volume growth. Additionally, we anticipate growth in supplementary books due to expected curriculum changes and increased spending by the middle class.

Our CBSE publishing business has a pan-India presence. The current trend of students shifting from private English

medium schools (SSC schools) to CBSE schools presents a promising opportunity for us in terms of market expansion. Our strategic approach involves integrating our EdTech business with traditional publishing, diversifying our product offerings beyond conventional learning materials. This is helping us gain traction in various regions across the country, including SSC and CBSE schools. All this is further anticipated to drive heightened demand for our publication vertical in the foreseeable future with our brands like Rise Additionally, the growth in text books is driven by the rising CBSE trend, curriculum changes, and the introduction of digital classroom offerings, further solidifying our position in the market. Moreover, the amalgamation of phygital components enhances the value proposition of digital offerings and enables learners to access educational materials through various channels. Despite the challenging landscape, our segments performance has remained resilient. Revenues from operations reached approximately Rs. 69,303 Lakhs.

Stationery Segment: Exports and Domestic

With a rich brand legacy spanning over six decades, NEL has built a solid presence in both paper-based and modern non-paper stationery products. Weve successfully penetrated global export markets such as the US, Middle East, and parts of Africa, positioning ourselves as the foremost Indian exporter of stationery to esteemed retail chains in the US. In addition to our global outreach, our domestic market engagement has been equally robust. Our stationery brands, notably Youva and HQ, have garnered significant popularity for offering a diverse array of products tailored to meet a wide range of customer needs.

The revenue from our export stationery business for 2023-24 stood at Rs. 59,047 Lakhs. The corresponding revenue from exports was Rs. 56,725 Lakhs. We are currently evaluating one of our product categories for potential antidumping duty implications in the US. While we anticipate servicing orders from this category in 2025, we are actively making necessary arrangements to navigate any associated challenges. Additionally, we have observed early signs of a slowdown in the US markets, attributed to supply chain constraints leading to a significant increase in freight costs from India. However, we view this as a temporary phenomenon and remain agile in our approach to mitigate its impact on our operations. A steady growth in our export stationery business is expected on the back of our plans to

launch new category offerings.

Our domestic business witnessed impressive growth, surging by 7% to approximately Rs. 40,582 Lakhs. Our outlook for the domestic stationery segment is optimistic and we anticipate a robust growth trajectory of 12% to 15% in 2024 on account of our plans to launch new products. Furthermore, we are currently in the process of evaluating and conducting R&D for several products within our nonpaper stationery category. These products are at various stages of development and refinement, for introduction in both export and domestic markets in the forthcoming quarters.

Indiannica Learning Private Limited

Our educational content and product portfolio encompasses Indiannica Learning Private Limited. This is a subsidiary of NEL, recognised for fostering exploratory learning and cultivating a knowledge-seeking mindset among learners. Renowned for its cutting-edge offerings, including curriculum-based learning and tailored technology solutions for institutions and individuals, Indiannica Learning Private Limited continues to play a major role in expanding our CBSE-based curriculum publishing.

Our subsidiary recorded sales worth Rs. 5,920 Lakhs compared to Rs. 6,517 Lakhs during 2022-23. With a commitment to exploring new markets and expanding our reach, particularly in CBSE textbooks, we anticipate significant growth opportunities ahead.

School Management through K-12 Techno Services Private Limited (K-12 Techno)

School management through K-12 Techno Services Private Limited (K-12 Techno) offers a comprehensive K-12 education model. It caters to students from KG to 12^th grade. Over the past 10-12 years, Navneet Learning LLP our subsidiary, has cumulatively invested approximately Rs. 1 1,859 Lakhs in this initiative, resulting in a 20.25% stake in K-12 Techno. Under the Orchid international brand K-12 Techno delivers elementary education across its network of schools. K-12 Techno has become a prominent player in school management services, particularly in direct education. With a focus on leveraging technology, the group has been expanding rapidly and gaining recognition in the EdTech sector. By harnessing the latest advancements in educational technology, K-12 Techno aims to enrich the learning experiences of students. As of 31st March, 2024, the network included 96 educational institutions (including schools & colleges), across 17 locations, serving approximately 58,000 students reinforcing the impact and reach of the K12 education model.

