S Chand And Company Limited (SCHAND) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to S Chand and Company Investor Call hosted by Prabhudas Lilladher Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Jinesh Joshi from Prabhudas Lilladher Private Limited. Thank you, and over to you, sir.

Yes. Thanks, Aisha. On behalf of Prabhudas Lilladher, I welcome you all to the 4Q FY '21 earnings call of S Chand Limited. We have with us the management represented by Mr. Himanshu Gupta, MD; Mr. Saurabh Mittal CFO; and Mr. Atul Soni, who's Head, Investor Relations. I would now like to hand over the call to the management for opening remarks. And after that, we can open the floor for Q&A. Thank you, and over to you, sir.

Thank you, and a very good afternoon, ladies and gentlemen. I am Himanshu Gupta, the Managing Director of S Chand and Company Limited. I would like to welcome you all to our fourth quarter and full year results conference for FY '21, and thank you all for taking the time out and joining us here today. I trust each one of you and your loved ones are safe in these difficult times. FY '21 has been a difficult year for all of us. The pandemic has impacted millions across the country. For the formal education sector, it began in March 2020 and continues to date. School, colleges, education institutes across the country were closed for most part of the academic year and continue to do so. The sector has had to adapt to the changing time line of examination, admissions and to online education. While urban and semi-urban areas have largely adapted, the major impact has been borne by students who have no access or limited access to devices. As per report, millions of students have had no exposure to formal education during the year. And while they'll be promoted to the next level, they would be impacted by this gap. We have built pandemic-enabled schools and colleges with online resources. Our Learnflix app was also provided to schools free to access during the initial months. Mylestone could also ramp up immediately to providing online education to its users within April 2020 itself. We conducted various workshops and seminars for teachers to train them on to new forms -- sorry, we conducted various workshops and seminars for teachers to train them on to teaching online. We acquired majority stake in Edutor Technologies in August 2020, which now forms the backbone of all our online learning solutions, that is Mylestone, Learnflix, Educate-360 along with its own IGNITOR platform. We also launched Educate-360, our learning management system in October, piloting in almost 50 schools. However, despite the various challenges faced like paper supplies, increase in paper prices during the last quarter, reduced engagement with schools and channel partners during the year. It has been a turnaround year for us in terms of reassessing and restructuring our business and making it more cost effective and working capital efficient, which resulted in generating positive cash flows. We have been extremely careful during the year to this regard. The plan S Chand 3.0 envisaged in December 2018 have been completely implemented and Slide 4 to 10, there's a lot of details around the positive outcomes of this plan. I'm extremely happy to report key highlights on this front that while we retain revenue at the same level as the previous year, we have more than doubled our operating cash flows on a Y-o-Y basis. They've also become free cash flow positive after FY '18 and reported a huge improvement in this metric. On the balance sheet front, we have reduced our net debt by over INR 700 million, which led to our lowest net debt level for the group since September 2018. Our focus on reducing inventory also led to our lowest inventory levels in 5 years on a year-ending basis. On the P&L front, we returned to positive EBITDA levels after FY '18. Our print business also returns to profitability on back of the full impact of our S Chand 3.0 program that led to a very strong reduction in operating expenses of over 46% over FY '19. Saurabh, our CFO, will give more details on these financial matters in his remarks. On edtech front, we are taking strong strides and getting ready for increased adoption of our digital solutions in a post-COVID world. Our most affordable learning app, Learnflix has over 2.3 lakh downloads and over 21,000 paying subscribers. We expect schools, which were provided with free usage during FY '21, would convert to paying customers in FY '22. We also have plans to launch Learnflix Bangla during the first half of this year. Our e-commerce sales now account for over 10% of the company's revenues, which is an encouraging sign. Our total e-book sales across B2C platforms and B2C sales -- and B2B sales institution has also doubled over the last year during FY '21. Madhubun Educate-360, our K-12 learning alignment system got implemented in 15 schools post successful pilot. We expect more schools to use this product as the year goes by. We're in the process of transferring Mylestone and Learnflix, our school and student solution, into an SPV, Convergia Digital Education Private Limited through a slump sale with the view of raising capital separately for this business to grow exponentially. Various formalities for this are mostly done and we expect the process to be completed by July. When I look back over the 12 months, I see FY '21 as a year in which we are extremely successful in doing the course correction on financial metrics, which were internal to our company and in our control. Now turning to more recent event, we saw the onset of wave 2, leading to schools and education institution taking precautions and shutting down from mid-March onwards. Most of the institutions preponed their summer holidays from April onwards. The current situation is that schools and colleges have remained close from March until June. We hope that given the lower number of cases, currently education institutes would start to reopen from Q2 and Q3 onwards. Online classes have resumed in schools and summer holidays at most places have ended. Our college segment will see shifting of sales from Q1 to Q2 and Q3 as Board examinations have been canceled and we expect central exams to happen over August, September, and academic sessions will start from October onwards for higher education institutes. As for FY '22, we believe that we are poised for growth across the group to fully leverage a normal sales season. Given the uncertainty around the number of COVID cases, you would see shifting of revenues across quarters of schools and colleges open up in due time. We're looking to increase our book prices of 5% to 10% across the portfolio on back of paper price hike over the last 12 to 18 months. This should aid our gross margins in this year. We believe that we have a great opportunity in coming time for blended learnings as a media of communication. We're confident of the value-add that our digital solutions, along with a strong content that positively build over 8 decades will provide. We feel that these products and services would be the future growth drivers for the group in the coming years. With that, I would now request our CFO, Mr. Saurabh Mittal, to appraise you of all the financial performances of S Chand. Thank you.

