Navneet Education Limited (NAVNETEDUL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Navneet Education Limited Q4 and FY '25 Earnings Conference Call hosted by PL Capital. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Jinesh Joshi from PL Capital. Thank you, and over to you, sir.

Yes. Good afternoon, everyone. On behalf of PL Capital, I welcome you all to the 4Q and FY '25 earnings call of Navneet Education Limited. We have with us the management represented by Mr. Sunil Gala, who is the MD; Mr. Kalpesh Dedhia, CFO; and Mr. Roomy Mistry, Head, IR. I would now like to hand over the call to the management for opening remarks. Over to you, Sunil Bhai.

Thank you, Jinesh, and good afternoon to all of you. Thank you, Jinesh, also introducing all of us. Now hope you all have received our investor presentation. For those who have not, they can view it on our stock exchanges and also on company's website. So today, I'm pleased to share with you our company's performance for the recent quarter and full year '25. Let me admit, while we have faced some challenges, I'm confident that our strategic initiatives and market trends position us for growth and success in future. In the year FY '25, our revenue grew marginally by around 2.5%, in which Publication segment grew by just 3% and Stationery also grew very, very marginally. Let me straight go to each of these businesses. I'll start with content business. So this segment, within content, I'll talk about publications. So our Publication segment experienced subdued performance, which, of course, I have been addressing in my earlier conferences as well. And as you all may recall, it is majorly due to the lack of change in syllabus in both the states of Maharashtra and Gujarat for now the seventh consecutive year. Additionally, second-hand book market continued to prevail due to this, resulting in below average counter sales at the retailers' counter, and new books, which generally is the trend. Now going forward, the company is confident of growing for the next couple of years on account of change in curriculum cycle announced from FY '26. Now moving forward, we remain focused on expanding our reach and strengthening our content portfolio, particularly on CBSE side, additionally, leveraging digital platform to enhance distribution and accessibility. I'm specifically referring to digital platforms because in the publishing side or on a content side or on the usage side by the end users, the importance of digital is increasing day by day. Therefore, this strategic initiative will enable us to build our success and drive for a sustainable growth in publication business. Coming back to Stationery business. First, I'll talk about domestic, that is all India. Now, you all may have noticed that actually we degrew by 13% in FY '25. Let me explain why. First and foremost, drop in paper prices resulted in reduction of product pricing and hence, lower realization by around 9%. And of course, there was a volume drop also by around 4%. The reason of volume growth of 4% was mainly on account of competition from unorganized sector. Now, as the paper prices have stabilized, the trade is convinced about no further reduction in paper price. And hence, we anticipate that the orders would be placed by them confidently, expecting no further drop in the final product prices. So till March, that was the biggest concern in the trade that whether paper prices will further go down and basis that the prices of the end product, which is stabilized now. So here also, we are focused on strengthening our distribution network and exploring opportunities for product innovation to drive sustainable growth in the domestic Stationery segment. Here, I should add that earlier, as you may know that our major focus was on paper products. But recently, in last 6 to 8 months, we have started focusing on non-paper stationery products as well. Couple of them already introduced in the market. And regularly, every quarter we'll be introducing various other products as well. So, our focus of strengthening our distribution network and exploring opportunities for product innovation, that will drive sustainable growth in the whole market. So let me repeat, but while near-term challenges persist, we remain very optimistic about the long-term growth prospects of this segment, backed by our strong brand positioning, extensive market reach, new product range and commitment to delivering high-quality products. With -- post this, I'll talk about now Stationery business, overseas exports. No doubt we were expecting around 15% growth in domestic -- in the exports of stationery, but we could achieve 12%. This new introduction of newer territories helped Navneet to expand its top line, even though -- now this is very important, even though new rates were negotiated with the clients after reduction in paper prices. So, like domestic, even in exports, because of the reduction in paper prices, we had to reduce the end product prices also. But, even though then we have grown by around 12%. The major topic that every one of you may have in your mind, about the U.S. tariffs effect on Navneet. Since our major exports are to the U.S., that concern or that question is but necessary. So I should convey here that the final positive or negative impact of the U.S. tariffs is unknown till final tariffs are decided by the U.S. for each of the countries. Thankfully, the company has not faced any cancellation of orders till now. But when it comes to new seasons or deciding the volumes for each of the product category that we are in, all our customers are saying to wait and watch. They are not ready to comment anything because all of them are waiting for the final tariffs. However, we are very positive on gaining the market share from our present and future product offerings in the U.S. Because when we talk to our customers, most of them wants to favor more and more towards India, but then also they are remaining noncommitted today on a long-term basis, basis the decision on the tariffs. But here, apart from the tariffs, of course, it will be on all the products, but we plan to further expand our product portfolio to include both paper and non-paper stationery items. Overall, looking ahead, we are optimistic about the future prospects of our company. With the upcoming curriculum change that I mentioned, we expect to see an increase in demand of our publications, and therefore, it means volume growth. Additionally, our focus on exports and new product offering will continue to drive growth and increase our market share. In terms of our competitive landscape, we believe that our company is well positioned to take advantage of the changing market trends. Our focus on quality, innovation and customer satisfaction has allowed us to build a strong brand and reputation in the industry. I might -- I may remind you all, and which I have mentioned it earlier, that particularly in exports where there are huge opportunities, with most of our clients, Navneet is categorized as preferred vendor. And therefore, we are very, very hopeful that if the tariffs are in favor of India, I'm sure Navneet will benefit tremendously. So in conclusion, while we faced some challenges in the recent quarters, we are confident that our strategic initiatives and market trends position us for growth and success in the future. We will continue to focus on delivering high-quality products and services to our customers. With this -- this is what I wanted to convey. I should thank all of you to have shown continued support and trust in our company. Now, I open floor for question and answer. Thank you.