This expansive network highlights K-12 Technos commitment to providing accessible and quality education, further solidifying its position as a leader in the education management domain. Furthermore, NEL through its subsidiary Navneet Learning LLP sold 5.12% stake on fully diluted basis in K-12 Techno for a consideration of Rs. 22,518 Lakhs. Going forward, growth in managing the number of schools and providing education solutions to more than 800 schools is expected to have a positive impact on our valuation.

Navneet Futuretech

In December 2021, Navneet Futuretech Limited, our wholly-owned subsidiary made a strategic move by acquiring a 14.3% stake in SFA Sporting Services Private Limited (SFA), a prominent player in sports tech and sports management. This collaboration aims to enrich the Companys portfolio of EdTech products catering to schools and educational institutes. By integrating sports technology and management solutions, our goal is to broaden access to sports activities for children and promote their overall development.

Methodology

Our approach to the teaching-learning process embraces a holistic methodology prioritising various forms of active learning. We emphasise on inquiry, discovery, discussion and analysis-based learning strategies. By encouraging exploration, critical thinking, collaboration, and reflection, we aim to cultivate a rich and engaging educational experience that fosters deeper understanding and lifelong learning skills.

Recommended lesson and curriculum plans.

Content Delivery

Integrated education Concept-based 2D, 3D digital content (all major subjects).

Competency- based Education

In the classroom, were embracing a competency-based approach, aligning education with clear learning outcomes. This ensures students master skills and knowledge at their own pace, demonstrating proficiency before advancing. By focusing on measurable objectives, we empower students to succeed academically and beyond.

Extended learning assignments

Multidimensional- Report Card (Technology-Based)

NED Guidelines

Thorough, comprehensive reports offer a detailed overview of each learners development across cognitive, affective, and psycho motor domains, providing a complete understanding of their progress and individuality.

360-degree report card with competency mapping of each child.

Art

Art-integration encompasses an interdisciplinary teaching method. It utilises a wide array of artistic expressions and cultural elements to facilitate understanding of concepts across different subjects. On the other hand, sports integration adopts a pedagogical approach that integrates various disciplines to foster holistic development, emphasising both physical and mental well-being while enhancing cognitive abilities.

At present, we are investigating means of providing this service to schools and tutors.

Sports

Sports-integration is a holistic pedagogical approach that merges multiple disciplines, aiming to foster comprehensive growth among learners. By prioritising physical and mental wellness, this approach promotes overall well-being while also enhancing cognitive abilities.

SportTech available to schools

Teachers Training

To support their professional development, every teacher will be mandated to participate in a minimum of 50 hours of continuing professional development (CPD) opportunities annually.

The primary objective of TopTech is to provide teacher training to ensure they are

proficient in implementing NFLs technology platforms and are not left behind. /

Coding

The integration of key subjects, skills, and competencies into the curriculum aims to equip students with a robust foundation in computational thinking, problem-solving, logical reasoning, and creativity. This will ensure their readiness for future careers.

Introduced TopCoder powered by Hackberry that aims to facilitate the implementation of a comprehensive coding curriculum for grades 1-10 in schools.

FINANCIAL REVIEW

Particulars	2023-24	2022-23	2021-22	2020-21
Total Income	1,70,746	1,65,169	1,08,071	81,749
Operating Expenses	(1,39,446)	(1,34,563)	(89,036)	(69,165)
EBITDA	31,300	30,606	19,035	12,585
Depreciation	(5,915)	(5,274)	(3,270)	(3,473)
EBIT	25,385	25,332	15,765	9,112
Financial Cost	(1,669)	(943)	(368)	(684)
Exceptional Items	(1,852)	3,037	4,580	0
EBT including Extraordinary Items	21,864	27,426	19,977	8,428
Tax	(3,011)	(8,127)	(5,315)	(2,265)
PAT	18,853	19,299	14,662	6,163
Tangible Capital Employed	1,56,655	1,45,950	1,21,682	1,06,491
Net Capital Employed	1,37,207	1,24,287	1,12,714	1,03,886
Return on Capital Employed (%)	15.02	19.44	12.96	8.56
Return on Net Worth (%)	1374	1573	13.01	5.93

Revenue

NELs total revenue increased marginally to Rs. 1,69,310 Lakhs in 2023-24 from 1,63,641 Lakhs in 2022-23. Our publication business encountered various challenges due to rising paper prices and lower-than-expected sales of channel inventory. This was further compounded by a notable surge in the resale of second-hand books.