Thank you. Good afternoon, everyone, and thank you for your time. I'm Saurabh Mittal, CFO of S Chand. In terms of numbers for the full year, our consolidated operating revenues came at INR 4,252 million versus INR 4,294 million during the same time last year. In spite of marginally lower sales, our gross margin for the year increased by 3% as a result of product rationalization, distribution of e-specimens and higher e-commerce and e-book sales. On an annual basis, we have increased our consolidated gross margin to 57% from 54% last year. On the back of our successful implementation of S Chand 3.0 plan, we saw operating expenses lower by 28% on a comparable basis and 46% lower in comparison to FY '19. We returned to EBITDA profitability after FY '18, with an EBITDA of INR 748 million versus a loss of INR 126 million in the same period last year. Our net loss reduced by 94% to INR 65 million versus a net loss of INR 1,115 million in the same period last year. I would like to point out that we would have returned to profitability, had it not been for the onset of COVID late in March. I would also bring to your attention to Slide #4 to 10, which should show the results of steps taken during the last 2 years towards building a cost-effective and lower working capital organization, which focus on positive cash flows. We continue to focus on working capital rationalization, product rationalization and growing margins for the coming year. In terms of working capital, debtor days have reduced to 276 days versus 285 days at the end of Q4 FY '20. Our net working capital days also decreased to 293 versus 321 days in Q4 FY '20. In terms of debt, we ended the quarter with a gross debt of INR 2,031 million and a net debt of INR 1,284 million, which is lower by INR 707 million over Q3 FY '21. This is the lowest level of net debt since September 2018. I'm happy to report that in terms of cash flows, we saw a massive improvement in operating cash flows coming through from the full implementation of S Chand 3.0 plan in the past 18 months. Our strategy of focusing on cash flows has yielded results with more than doubling of net cash generated from operations of INR 1,076 million in FY '21 versus INR 484 million in FY '20 and INR 386 million in FY '19. On an overall basis, there is an INR 828 million improvement in free cash generated over last year in spite of pandemic times. We have turned free cash flow positive of -- with these INR 321 million versus negative INR 507 million. As we go into FY '22, I would like to call out a couple of things for the coming years. Firstly, we would be taking a price hike across our product portfolio to the tune of 5% to 10%. Secondly, we expect some portion of Q1 revenues to move to Q2 on back of school closures than most of Q1. Similarly, Q2 would see some shift in our revenues from higher education segment on the back of delayed college openings. This Q2 and Q3 could be bigger quarters in comparison to the previous year. Thirdly, with the increased number of vaccination and lower COVID cases, we expect schools and colleges to gradually reopen and this can lead to normalization during Jan to March '22. This -- thus, if COVID situation holds up, then we can get the dual benefit of higher product prices and normal sales season in FY '22. Though it's very difficult to give a guidance number for revenues during pandemic times, but if the above-mentioned situation holds up, we can end the year with upwards of INR 500 crores with higher EBITDA margins. Fourthly, on the debt front, we aim to be net debt free in 2 years and further optimize working capital going ahead. Fifth, the biggest growth driver for our print business would come from the introduction of new syllabus post the announcement of the NCF. This should lead to strong revenue and profitability growth for 2-, 3-year periods. Our base case is that the NCF should impact financials from FY '23 onwards. An earlier announcement can greatly change our FY '22 financials as well. With this, I would like to open the call for questions. Thank you.