[Operator Instructions]. We have our first question from the line of Niraj Vijay from ProsperoTree.

Sir, my question is related to the Indiannica. Sir, what is the revenue and profit from the Indiannica in the financial year 2025 versus FY '24?

Can I request my CFO, Kalpesh, to answer that, please?

Please, please. Anyone -- anyone can...

Sure. So, revenue from operations was about INR 55 crores compared to INR 59 crores in '24.

Okay. And what is the profitability from the Indiannica?

So at PAT level, there was a loss of INR 6 crores compared to INR 10 crores last year.

And at EBITDA level?

EBITDA level, it is INR 1.6 crores loss versus breakeven last year.

Okay. Sir, if I'm not making mistake and I'm not forgetting, in the Q3 con call also it was suggested that the Indiannica may report the INR 60 crores to INR 65 crores of the top line and we will achieve the breakeven. See, at the consol level, the Q4, the major contribution comes from the -- at least in the Publication division, the major contribution comes from the Indiannica, and Indiannica is not making positive contribution to the Navneet final -- at the consol level. How long we will continue the Indiannica business? And what is our actual logic to continue and support the Indiannica business? I don't understand. Because this is -- I think the 8 to 10 years has happened the acquisition and still the Indiannica is not positively contributing to the Navneet. Can you explain something?

Yes, sure. And I fully agree with you that for several years we have not been able to perform in an individual company level on the positiveness. I fully agree with you. Having said that, as a content provider for the last several decades and as you all know, that we were pioneer and we were successful in state-level extracurricular activity books, that is guides, workbooks that we have been publishing. If you have ever read the recent trend of converting SSC schools to CBSE school is rising at a very, very rapid pace. Now here the challenge that we are facing, and likewise maybe all the publishers are facing is going to each and every school to recommend for a textbook. In Navneet, we were always selling supplementary books. Major sale was coming from the trade. Whereas at Indiannica, it is the textbook which we have to visit each and every school on regular basis and get them recommended. Here, competition -- unhealthy competition is frankly coming in our way. Now, I do not know whether it is a short-term issue or a very long-term issue. Books together with digital content providers are very, very few in the country, or the level of digital that we are providing. The major loss that we are still seeing is because continuously we have to invest in digital products also for -- together with the textbook. So what I'm saying that we are quite concerned ourselves about the financial numbers. But simultaneously, keeping CBSE focus away can be the biggest mistake for any publisher now. And therefore, we still continue this. And of course, we are learning on a regular basis on how to manage this unhealthy competition. So I'm sure -- I don't want to commit now because I had myself said, but it has not come true. But I would say that we will have to improve upon, as far as this individual business is concerned.

