S Chand: Incorporating NEP and eyeing greater market share

New Delhi: On October 20, the Indian government unveiled the National Curriculum Framework for Foundational Stage, setting the cornerstone for the New Educational Policy. This action has not only raised expectations for the announcement of the NCF for the remaining stages, but it has also drawn attention to the revamp of the Indian educational system.

Amid the cooling down of the edtech craze and the looming challenges of global headwinds, very few businesses are equipped to usher in the new era of learning, which requires innovation and operational efficiencies laced with financial viability. S Chand and Company Limited, one of India’s leading and oldest education content companies laid down a blueprint of how it intends to tackle the challenges and incorporate the changes during their Q2FY23 earnings. 

Commenting on the launch of NCF and its implications for the business, Mr. Himanshu Gupta, Managing Director of S Chand and Company Ltd. said, “The recent NCF launched by the government covers classes from pre-primary to Class 2, which contributes 15% to 20% of our revenue from schools. We have already begun developing new content and books based on the new curriculum for these classes, and we anticipate that sales will occur during our upcoming sales season, which runs from January to April.”  

For the higher education front, the first-ever CUET (Common University Entrance Test) was administered in July in accordance with the NEP to give students across the country a level playing field. While there were a few glitches with the examination process, the publishing house ensured that the students taking the test had access to reading material and practise questions.

“PCB and PCM books are available for Board/NEET/JEE specific syllabus. CUET covers a larger syllabus and therefore, the content is different. For national entrance exams we have 49 titles available in 6 languages to which we’ll be adding more books going forward. Due to the delay in board exam and CUET results this year, college admissions were delayed, which affected our higher education sales for the second quarter. However, with the beginning of the new academic session for colleges, we foresee strong demand in the third quarter,” Mr. Saurabh Mittal, CFO remarked. 

S Chand and Company’s consolidated revenue for H1FY23 stood at 154.6 crores vs 87.7 crores during H1FY22, registering a staggering growth of 76%. The net working capital days decreased to 171 days, the lowest for Q2 over the past five years. The company expects to be debt-free by the fourth quarter.

While schools and colleges have now fully reopened in physical modes with record admissions taking place, including technology in the learning pedagogy remains a key monitorable factor which demands innovative educational experiments. Dependent on factors such as cost-effective teaching model and content development technology, K-12 blended e-learning market is poised to grow at a CAGR of 17.55% suggesting that hybrid learning is the way of the future. 

Citing the adoption of the company’s own blended learning investments Mr. Gupta said, “Madhubun Educate 360 - Our K12 Learning Management System is now being implemented in over 55 schools and covers 100K students.  We had in the past developed VRX a virtual reality experience for Science books in partnership with our investee Smartivity Labs, which creates STEAM-based toys. We also have plans to collaborate with such companies over the adoption of NCF which focuses on experience and toy-based learning.”

Even as demand for online edtech apps saw a dip, YouTube continued to be a learning favourite owing to its accessibility and affordability. With over 700 videos devoted to science, engineering, and test preparation, S Chand Academy on YouTube experienced tremendous success in a short period of time. The channel has already received 7 million views, and is expected to cross 10 million views in the upcoming few months.

Decoding the success and the purpose behind the channel Mr. Gupta said, “We have converted each chapter of our books into video- based lectures with a QR code to the e-book as well as links to purchase the book. This enables the students to have an additional online support along with the book itself and helps us increase our adoptions and keep retention of our study materials in the students’ minds.  This channel empowers those residing in Tier-2 and Tier-3 cities to learn critical concepts through top-notch educationists and serves as an inclusive platform.”

On a global scale, rising paper costs are stifling the resurgent demand for books and putting a pressure on margins. While price hikes are being undertaken, companies have adopted a conservative forecast for growth in volumes due to the unpredictability of price fluctuations. 

“We have maintained our gross margins at the same levels for the first half of the year in spite of the sharp increase in paper prices on account of inventory liquidation. We are looking to counter paper prices through some price hikes, improving realisations, internal efficiencies, and continuing cost control through the year. 90% of our paper requirement has already been secured which mitigates the risks of further fluctuations and ensures that the supply is not disrupted,” Mr. Mittal responded.

In the post-covid world of supply chain disruptions, raw material shortages, and price fluctuations, S Chand seems well-positioned to capitalise on its premium product line, brands, distribution network, long-standing relationships with institutions and educators, superior customer service, and inherent financial strength to further increase its market share.