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Navneet Education Ltd.

BSE: 508989 Sector: Services
NSE: NAVNETEDUL ISIN Code: INE060A01024
BSE LIVE 12:54 | 17 Aug 157.70 -0.30
(-0.19%)
OPEN

157.65

HIGH

161.10

LOW

153.10

NSE 12:41 | 17 Aug 157.80 0.35
(0.22%)
OPEN

160.00

HIGH

160.25

LOW

155.40

OPEN 157.65
PREVIOUS CLOSE 158.00
VOLUME 3090
52-Week high 193.60
52-Week low 94.00
P/E 23.82
Mkt Cap.(Rs cr) 3,756
Buy Price 157.00
Buy Qty 50.00
Sell Price 157.70
Sell Qty 11.00
OPEN 157.65
CLOSE 158.00
VOLUME 3090
52-Week high 193.60
52-Week low 94.00
P/E 23.82
Mkt Cap.(Rs cr) 3,756
Buy Price 157.00
Buy Qty 50.00
Sell Price 157.70
Sell Qty 11.00

Navneet Education Ltd. (NAVNETEDUL) - Chairman Speech

Company chairman speech

ON BEHALF OF THE BOARD OF DIRECTORS I THANK YOU FOR YOUR INTEREST AND SUPPORT FORNAVNEET EDUCATION LIMITED. I HAVE COMPLETED TWO YEARS AS NON-EXECUTIVE CHAIRMAN AND I FEELPRIVILEGED TO HAVE THE OPPORTUNITY TO SERVE THE COMPANY IN THIS ROLE.

Dear Shareholders :

2015-16 was a year of unprecedented economic upheaval which caused almost all businesssectors to suffer especially retail. The publishing industry was affected as wellposting declines which was never experienced in the past. As is now widely known theDraught across the country in the 1st quarter of the year 2015-16 which while loweringthe bar in Q2 only made the ensuing declines more problematic.

Fortunately for Navneet Education Limited we could read early signs and did begin totake measures well before the crisis became national news. Accordingly we planned ouractivity and thereby reducing our operating expenses wherever possible and also we managedour fund flows in a way which lead to savings in our borrowing costs. As a result we cameout of one of the nation's deepest slowdowns in a reasonably good position achieving Rs.15875 Lac in operating cash flow.

Even as comparable Revenue from operations declined by 2.9% for the year ourmanagement team again executed our business plans flawlessly managing the overheads inline with the diminished sales while providing the best content and product. As wellcontinued improvement of our supply chain system enabled us to reduce the inventoryturnover ratio while maintaining the levels in stock positions we have always achieved.Inventories turnover ratio improved during the year and markdowns actually decreasedcompared to the previous year.

The segment highlights are as under :

• Publication Revenue dropped by 3.0% to Rs. 51595 Lac

• Stationery Revenue also dropped by 3.5% to Rs. 40766 Lac

In my last year's letter to you I had mentioned that the company "the company wiNstrive to achieve higher numbers year on year". Regrettably this has not happened inFY 2015-16. Apart from several factors contributing to de-growth we would consider thisyear as a year of consolidation at company and its subsidiary levels.

Despite the bleak year we did have a couple of bright spots on the horizon notablythe increase in the CBSE and Children & General Books and also Stationery Exports.

Considering the onset of the digital revolution; company's subsidiary eSense Learningwhich is into Digital learning business is fast emerging as a good established player inthe business. Turnover achieved during the year was Rs. 1976 Lac though low in numberbut is higher in Content sales v / s Hardware sales comparatively. The company iscontinuously striving to grow the business and is focused on the same considering theenormous potential of the Digital content marketplace has. I am happy to share today thatour platform "TOPScorer.com" is launched in the current year for Business toConsumers (students) and consumption of our content has already started on this platform.We are continuously evaluating the business as we see potential far beyond what wasobvious to us before and we believe compelling enough for investors to sit up and takenotice.