Thanks. Sir, but is it not [ advisable ] to merge the Indiannica business with the Navneet so we can set up the loss incurred by the Indiannica? And we have a lower tax liability because we -- otherwise, there is a -- at the consol level we cannot set up the -- what we pay tax at the standalone level and we are incurring the loss at the subsidiary level. So is it not advisable to merge the Indiannica with the Navneet and with maintaining the Indiannica as a separate one, not necessary that the Navneet as a brand, but Indiannica is -- because the Indiannica is a 100% subsidiary of the Navneet. So is it not advisable, [ sir ]?

So we are seriously considering that aspect. The reason of keeping it altogether different was the dynamics of selling products. The salaries of the sales team was very, very different than the state level curriculum sale business. That was the major reason of us keeping it separately. But now we are evaluating very seriously and probably in some time we will decide on that as well.

We have our next question from the line of Himanshu Upadhyay from BugleRock PMS.

Sir, [indiscernible] question about Indiannica. Sir, can you give an idea of how many schools we approach this year versus FY '24? And how many titles were subscribed per book -- per school where we approached? And what has been the trend in last 3 years? And why dip? Because it felt that we have increased our sales force and the number of schools we had approached this year was much larger than in previous year. So some thoughts on that would be helpful to understand the challenges we are facing in the business?

So, of course, we do not keep count of the number of schools that we visit, but this is -- this question I can roughly say based on the projections that I recall, that in the earlier year we would have approached around 8,500 schools, of which around 5,000 schools would have been converted for one title to 3, 4 titles. Versus this year we may have approached nearly 10-odd thousand, but we could not increase the conversion. And the reason I already mentioned to the previous person, Mr. Niraj, that the unhealthy competition everywhere is coming in the way. But thankfully, in the state of Maharashtra and Gujarat where schools are getting converted from SSC to CBSE, there we are more or less quite successful. The success ratio is more than 80%, there to have this recommended. So, even for us to retain Maharashtra, Gujarat intact, this is necessary. And therefore, we still continue to do so. But now as far as per school how many titles, to that level I [ guess ] we really cannot share as well. But overall, the reason of degrowth as well as the losses, which I mentioned to earlier person, remains the same.

And how is the Grafalco brand doing, [ means ] sir -- and does it really make sense that Grafalco and Indiannica having 2 separate brands when they are trying to have [indiscernible] so each large market?

Yes, this is typical trend in CBSE schools. So the trend is that no school continues with more than -- for the same title for more than 3 or 4 years. They need a different title, different style of product. And therefore, most of the large publisher in the country, they have their minimum 2 to maximum 5 brands of the same -- coming from the same company. So even if school wants to change from one brand to another, they can do so. But simultaneously, it benefits to the same company. And that is the reason we have kept Grafalco. The other reason Grafalco that we have kept here is Grafalco focuses only on pre-primary and up to Grade 5. It does not publish beyond Grade 5. These products, apart from selling it into the CBSE schools, we do sell them in SSC English medium schools as well. And for that, if we merge Indiannica brand with Grafalco also may create some confusion internally, frankly. And therefore, we have kept this separate.

Okay. Okay. And one thing, we had that digital solution, TOPClass and TOPScorer and all those, which got merged, but we wanted to continue with our digital journey, okay? So what progress has been made in this FY '25? And is it really working or we are not working on that space [indiscernible]?

If we were not continuing our digital journey, it would have really dampened our physical sales of books across. So I'm just not talking about CBSE, but for SSC as well. And therefore, we have to consider that as a cost of production now. Of course, we have a individual product called TOPClass and TOPScorer that -- of course, we have that as an offering to the school. But now every book that we come up with, has some or the other digital component in it. So I would say that, of course, our cost has increased there, and we have not been able to -- or we are purposefully not trying to pass on that to the end customer and consuming ourselves. And therefore, you saw that our EBITDA margin has come down if we compare it with 5 years ahead. So, we are okay with that to continue for next couple of years. And of course, finally, we will try and pass on the same to the end customer. But till we successfully get this implemented, the user base increases for this, we would like to consume ourselves the cost and offer to the student community.

