Indias economic Overview
Despite global uncertainties which can weigh in, it is expected that India is poised to
grow by over 6% in the medium term. The last three years have seen the global economy face
multiple challenges with overlapping crises. However, despite this gloom, many market
analysts believe that this could well be Indias decade. Recent data revisions by India
suggest the Indian economy has fared better than what was previously believed despite
continuing global uncertainties. Indias young and large, middle-income population, has a
propensity to spend. Consumption-led growth will give India the momentum that it needs to
record sustained domestic growth. Analysts expect India to grow between 6.0%-6.5% over the
medium term. Overall the outlook for Indian economy remains bullish with a strong
resilience to external shocks. (Source: Strategic Investment Research Unit)
India stands out as an inspiration with her highly qualified personnel, very strong
technological prowess, and infrastructure. The country therefore offers attractive
investment opportunities and sustainable development in the times to come.
education Sector in India
As per IBEF Report (May 2023), the Indian education system is one of the largest in the
world with about 1.5 million schools, 9.7 million teachers, and about 260 million
students. Indias large population in the age bracket of 5-24 years (580 million people)
presents a huge opportunity in the education sector. Private sector players are
increasingly collaborating with international universities to offer attractive options for
the students. This has substantially increased the urge for specialized degrees and
industry focused qualifications.
Science, Technology, Engineering and Mathematics (STEM) based edtech companies are
partnering with Niti Aayog and the government to build a STEM ecosystem by establishing
Atal Tinkering Labs (ATL) to spread knowledge about STEM, ‘Science, Technology,
Engineering, Arts and Mathematics (STEAM) and Robotics for K-12 students. With
cutting-edge technologies such as AI, ML, IoT and blockchain, Indias education sector
will redefine itself in the years to come.
Online education has powerfully contributed to accelerating the accessibility of
education across Bharat.
Key Milestones since Independence
India has accomplished several milestones in the school education system with NCF for
K-2 in 2022 being the latest development.
Mudaliar Commission (1952): Also known as the Secondary Education Commission; the
members were tasked with examining the existing secondary education system and presenting
recommendations for its re-organization and improvement
Kothari Commission (1964): The Mudaliar Commission was followed by the Kothari
Commission, also known as the National Education Commission, which made recommendations to
reform and develop the Indian education system.
National Policy on Education (1968): On the basis of the Kothari Commission, the
government announced the first National Policy on Education. It called for mandatory
education up to the age of 14, the "three language formula", and improved
teacher education.
(New) National Policy on Education (1986): The new education policy laid a greater
emphasis on integrating women, SCs and STs. There was also a focus on a
"child-centred" approach in primary education. The policy also expanded the open
university system with IGNOU.
Midday Meal Scheme (1995): School meal programme to improve the nutritional levels
of students in primary grades. In 2021, the Ministry of Education renamed the policy to
PM-POSHAN and extended it to 24 lakh pre-primary grade students.
National Curriculum Framework (NCF) (2005): Published in 2005 by the National
Council of Educational Research and Training (NCERT), NCF is quite significant for
bringing reforms in the education system by creating constructive learning through
developing a learner-centric curriculum, that fosters autonomy to the learner.
Rashtriya Madhyamik Shiksha Abhiyan (RMSA) (2009): Initiative launched by the
government to develop secondary education in public schools throughout India. It aimed to
increase the enrolment rates at the secondary level.
RTE Act (2009-10): The landmark act made education free and compulsory for students
between the age of 6 to 14 years in India. RTE Act also specified recommended
student-teacher ratios, teacher working hours and school working days.
Beti Bachao, Beti Padhao (2014): Campaign launched to ensure the safety and
education of the girl child, including commitments to building more girls toilets to
reduce the number of female dropouts.
Rashtriya Avishkar Abhiyan (2015): Convergent framework launched to encourage
children towards learning Science and Mathematics.
DIKSHA Platform (2017): Launch of the Digital Infrastructure for Knowledge Sharing
(DIKSHA), an open-source technology platform, for school students and teachers providing
e-content, teacher training, mentorship, etc.