Operating Expenses

NELs overall operating expenses stood at Rs. 1,39,446 Lakhs in 2023-24 compared to Rs. 1,34,563 Lakhs in 2022-23.

EBITDA

NELs EBITDA increased marginally to Rs. 31,300 Lakhs in 2023-24 from Rs. 30,606 Lakhs in 2022-23 due to restructuring of our business.

Depreciation

NELs depreciation increased to Rs. 5,915 Lakhs in 2023-24 from Rs. 5,274 Lakhs in 2022-23.

EBIT

NELs EBIT increased marginally to Rs. 25,385 Lakhs in 202324 from Rs. 25,332 Lakhs in 2022-23.

Finance Cost

NELs finance cost increased to Rs. 1,669 Lakhs in 2023-24 from Rs. 943 Lakhs in 2022- 23.

Exceptional Items

During 2023-24, exceptional items include charge of Rs. 4,875 Lakhs towards diminution in value of investment in wholly owned subsidiary Navneet Futuretech Limited, which is primarily on account of demerger and fair value changes in investments made by the said wholly owned subsidiary and Rs. 3,023 Lakhs towards profit on sale of property.

PAT

NELs PAT decreased to Rs. 18,853 Lakhs in 2023-24 from Rs. 19,299 Lakhs in 2022-23.

Tangible Capital Employed

NELs capital stood at Rs. 1,56,655 Lakhs in 2023-24 compared to Rs. 1,45,950 Lakhs in 2022-23.

Net Worth

NELs net worth stood at Rs. 1,37,207 Lakhs in 2023-24 compared to Rs. 1,24,287 Lakhs in 2022-23.

Financial Ratios

Ratios	2023-24	2022-23	2021-22
Current Ratio	2.86	2.48	3.47
Debt-to-Equity Ratio	0.17	0.20	0.08
Debtors Turnover	5.86	6.96	6.28
Operating Profit Margin	14.15%	14.55%	16.04%
Net Profit Margin	11.14%	11.79%	13.83%
Return on Net Worth	13.74%	15.53%	13.01%
EPS (Rs)	8.33	8.53	6.45
Fixed Asset Turnover Ratio	10.73	10.55	6.63

Return on Capital Employed

NELs return on capital employed ratio decreased to 15.02% in 2023-24 from 19.44% in 2022-23.

Return on Net Worth

NELs return on net worth decreased to 13.74% in 2023-24 from 15.53% in 2022-23.

Dividend History

Below is the dividend history for the last five financial years

Financial Year	Dividend Type	Dividend%
2023-24	Final*	130
2022-23	Final	130
2021-22	Final	75
2020-21	Final	50
2019-20	Second Interim	25
	First Interim	125

Credit Rating

During the year under review, CRISIL Limited reassigned an A1 + rating for the Companys Commercial Papers programme and the short-term bank facility. This continues to reflect the Companys established market position in the educational books segment in Gujarat and Maharashtra, healthy presence in the stationery segment in the domestic and global markets, and comfortable financial risk profile. This rating is widely respected for its high level of reliability in promptly meeting financial obligations, indicative of our comfortable financial risk profile supported by robust gearing and debt protection metrics. Additionally, it underscores our well-established market position in the educational books segment and strong global presence in the stationery segment.