Okay. And in next -- FY '26, what measures are you thinking about our CBSE business? What can we improve and change and target that business? So any thoughts here will be helpful.

So here now the target given to our sales team is instead of focusing more on number of schools, they should focus more titles in the same school. And therefore, we are trying to concentrate on major cities and not trying to grow exponentially in the other cities or smaller cities. That way, there will be reduction in expenses and our focus to increase more titles in the same school would benefit better volumes from each of the school. So this is the action plan that we have designed after the performance of FY '25. And of course, I should also mention to all of you that as far as technology is concerned, we -- you might have read some social media advertisements also, and we have come up with a great AI solution for the teacher community, which we are not charging for the current year and are giving it for free to -- and we have decided to give to around 1,000 schools. And this is not restricted to CBSE schools, but as well it is offered to SSC schools also. The way we are seeing the usage of that tool in the schools, we are very encouraged that this type of facility to the teacher really saves huge time, effort of the teacher on their day-to-day activities, and that will really make us glued in the school for a very long period. So this is one major initiative that we have taken and have introduced. And I think as we know, we are the only publisher in the country offering this solution for the teachers.

We have our next question from the line of Viraj from SiMPL.

Yes. Just a couple of questions. First on the CBSE business segment. Can you give some color what is the sales, profitability of Navneet RISE in '25? And just going a little deeper into the competitive aspect in CBSE, which you alluded now. If you see post NEP, the thinking was that given the kind of digital capability one would require with the content change, then one would see a consolidation and competition intensity would be much lesser in CBSE, but your comments say [ otherwise ]. So can you kind of give a more deeper perspective on what is driving [ NLD ] competitive aspect?

Now, of course, there are more than 600, 800 publishers who may not be publishing all the titles in their company. But with whatever that they come up with, they try to see and -- that their titles get sale. Now unfortunately, they have very limited sales expenditure or advertisement expenditure. Sales expenditure is one of the biggest in CBSE book business. And therefore, they are able to offer higher discounts. Now that higher discounts per se attract schools to recommend those titles. So that is one of our biggest concern that we are facing. I do not recall having talked about consolidation in the industry. But we -- I did recall having said this for our domestic stationery, if paper prices were to further go up, then there was huge possibility of consolidation. So in this, we are not seeing consolidation. What we have now decided that instead of fighting on the discounts with each and every school, we are trying to see what else can we provide to them, what additional features can we provide to them. And that should attract them to buy our product without looking at the discounts only. So that is the way to succeed in this business on a long-term basis, that we have started implementing -- rather introducing this, particularly what I mentioned about AI. So with that, the glueness to continue using our products should increase and more and more new customers should get attracted. So that is the endeavor that we are focusing on, and that should bring us a better volume going forward.

And on Navneet RISE, can you just give some perspective how the -- what...

So Navneet RISE our focus has been always Maharashtra and Gujarat majorly. So our 80%, 85% of the revenue comes from these 2 states only. Whichever schools have got themselves converted to CBSE, we are offering them RISE series. So for the year '25, of the total publication sales, standalone publication sales, the RISE sale would have contributed around INR 35 crores. And we are sure that as and when other schools get converted to CBSE or they grow in number of standards -- because each converted CBSE may not have all the 10 grades with them. And therefore with all this, we should -- at least we want to retain our 2 core states with us. And whatever is required by those schools, we would like to offer it to them. So as far as number is concerned, I did mention and the reason of RISE and a special product focus on Maharashtra, Gujarat also I mentioned.

Second question is on the export piece. Can you give some perspective in terms of contribution of new categories of products? Say in '25, how much those would have contributed, categories of products introduced in the last 2, 3 years? And in terms of the tariff part, so if you can just also give some perspective how does the contracts are arrived at with our customers in U.S.? So typically here, the tariff, whatever is applicable currently, who bears the tariff impact?