Our Investments in K-12 Technologies through subsidiary Navneet Learning LLP is nowshowing excellent results though we had several set backs in last few years. Now we have12 CBSE schools under management with a brand "Orchid Internationals"with astudent enrolment of more than 10000.

In closing I want to thank the leadership team and also the staff at all levels forwhat we have accomplished during the year. I also want to thank our Distributors SupplyChain Team and also our Customers and Vendors for all the support provided to us.

I would like to thank all our shareholders for their continued trust and confidenceshown towards the company's management.

Best regards

Kamlesh S. Vikamsey

Management Discussion and Analysis

Dividend Policy:

As you know the Company has always been rewarding its shareholders with minimum of 25%of its post tax proits. This year your Company declared Interim Dividend of 110% or Rs.2.20 per share on the face value of Rs. 2 / - which works out to 49.35% payout (includingDDT) for FY 2015-16.

FY Type Dividend(%) Net Proit ( Rs. in Lac) % to NP (incl DDT)
2015-16 Interim 110 12780 49.35
2014-15 Final 110 12930 48.79
2013-14 Final 100 11318 49.30
2012-13 Final 90 11107 45.20

Section 124 of the Companies Act 2013 mandates the companies to transfer dividendthat has been unclaimed for a period of 7 years to the Investor Education and ProtectionFund (IEPF). The Company sends periodic information to the concerned shareholdersadvising them to lodge their claims with respect to unclaimed dividends. Shareholders arecautioned that once unclaimed dividend is transferred to IEPF no claim shall lie inrespect thereof with the company.

Business Overview :

(A) Content Publishing Segment :

During the year there was hardly any change in syllabus in Maharashtra and Gujarat andto add to the problem was the draught across the country which dropped its PublishingRevenue by 3.0% in FY 2015-16. The Revenue dropped from Rs. 53190 Lac to Rs. 51595 Lac.The PBIT in the segment also dropped from 34.3% to 33.9%. It is expected that in theensuing year there would be syllabi change and also there would be good rainfall whichwill in turn improve the economy in the rural areas and help boost the sales of theCompany.

(B) Stationery Segment :

Stationery segment dropped by 3.5% over the previous year from Rs. 42240 Lac to Rs.40766 Lac; again the major reason for downfall being the draught across the country. TheCompany shall continue to focus on the Exports Business and is expecting to have morerelationships in the US markets which will further drive the growth in the segment. YourCompany's

products have been appreciated in the retail chains in the US and it is expected thatthe strategic relationships will help the Company to step on to the next level.

(C) Net Profits:

Your Company's net profit for FY 2015-16 was Rs. 12780 Lac as compared to last year ofRs. 12930 Lac.

(D) Investment in School Management Company:

The Company continues to expand and diversify the direct education business through theminority stake which it owns in School Management Company known as "K12 TechnoServices Private Limited". Under its realm the Company manages "Orchids - theInternational School". The schools under the management has 12 Orchids Internationalschools.

(E) e-Learning Segment:

Your Company's subsidiary eSense Learning Private Limited revenue stood at Rs. 1976Lac as compared to Rs. 2013 Lac last year. Though there is drop in revenue due tobusiness mix over all your Company could sell more Digital content during the year. TheCompany aspires to grow faster from FY 2016-17 onwards considering the onset of digitalrevolution. The Company's products are now also available on 'TOPScorer.com' for onlineconsumption and which will entail into a good revenue improvement model.

(F) Future Growth Drivers Opportunities & Risks:

Growth Drivers:

Our focus on delivering business performance and driving progress in society is tocreate a future of Inclusive Growth. Our Strategic direction for inclusive growth takescognizance of the fact that today we must move towards next level of what is required forBusiness and so we think the drivers for the next level will be:

• Moving on content publication of CBSE and CBSE pattern schools and establishingour presence outside Maharashtra and Gujarat more aggressively. We have already createdthe content for these schools for Grade I to Grade VII and are working towards the othergrades which will be completed in the ensuing year.

• E-Learning is the future and so the focus will remain in building the growthmodel in this area of opportunity.