Navneet Publications India Limited, founded by the Gala family in 1959, is in the business of publishing and paper and non-paper stationery (school and office) products. The company's three major brands are Navneet, Vikas and Gala. Navneet is a dominant player in the field of publishing with more than 4,500 owned titles in English, Marathi, Hindi, Gujarati and eight other Indian languages. In 1993, the company started catering to the stationery needs of the Middle East, parts of Africa, U.S. and Europe and has acquired a leading position in those markets as well, although competition is intensifying.
Publishing business: The publishing business of the company is further segmented into three divisions, the sub divisions being educational books, non-curriculum books and electronic learning.
Educational books: The educational books, which can also be termed as curriculum books, are the supplementary books such as 21 question sets, digest and workbooks. In the supplementary books category, the company has a dominant market share in Maharashtra and Gujarat. Earlier Navneet's focus areas remained Maharashtra and Gujarat, however, now with the new range of supplementary books targeting the students from CBSE and ICSE boards, Navneet's educational books are made available across India. The curriculum books cater to the students right from kindergarten to 12th standard students of Maharashtra, Gujarat, CBSE and ICSE.
Non-curriculum books: Non-curriculum books are the books not based on syllabus. In this category the company publishes children and general books. Children books range from colouring books, activity books, storybooks, interactive books etc, while general books include interest books on subjects like mehendi, health and hygiene, cookery, rangoli etc.
Electronic products: In a digital world, the company has realised the importance of technology and has entered into a next generation era of e-learning with the primary objective being to bring the power of technology to the classrooms and enhance the quality of education. E-book is the first software introduced by Navneet under the e-learning umbrella and is a multimedia software focusing on classroom teaching. Since e-book has the power of multimedia i.e. visual & voice, it is expected to give more insight to students and case teachers' responsibilities. E-book has been launched in Gujarat in 110 schools on a trial basis during FY08 and the company is targeting 1,000 schools in Maharashtra covering all standards and subjects for Marathi and English medium.
The publishing segment of the company contributes almost 65% to the total revenues. The publishing segment's contribution has increased over the years from 57.3% in FY04 to 65.8% in FY07 and has grown at a CAGR of almost 15% in past three years.
Stationery business: The stationery business is largely dominated by unorganised players accounting for 95% of the market share and the rest by organised players like Navneet, ITC etc. Navneet, one of the largest stationery brands in India, initiated its stationery export business in 1993 and also grew as India's first branded paper stationery manufacturer. The company's products include a wide range of tight-bind notebooks, long books, drawing books etc. Apart from paper stationery products, the company has successfully launched other stationery products like pencils, erasers, sharpeners, colours etc.
The stationery business had been negatively impacted in the past couple of years owing to slowdown in its export business. Exports of stationery declined by almost 29% in the past two years on account of appreciation in the rupee and rising competition in the international markets. Thus, the segment's contribution to the total revenues declined from 42.3% in FY04 to 32.9% in FY07, reporting a CAGR of meager 0.7% in past three years.
Other business: The revenues of the other business segment consist of power generation, trading, media charges, waste and scrap sale. The contribution of this segment to the total revenues is miniscule (1.3% in FY07). However, owing to the lower base, the segment has reported almost 68.5% CAGR in revenues and is expected to contribute more to the topline owing to the sale of power generated by windmills.
What to expect?
The low penetration of education in India and the government's thrust to improve the education system and extend this right to every Indian only highlights the scope for companies like Navneet Publications to grow and expand their business. At the current price of Rs 96.5, the stock is trading at 17.3 times its trailing twelve-month earnings. We shall soon come out with a report on the company.
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