(Source:https://www.crisil.com/mnt/winshare/Ratings/RatingList/RatingDocs/NavneetEducationLimited_February%2021,%202024_ RR_335587.html)

Furthermore, during the same period, CARE Ratings Limited reaffirmed its ratings for our long-/short-term bank facilities to CARE AA; Stable/CARE A1+. These ratings reflect the favourable financial risk profile of the Company, supported by a strong liquidity position and the absence of long-term debt. They also account for factors such as the extensive experience of our promoters, well-established market presence, and strong brand recognition, all of which contribute to the positive rating assessment.

RISKS AND CONCERNS

Navneets risk management strategy focuses on identifying and mitigating potential risks that could impact the business. Due to seasonality, the unprecedented increase in paper prices, may have an impact on our margins. Additionally, freight costs, especially for our exports business, pose a challenge. Although we supply on an FOB basis, customers consider their total landed costs, and any increase may lead them to seek alternative suppliers. Furthermore, while increased government spending on the rural economy is expected to boost spending from our target markets, any delays in this government spending may restrict our target audiences ability to spend.

Risk Mitigation Strategies

Risk	Mitigation Strategy
	NEL implements Enterprise Risk Management (ERM), a well-established methodology for identifying, assessing, and addressing potential risks, losses, and disruptions that may impact our organisational structure and goals. By leveraging ERM, we can effectively identify and evaluate potential threats, allowing us to implement proactive measures to mitigate them.
Process Risk	Our internal audit team plays a pivotal role in ensuring the efficiency of commercial and investment controls across all key operations by managing process risks effectively.
	Our Company adheres to all laws and regulations by employing a rigorous verification process. We have a robust reporting structure in place, extending from business line executives to the Audit Committee and the Board of Directors. An expert team conducts an annual internal audit, scrutinising key elements of corporate operations, followed by thorough reviews by internal auditors, the Audit Committee, and the Board of Directors. The Audit Committee consistently assesses the suggestions put forth by internal auditors and proposes measures to bolster internal controls.
Digital Risk	Our Company has integrated a cloud application security tool to identify and resolve cloud security vulnerabilities effectively. Furthermore, we conduct continuous security assessments around the clock to protect our data.
	We have exclusively relied on internal funding to fuel our technological endeavours. Unlike counterparts in the sector facing funding hurdles, we have steered clear of such risks. Our unwavering commitment to funding our ventures with meticulous diligence empowers us to expand and yield favourable returns.

Corporate Social Responsibility (CSR)

In alignment with our commitment to social responsibility, we actively participate in a variety of CSR initiatives focusing on education, healthcare, animal welfare, community development, and sports development. We diligently monitor and optimise resource utilisation at the grassroots level to ensure that the benefits of these programmes reach their intended recipients. Furthermore, in line with our dedication to environment sustainability, we prioritise the use of eco-friendly materials for our key products. In 202324, we made a significant contribution of Rs. 426 Lakhs towards our CSR initiatives.

Internal Control System and Its Adequacy

Our internal control system is robust, efficient, and integral to the success of the Company. It facilitates the review of various segments and sales operations, ensuring the proper maintenance of internal audit controls, such as overseeing operations, safeguarding assets, and adhering to regulations. Our annual internal audit covers essential areas of business operations identified by a team of experts. Each area undergoes review by internal auditors, the Audit Committee, and the Board of Directors. The Audit Committee evaluates inputs from internal auditors and provides recommendations to enhance internal controls periodically.

Cautionary Statement

Certain statements in the MDA section concerning future prospects may be forward-looking and involve a number of underlying identified/non identified risks and uncertainties that could cause actual results to differ materially. In addition to the foregoing changes in the macro-environment, a global pandemic like the Covid-19 may pose an unforeseen, unprecedented, unascertainable, and constantly evolving risk(s), inter-alia, to our Company and the environment in which it operates. The results of these assumptions made, relying on available internal and external information, are the basis for determining certain facts and figures stated in the report. Since the factors underlying these assumptions are subject to change over time, the estimates on which they are based are also subject to change accordingly. These forward-looking statements represent only our Companys current intentions, beliefs or expectations, and any forward-looking statement speaks only as of the date on which it was made. Our Company assumes no obligation to revise or update any forward-looking statements, whether as a result of new information, future events, or otherwise.