National Education Policy (NEP) (2020): The first education policy of the 21st
century, the NEP 2020 proposes numerous reforms in school education and higher education.
The policy aims to transform Indias education ecosystem by 2030.
National Curriculum Framework (NCF) for K-2 (2022): The government announced the
NCF for the Foundation Stage, i.e. Classes K-2, on 20th October, 2022. More
announcements are expected to come regarding the NCF of the Preparatory, Middle and
Secondary Stages as well during the year 2023.
Opportunities in K-12 education in India
NEP 2020 aims to revolutionize the Indian education system; the education sector is
shifting towards experiential learning, supported by initiatives from the government and
private players. Various teacher development initiatives have been proposed by NEP 2020,
recognizing the inadequate teacher quality; the demand for international schools has risen
on the back of rising disposable income.
National education Policy (NeP) 2020
The National Education Policy 2020 is the first education policy of the 21st
century and it replaces the 34-year-old National Policy on Education of 1986. The NEP lays
out an ambitious plan, seeking rehaul and transformation across the educational value
chain in India including K-12 education, higher education and teacher training with a
focus on critical and experiential thinking.
Increased Penetration of Digital education
The education sector is undergoing a digital revolution, hastened by the onset of the
pandemic. India in particular is seeing a dramatic uptick in the adoption of digital
education initiatives, with UNESCO listing it among nine countries likely to shift towards
digital education. The push towards a digitally enabled education has been helped by
improving internet penetration and digital infrastructure in the country. Private players
have launched advanced platforms and apps, enhancing the learning of school students. The
government has also launched numerous initiatives to bolster e-learning for school
students. These include PM e-VIDYA, DIKSHA, SWAYAM, ePathshala, among others.
Some schools have adopted the hybrid learning model, which combines in-person and
online learning while making education more accessible.
Internet penetration rate in India from 2007 to 2022
Demographics for K-12 education in India
According to FICCI (K-12 Education in India: Vision 2047, December 2022), India, with
close to 260 million enrolments and ~1.5 million schools, is one of the largest school
education systems in the world due to a high proportion of younger population. It spans
multiple affiliating boards, different modes of management and governance across state and
central levels.
• K-12 schools in India are broadly of three types: Government schools, Private
aided, Private unaided
• Of the ~260m students enrolled, ~46% students are enrolled in private schools
(aided and unaided) whereas ~54% students are enrolled in government schools
• K-12 segment in India is witnessing a rise in faculty members with ~9.7 mn
faculty members in 2020-21. The Student Teacher Ratio (STR) has improved to 26 (2019-20)
from 30 (2014-15)
Source: Unified District Information System for Education (UDISE) 2020-21, Economic
Survey of India 2021-22
The number of schools in India has remained flat, but there are trends of increased
private sector participation and a gradual urban shift
Number of schools in India across management (2012-21)
The government schools are decreasing in number, largely due to consolidation. Those
with low student numbers being merged with other larger schools in the vicinity.
Source: UDISE
Number of schools in India across rural-urban
Even though the number of schools in India have remained stagnant, the share of urban
schools have been grown.
Source: UDISE
Student enrolment in India across management
Enrolments in private unaided schools have increased in the last eight years. In India,
it is observed that 73% of parents who chose a private school did so because they
perceived it as offering a better learning environment, 12% for English medium education
and 10% because of lack of availability of a government institution.
Source: UDISE
Over the years, Student Teacher Ration (STR) has improved on the back of a rising
number of teachers; Gross Enrolment Ratio (GER) in primary grades is falling and GER in
higher grades is increasing
Student Teacher ratio (2012-21)
There has been a notable improvement in the Student Teacher Ratio (STR) due to a rapid
growth in the number of teachers (~7.8m in 2012-13 to ~9.7m in 2020-21). However, there is
segmental disparity as the STR in senior secondary school is ~47:1, as opposed to ~26:1 of
the overall school system, as per UNESCO.
Source: UDISE
Gross enrolment ratio (2012-21)
The GER in primary grades has declined over the years; on the other hand, the GER in
the higher grades has increased. In absolute number terms, the enrolment for lower grades
is likely to fall (and enrolment for higher grades are likely to rise) due to a fall in
population growth with a decline in total fertility rates.