I'll answer first your last question on the way contracts are designed. So most of our customers, we enter into a yearly contract. Yearly contract meaning starting from January till August. I'm talking about U.S. customers and where our major business is. So there, the contract is fixing on a price of a product and tentative volumes that they are expecting. So with these 2, we arrive at our production planning. And for every month, they go on releasing the quantities to us for their requirements. This is the way it is designed. So for 1 calendar year, practically you can say the price is fixed and the volumes are more or less estimated. Based on this, we start planning ourselves. So now when we go for the next year season, it will all depend on the final outcome of the tariffs. And based on that, we will come to know what kind of volumes are possible from them. And your first question was on?

On new categories...

Contribution -- yes, new category contribution. So in last -- not 3, but 4 years, we have focused more on file folders made of plastic or couple of metal products. So happy to say that file folder itself is contributing nearly 17% to 18% of our total revenue of exports. Metal is still very small. It's hardly, I should say, 1% or so. Now that they have experienced our product and quality, I'm sure now they will start increasing volume for the products that we are sending as well as new items in the same material that they will start giving us. So it is a journey that we have to be with them and satisfy them, which we are feeling we are very confident and happy that we have fulfilled all their requirements till now.

Sir just 2 questions on this and I'll come back in queue. One is, you did say that it takes somewhere between 2 to 3 years for the trial, evaluation and the ramp-up to happen. So among the categories which you have introduced other than -- are there categories which you think they are now at a mature stage and which should see faster scale up? And second parallel question is on the CapEx, how -- what kind of CapEx you're looking to spend for next 2 years?

Yes. So categories are many that are under pipeline, under discussion with the end customers, rather our customers. And this includes more and more ranges on canvas, which is the cotton as a raw material. So canvas products and some wooden products which are used as a stationery products. So these are 2 categories that I can mention. I will not be able to discuss more about other categories that we are evaluating. And secondly, the CapEx that you asked, so -- of course, there was some CapEx made already, but it's still shown in working capital because we have not operationalized yet. So that number will be around INR 50 crores, which the production facility will start by July. And further we have decided to invest at least INR 100 crores every year in stationery business, which will include buying of land also, construction and machinery. So all put together, sometime it may go to INR 150 crores -- or INR 150 crores, but it will be -- on an average INR 100 crores will be spent in next 3 years.

We have our next question from the line of Arihant from Bowhead.

[indiscernible] regarding Gujarat specifically, which subjects or grade the curriculum is changing this year? And what are the expectation for next year?

Roomy, by any chance do you recall which all subjects are changing in Gujarat?

So yes -- So in Gujarat there are couple of changes of limited subjects in Grade 6 and 7.

Okay. And any expectation for next year? Like in Maharashtra state change is happening grade-wise. So in Gujarat also like for next year will it happen -- curriculum change will happen grade-wise only or will it happen subject-wise only?

Yes. So it is grade-wise, and in the grades also there are specific subjects that are going to change.

Okay. And sir, my other question was on paper prices. Like since the start of this year, has the price increased or decreased? And what is your outlook for the future for paper prices?

No. Since last February the prices are stabilized. It has not increased, neither decreased. So at least for next 6 months we are not foreseeing any paper price increase.

Okay, sir. And wanted to know have we introduced the new products in paper and non-paper and domestic stationery market? When did we introduce that? And how has the response been so far? And what is the growth we are expecting in Stationery domestic segment this year?

Your voice is little subdued, but what I understand the growth prospects in non-paper stationery products, right?

Growth in overall stationery -- domestic stationery, what we are expecting? And the products which we have introduced, paper and non-paper, how has the response been from the market for those products?

So we've introduced most of the new products in the month of March only. And as we are in May, the response has been quite positive. The appreciation on quality aspect is seen. The real test for us is the month of June when the actual users go into the retail trade and buy the products. That will be the real test for us. And we will see then that what is the repeat of each of the items. So -- but as far as trade is concerned, they are very happy with the new quality, new designs that we have come up with.

Okay, sir. And sir, my last question would be regarding export in FY '25, what would be the price decline which we have taken? Can you provide price and volume growth breakup for export stationery?

You're saying price growth and volume growth?

Yes, in FY '25.

What was the price -- Price I mentioned in my speech. Particularly paper products we had to reduce the prices because of the reduction in paper prices. So price reduction would be to the extent of around 9% -- 8% to 9%. That would be the reduction in paper products. Whereas other category, that 20-odd percent that I mentioned, there we did not have to reduce the prices.

We have our next question from the line of Ranjan Shah, an individual investor.

Sunil bhai, I have a very straight question actually, a couple of them. One is that I think this year you reported a turnover of about INR 1,786 crores on a consol...

Consol level. Yes.

Yes. And the profit was at about INR 174 crores, down by about 5% compared to INR 183 crores, normalized.

Kalpesh, can you comment on that, please?

Ranjan bhai, can you repeat, please?

No, no. I actually basically wanted to ask, Sunil bhai, one question, that this year you reported INR 1,786 crores top line and INR 174 crores of bottom line. Now similarly on a consolidated basis, normalized operations, what are your projections for FY '26 and FY '27, internal projections? If you can share those with us, it would be really helpful.

Kalpesh, are you answering?

Yes. So, Ranjan bhai, you are asking for the projection of normalized profit...

First talk about -- Kalpesh, first talk about FY '25 numbers that he's asking.

Yes, he's correct, sir. He's reading from our investor presentation.

Yes. Investor presentation shows that you reported INR 1,786 crores of top line and INR 174 crores of bottom line, right, for FY '25, right?

Yes.

Now my question to you is that what are your similar projections for FY '26 and FY '27? If you can share, it would be really helpful to us. Because understanding exports stationery, domestic stationery, publication, syllabus change, all these things put together, what are your projections -- internal projections for FY '26 and FY '27? Basically, how much kind of revenue growth are we foreseeing in FY '26 and FY '27? And similarly, what kind of profit growth are we projecting for FY '26 and '27? And also the last question, what is the current net cash on the books of the company? And what is the total debt?

So I'll answer that. So as far as debt is concerned, as we speak, we have hardly few crores -- around INR 30-odd crore debt on our books. And as far as projections are concerned, Ranjan bhai, this all depends on how much can we really grow volumes. Because if we stick to the same volumes without increasing the pricing, the bottom line is like -- but obvious will be down. So as far as volume growth is concerned at a company level, so we are foreseeing that on an average, 10% to 11% volume growth we will see. If I talk about publication, around 6%, 7%. Exports around 20-odd percent and domestic around 5%, 6% again. So on an average consol basis, we will see a volume growth of 12%. And with that, the bottom line also should grow by around 10%. So this is the expectation for FY '26. FY '27, I would like to -- not like to comment today because it will be -- it is too early for me to comment on FY '27.

Fine. So basically, approximately INR 200 crores of net profit on a consol basis we can expect for the next -- for the current year, FY '25? Approximately INR 200 crores of net profit?

Yes, yes, yes.

Okay. And sir, what is the total net cash on the books of the company right now as we speak?

Kalpesh?

So as we -- as Sunil bhai just mentioned, we are in debt at present. So as of now -- as on today, we have only debt of INR 20 crores. So there are no cash on the balance sheet.

There's no cash on the balance sheet. Okay.

This is not a time where we would have a cash. We will have maximum cash in the month of September.

We have our next question from the line of Niraj Vijay from Prospero Tree.

My question to Sunil bhai only because, sir, I would like to know what are the major likely positives for the company for the next 2 years? Is it the syllabus change or higher export of stationery or turnaround of the Indiannica? What are the bright spot for the company currently? What you are thinking that these are the bright point on which we can -- the company can encash it?

You yourself answered, frankly, all of them, which is the curriculum change cycle for next 4 continuous years we are very sure of. That will help publication growth as well as profitability. Exports of stationery growth is quite sure. Just one caveat that if some very, very adverse tariff comes on the country, then I -- we may not hold ourselves right. So that is the only risk factor that we see. And thirdly, in domestic market also, instead of just focusing paper-based stationery products, we're introducing various non-paper stationery products in the market. These are the 3 areas where we believe -- rather all the 3 businesses we should be better off than FY '25. And I'm talking about long-term.