Source: UDISE
edTech in India
As per IBEF Report (May 2023), the Indian edtech market size is expected to reach US$
30 billion by 2031, from US$ 700-800 million in 2021. According to KPMG, India has also
become the second largest market for e-learning after the US.
The key categories in the India edtech market are Pre K, K-12, higher education and
corporate. Pre K and K-12 was the largest segment of the edtech market in India in 2021.
Edtech in India has grown phenomenally in the last couple of years, making India the
edtech capital of the world. The private sector is playing a key role with the public
sector acting as a facilitator. Indias education sector saw a boom in edtech funding
during the pandemic. There are certainly some advantages of edtech over conventional
learning that should be considered.
Educators, parents, and students have long complained about the one-size-fits-all model
of conventional schooling. Edtech provides specially tailored classes and access to
content at a pace students are comfortable with.
Edtech provides access to education on demand: students who were not compatible with
the traditional school systems rigid timetables can get access to quality education.
Edtech complements traditional schooling, with better navigation of resources, multimedia
graphics and interactive elements, allowing for a more engaging educational experience.
Edtech, which uses IT tools for inclusive, engaging and personalized learning, could
potentially bridge the gap for socially disadvantaged segments in India. Indias edtech
boom also stems from facts like the prevalence of enthusiastic entrepreneurs adopting a
multicultural approach to suit the needs of a diverse country. It is interesting that
learners from abroad are enrolling with Indian edtech companies not just for affordability
but also because they deliver world-class content.
Various Indian edtech companies are slowly upping their global presence by
collaborating with international universities or acquiring foreign firms. These
collaborations have been given an impetus by the new National Education Policy, 2020,
which encourages education through foreign universities to help establish India as a
global education hub. These partnerships are expected to provide students with an
excellent learning environment as well as access to inter-disciplinary programmes.
Company Overview
S Chand is a trusted quality education content company for over 8 decades. The Group
has a suite of products which offers complete solutions for learners across K-12. Higher
Education, Competitive examinations and digital platforms. The Companys strength is
founded on its capacity to develop and nurture relationships with customers who trust the
quality and authenticity of the quality content and innovations that S Chand develops. The
Company has invested and focused on digital offerings in recent years. The Company has
more than 10,000 book titles. The pan India distribution and distributor network has
resulted in deep market reach, consisting of approximately 3,000 distributors and channel
partners. S Chand aspires to be a leader in hybrid learning solutions to cater to the
changing and dynamic needs of schools, higher educational institutions, professional
colleges, and vocational training institutes.
Key Performance Highlights
The S Chand 3.0 implementation starting from FY 19 was the breakthrough that helped
deliver a strong turnaround, the full benefits of which are now evident in FY23. With a
focus on cash flow improvement, the Company launched a strategic plan to right size
employee headcount, rationalize the number of offices and warehouses, evaluate and
eliminate dispensable internal spends, optimize paper and freight costs.
The results of the S Chand 3.0 are seen in the working capital metrics:
• Inventory days down by 37% since FY19
• Receivable days down by 49% since FY19
• Net Working capital days down by 41% since FY19
There was solid improvement in FY23 in working capital metrics:
• Trade Receivables: Reduced to Rs 2,653m during FY23 vs. Rs 2,921m during FY22.
This is a Rs 268m decrease in receivables in spite of achieving incremental sales of Rs
1,294m over last year. In terms of receivable days, it stood at 159 days (vs. 222 days in
FY22), a reduction of 63 days during FY23. This is the lowest receivable days in Q4 in the
Companys history.
• Inventory: Increased to Rs 1,562m (vs FY22: Rs 1,276m). This increase in
inventory is due to the un precedented price hike seen in the raw paper prices during the
year. Additionally, this inventory level includes raw material paper inventory of Rs 436m
(vs FY22: Rs 277m). In terms of inventory days, we improved over last year at 208 days
(vs. 216 days in FY22), a reduction of 8 days during FY23.
• Net Working Capital: Reduced to 188 days (vs. 226 days in FY22) which is a
reduction of 38 days during FY23. This is the lowest Q4 net working capital days in the
Companys history.