Okay. Sir, in a reply to one question, you mentioned that -- the prospective export buyer, our buyer. Has -- have they postponed the decision to place new order or the pipeline is weaker because of the -- there is a possibility of the higher tariff will be imposed by the U.S.A.? Is that the case? Or is it the normal business as the last year?

Till date, it is normal. Whatever orders that we were expecting for the year based on the contracts that we have entered into, have come in. So more or less, the final dispatches would be around 15th of June for the U.S. territory, and that would be over. So their back-to-school season, which starts from August every year, for that whatever that they had committed, have bought. Now we are talking about going forward next subsequent year. For that, I think we all will have to wait till the final decision on tariff.

Okay. By the end of this quarter, we may come to know that the --- will there be any new fresh order or the tariff...?

Yes. So when we have our con call, we would be clear because I believe those 90 days gets over on 9th of July. So by then, we should be clear.

But the current orders are in progress as...

Yes. Not a single order canceled.

We have our next question from the line of Amit Khetan from Laburnum Capital.

So in the Publication segment, can you just give a rough breakdown of the split between Gujarat and Maharashtra and provide some commentary on the dynamics of both markets? Are they different? Are you facing challenges in any of these states? And do you expect similar growth rates in these 2 states?

So the split between Gujarat and Maharashtra this year has been 64% Maharashtra and 36% around Gujarat, if we just take total of these 2 states. I'm saying this because we have some sales beyond Maharashtra, Gujarat also, majorly in CBSE titles that we publish from Navneet. That's what I'm saying this is the split between the 2 states. And growth, I'm sure it will be the same percentage, which I mentioned, 6%, 7% because here, one standard is all the titles are changing, whereas there it is though a couple of subjects, but the higher standard is changing. And therefore, we are sure that the growth will be same in both the states.

Got it. And you mentioned a growth of 6%, 7%, that's in volume terms, right? Are you...

Only volume terms, yes.

Are you planning to...?

No, we are not planning to increase the end product prices. There is no reason. Yes.

We have a follow-up question from the line of Arihant from Bowhead.

Yes. Sir, can you guide like on margin terms for publication and stationery? Like for this year, FY '26, how much higher or lower in percentage terms will they be compared to last year? Because this year we have advantage of low-cost inventory as well. So any rough guidance on how much the margin would be higher this year compared to last year?

Going forward you are asking me?

Yes, going forward, in FY '26.

Yes. So if we achieve volumes that I just mentioned, then margins should definitely improve by nearly 150 to 200 basis points in publishing business. In stationery, frankly, we do not have that benefit of passing on, because as and when the paper prices are changing, we have to change the end product prices also.

We have our next question from the line of Shubham Sehgal from SiMPL.

Yes. I just had one question on our stationery export business. So, like the current product portfolio which we have and the newer products which we are introducing, do we have any products which come under the exemption list from the tariffs? And are we like planning to [indiscernible] products from that list?

As far as our knowledge is concerned, all exports from -- all stationery exports from India to the U.S., all carry same tariff as of now. So I'm not really known -- I do not know any exemption list within stationery. So, if you are aware, please let us know which particular stationery product is exempted. I -- at least we are not aware about it.

Okay. Got it. Anyway. Like on the domestic stationery, like as we mentioned that we saw around 3%, 4% volume drop. So going forward, let's say for the [ next ] 3 years, what is our plan for domestic stationery? Like how do we grow marginally in domestic market?

By only introducing new and new category of products. We want to then grow our business on a top line basis also and little bit improve our bottom line also, but getting into non-paper stationery products. Paper stationery as a category to improve margin is becoming bit difficult now.

So currently what would be the mix of paper and non-paper products in domestic -- like is non-paper right now like [indiscernible] or...

Yes. Our non-paper contribution is hardly 3%. One minute. Around 8% FY '25. But mind well, these products were -- we were selling for many years. Of late we have redesigned, repackaged these products, have brought more variety of products in there, which we have recently introduced from the month of March.