• Debt: Net Debt was Rs 60m (vs. Rs 721m in FY22) and Gross Debt was Rs 1,268m
(vs. Rs 1,572m in FY22). We have turned Net Debt Free in April, 2023 on back of strong
collections.
The reduction in operating cash flow vs. FY22 is attributed to the higher inventory
value at the end of the year which is on back of increased purchase of paper during the
year.
Transformation in Metrics Since FY19
The SChand 3.0 initiative was a stringent exercise in enhancing operational
efficiencies. This has netted a huge benefit in terms of higher cash flows and lower
inventory resulting in better financial strength and return to profitability. Since FY20
the net debt has reduced by 61%.
Impact of the New NeP
The New Education Policy (NEP) was formally adopted by the Union Government in July,
2020. The release of the new National Curriculum Framework (NCF) is expected during
CY2023E. The Company expects a strong runway of growth for at least 2-3 years, since the
New Curriculum is being developed after a gap of 15 years. Consequently, the secondhand
book sale is expected to reduce which augurs well for increase in market share.
During the 2005 NCF announcement, the new syllabus was rolled out over a period of 3
years with 5 grades moving to the new syllabus in Year 1, another 5 grades moving to new
syllabus in year 2 and 2 grades moving to new syllabus in year 3. Impact of NCF on the
company financials is dependent on the timing of the complete NCF announcement by the
government.
Potential opportunities from the new NeP
Digital Business
• The Company launched S Chand Academy channel on Youtube during FY22. The channel
houses modules comprising of over 1,400 videos that have been prepared supplementing our S
Chand Test Prep & College Content. The channel has showed strong growth reaching ~170k
subscribers and over 15 million views so far.
• The Company has launched a revised and updated TestCoach app. The app has been
downloaded over 170K times. The mock tests provided by the app covers over 50 national and
state level exams in English and Hindi. Given the uptick in the number of test prep exams
and government job openings, we expect strong adoption for TestCoach during the year.
• Mylestone: Digitally enabled School Curriculum Solution for the K-8 segment.
Affordable Private Schools would be enabled with this one stop solution for all their
curriculum, content, teacher trainings and assessment needs. We have changed our strategy
and are focusing on larger adoptions with the rebrand of it as "S Chand
Mylestone". Further the Company is also developing another integrated curriculum
product for the more progressive schools.
• Madhubun Educate360 is a K-12 Blended learning solution for enabling schools to
conduct online classes, student assessments, e-book support etc. This product is NEP 2020
compliant supporting the recommended pedagogies.
• SmartK: Our Early Years curriculum, SmartK caters to the age group of 2.5 to 6
years. Following the ‘preschool in a box approach, SmartK is a balanced play and
activity-based program that provides a stimulating environment for the language,
socio-emotional and physical development of the children. Designed on the guidelines
recommended by the NCERT, SmartK lays the foundation for the holistic development of the
children in their early learning years. SmartK provides a smooth transition from home to
preschool to formal schooling.
Our Investee Companies
The hidden value in our balance sheet comes from our investee companies.
Looking Ahead
Looking ahead to FY24, we will focus on working capital metrics and free cash flow. We
expect the operating revenues to be in the range of Rs 720cr to Rs 750cr. Gross margins
can increase if paper prices decline during the year. We are targeting EBITDA margin to be
in the band of 16%-18%. We expect strong growth in S Chand Academy Youtube channel. We
look forward to the announcement of NCF for more classes in CY23 which will help in volume
expansion.
Human resources
As of March 2023, the Company at a group level has approximately 1800 employees,
including the product/ services sales and marketing team of over 700 spread across the
country and a content development team of subject matter experts, instructional designers,
graphic designers of approximately 200 employees.
In addition, the rewards and recognition program and adequate growth opportunities help
to ensure that employees are motivated and performance oriented. The Company also offers
an incentive program to its employees, pursuant to which executives and managers receive
additional financial remuneration if the Company achieves a defined percentage of their
annual sales targets and budget.
S Chand has established extensive requirements relating to workplace safety. To ensure
that the Company adheres to all statutory laws and regulations on environment, health and
safety, it has implemented an environmental, health and safety program. In addition, S
Chand has implemented programs related to electrical safety, the handling of equipment and
materials, the handling of hazardous chemicals, fire safety, monitoring of the work
environment (including air quality, ambient noise and the quality of drinking water),
first aid, hazardous waste disposal and housekeeping.
The Company has a system of accident reporting and investigation, pursuant to which all
accidents, both fatal and non-fatal are reportable to health and safety authorities.
Employees are also encouraged to report on "near miss" accidents.
Post Covid-19, the company has been very careful in implementing all MHA guidelines for
safety of its employees and has also offered work from home wherever possible and
required.
risks and Concerns
S Chand is closely linked to the central curriculum academic cycle of April to March
school cycle, which is seasonal in nature. The seasonality in the K-12 market has a direct
impact on S Chands operating revenues, margins and cash flows on a quarterly basis. The
company has also diversified its revenue stream by focusing on digital solutions which are
focused both on educational institutions and students. In addition, the company is present
in the Higher Education, Test Preparation, Distance Learning and Skill education segments
which have different sales cycles.
The rapid advancement of EdTech can potentially be a threat for the Companys print
division. But, we believe that the NEP will open up many opportunities give a big fillip
to the Companys print business.
The Company can face other external challenges like circulars from State Governments on
reducing bag weight for students, pressure for adoption of NCERT books and reduction of
certain non-core subjects in junior classes etc. The Company has mitigated some of these
threats by developing monthly/semester books, digital products and value-added services
and also focused on workshops and seminars with schools to enhance engagement with
schools.
A significant portion of the Companys revenues are dependent on the titles of a few
top authors. To maintain on-going harmonious relationships, the Company ensures that its
authors are compensated well. It believes in maintaining mutually beneficial relationships
and having a strong feedback mechanism to ensure longevity of the S Chands various
brands.
In parallel, the Company continues to widen and expand its content and author base on a
continuous basis. To protect its content ownership and dissemination, S Chand has a
dedicated legal team that strongly manages its Intellectual Property Rights on an ongoing
basis. The Company views the advent of disruptive digital technologies and the development
of open-source content, more as a business opportunity, rather than a threat.
Piracy (physical and online) continue to be a large risk for all publishing companies.
The key titles being pirated across various locations for which the company continues to
conduct raids through Government agencies. Further, online piracy in the form of internet
based applications, use of content by various education aggregators and individuals on
platforms like Youtube etc. without permission and uploading of content through various
sharing sites are regularly scanned and action taken to protect copyright of company and
its authors from infringement.
Internal risk Control
The following list highlights S Chands comprehensive Internal Control Framework:
1. Key Policies are formulated, circulated, approved and reviewed annually, in addition
to being published online.
2. The Authorization Matrix is clearly defined with segregation of duties to ensure
internal controls.
3. Internal Control Testing is conducted by Internal Auditors, with low failures under
the Risk Control Matrix process.
4. Application authorization are given to employees based on level and work profile
5. Regular Internal Audit is conducted for the company and subsidiaries throughout the
year
6. External Software to track Statutory Compliances.
7. A robust Corporate Governance approach is followed, with Independent Directors in
the Company and all material subsidiaries.
8. Related Party Transactions are approved by Audit Committee and Board wherever
required
9. An arms length approach is followed, even between subsidiaries/associates and the
holding company 10. Formulation of a Risk Management Committee to oversee risks and
measures to mitigate them.
Cautionary Statement
This document contains statements about expected future events, financial and operating
results of S Chand, which are forward-looking. By their nature, forward-looking statements
require the Company to make assumptions and are subject to inherent risks and
uncertainties. There is significant risk that the assumptions and predictions and other
forward-looking statements will not prove to be accurate. Readers are cautioned to not
place undue reliance on forward-looking statements. A number of factors could cause
assumptions and actual future results and events, to differ materially from those
expressed in the forward-looking statement. Accordingly, this document is subject to the
disclaimer and qualified in its entirety by the assumptions, qualifications and risk
factors referred to in the managements discussion and analysis of S Chands Annual
Report, FY2023.
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