Okay. So going forward we can...

As a percentage to total stationery business in the country, non-paper percentage should rise faster.

Okay. Got it. So apart from product introductions, are we also looking to maybe acquire players in the domestic stationery because like other competitors have been doing the same?

At present we do not have such plans.

We have our next question from the line of Madhur Rathi from Counter Cyclical Investments.

Sir, I wanted to understand regarding our stationery business margin. Sir, so if I look at our overall domestic plus exports, sir, you said that it is difficult to improve margins in our Paper segment. So what is the stead state margin then we expect going forward from FY '26 in this segment overall?

One minute. So steady state you can consider 12% to 13% EBITDA margin.

Sir, this was much higher when we -- like I think last 2, 3 quarters back we were considering more than 15% in the EBIT margins for our export business and 12%, 13% for our domestic business. But combined 12%, 13%. So has anything changed particularly for us to -- or is this a conservative number?

So in the domestic business, it has further gone little down. Export, it has been 15% to 16%. So therefore, if we combine both the -- revenues of both the businesses, I mentioned 12% to 13%. And we have been showing the same -- or we have been achieving the same for last couple of years. Sometimes because of the sudden change in the product -- raw material prices, we see variation of 1%, 1.5% here there, but these are all time-bound decisions that we have to take.

Got it. Sir, what is the tariff for export of stationery from India versus any other -- mainly China or any other competitors that would have? And sir, currently, tariffs, are we currently paying it for our customers and getting it back? Or how is the accounting done for that?

So we are not concerned about tariffs levied on to our customers. So it is their responsibility to pay those tariffs. So we have nothing to do with tariff today. And as far as comparing tariffs between the 2 countries, I think major exports are from the -- from China where the tariffs -- general tariffs are 30%, 30% versus from India it is 10%.

Okay, sir. Got it. Sir, just one more question, sir. We mentioned that paper prices will be flat for the next 6 months. Sir so -- and our -- majority of our business will happen in the next 6 months. Sir so is it fair to assume that the volume growth of 10%, 11% should translate to value growth for FY '26?

Yes. If it is volume growth, the same percentage you should consider for value growth also.

Okay, sir. Sir no impact of rising paper prices or nothing like that, right?

No, no, no.

We have our next question from the line of Himanshu Upadhyay from BugleRock PMS.

My question was we have some of those investments like SFA play and where we were very optimistic on, right? So what happened in FY '25? And how has that business progressed? And also, if you can tell about other investments which we have had historically, like Be-Galileo or Tinkerly?

So, I think both the small investments, even though one of the company is closed, which we have already written off, that is -- which one was that?

Be-Galileo.

Be-Galileo -- Not Be-Galileo. Tinkerly. That we have already written off. On Be-Galileo also we are writing off every year some or the other amounts. Company is still in operation, but we have no hopes, more hopes from that company. As far as SFA is concerned, good news is that the demand for such company is rising very, very fast. Problem is people spending more on these businesses for their company's awareness creation. Since the -- they are not able to get good advertisers or sponsors for the events, the company is still making losses. Simultaneously, various state and central government are continuously offering them for the opportunity of managing the sports, or every event. So as far as numbers are concerned, they just did around INR 80-odd crores revenue last year and with a loss of around INR 25 crores last year.

And the number of events, how would that have scaled up and...

So 9 -- in 9 states, they conducted the event. And major loss is on account of the -- their SFA championship that they conduct in these 9 states, where the major losses are incurred, where, as I said, they are not able to attract yet the advertisers or sponsors. But number of schools participating it, or number of children participating in it is increasing.

Thank you. Ladies and gentlemen, this would be the last question for today, and I now hand the conference over to the management for closing comments.

Thank you. I take this opportunity to thank everyone for joining the call. I hope we have been able to address most of your queries. If you still are left with any queries, kindly get in touch with our Investor Relations department. I also thank Jinesh of Prabhudas Lilladher to have helped us conduct this con call. And once again, thank you, all.

Thank you, sir. On behalf of PL Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.