[Operator Instructions] The first question is from the line of Deepan Shankar Narayanan from Trustline PMS.

Firstly, congratulations for the management team for a strong cost control and strengthening balance sheet and improvement in cash flow. So my first question would be, so earlier we were targeting INR 600 crores kind of revenue for FY '21. So these lower revenues will be a large opportunity or we can make it up for the next -- during the next 2 quarters?

So I'll take that. See, we were targeting INR 600 crores. But however, the situation across the country with schools not opening and colleges also not opening, the situation remained very, very limited in terms of what we could do during the year. Most of the rural belts got impacted with no schools running at all, even online classes not happening. And that's quite a large portion of our sales. So instead of aggressively pushing into that segment, we've seen what inventories are there in the market. And we prefer not to supply in certain locations because that would not help at all. So we've tried to be as conservative as possible to ensure that, I mean, we don't waste resources just for the sake of it. So yes, while revenues are much lower than expected, but I think the end result of making money on revenue is there. And we have what we targeted in terms of profit is quite there already.

Okay. Okay. So the assessment in terms of Q1, has it improved in terms of even online classes starting up and book ordering has improved or still we are seeing not improvement much?

I think the first quarter this year has been greatly impacted because, as you know, the second wave and the lockdown hit us in the month of April and May. And that was the first quarter. So our offices were also close. Our warehouses and factories were also close. So the first quarter has been impacted this year. We will still get to know the full results after the closing of the first quarter. But it has been impacted because of the second wave.

Deepan, just to add, we have also mentioned in our presentation that we expect Q1 this year to be softer versus Q1 of last year. And this is -- and the revenue should get shift to later quarters.

Okay. Okay. Okay. So this whatever we are running sort of in FY '21, how much could have been recoverable in the coming quarters?

Difficult to say. Very difficult to say how much we'll recover because sometimes the decision of the customer has postponed or sometimes even the parents of the children can get used books or they exchange the books from their friends or their neighbors or whatever. But we believe that it will all depend on how the schools open up because the important part of school opening up is very important that we are still not sure.

Okay. Okay. And in terms of FY '22 guidance of INR 500 crores. So are we also incorporating some part of revenues coming from NEP as well?

No, not as of now. No.

Okay. So what is the status on NEP, how things are moving over there?

The status is still not very clear. We are just thinking because as the schools are not opening up and bringing a new curriculum for the government and to train the teacher and to implement that in the school where the physical schools have not opened will be a difficult task for the government. So we believe that it might not happen this year, it might happen next year. But we are still not sure about it.

Okay. Okay.

So Deepan, if you look through our presentation, we have mentioned that for us, now the base case is implementation of NPS in FY '23. That is what we have shared as our base case. Obviously, if it happens earlier then it is positive for FY '22, but that is not something what we are building in currently.

So that's way we are expecting FY '22 to be on organic revenue growth?

Yes.

Yes.

Okay. Perfect. And whatever the...

Understand this is a government matter, so it's very difficult for us to give a guidance on when it will be released. But yes, I mean, given the way the pandemic is going on and I mean, the authorities are busy in handling the pandemic at this stage, so our -- we don't have a lot of confidence in it being released within this year.

Okay. Okay. Okay. And what are the growth target for Learnflix? Last year, we have been discussing about around 1 lakh paying -- payment -- paying subscribers over next year, right, FY '22. So is this target still remains?

Yes, the target still remains. Unfortunately, we were targeting that because it's more of a B2B sale for us, not a B2C. B2C sale requires a lot of marketing, which at this point of time, unless we have a fund raise we will not go ahead with that. So we are still working on the B2B space. And once schools are able to operate normally, I'm sure that will happen.

Okay. Okay. And lastly, our other intangible assets increased by INR 33 crores. Any specific reason for that?

That's more of an accounting issue. That's on account of the Edutor becoming a subsidiary. We acquired it in August last year, and then the platform IGNITOR was valued at a higher distance. So that -- it's more of an accounting issue, not really cash outflow.

[Operator Instructions] The next question is from the line of Ajay Sharma from Cycas Investment Advisors.

I just had a very broad question here. So as an investor, is it best to think of this company as an edtech company? And if it is, how do you view the competition and the consolidation that's happening right now in the edtech space. How is the company changing its culture, its structure, its management strategy to be able to better deal with this competition?

So I would not call ourselves an edtech company -- as an edtech company as such. However, we are a content company, and we provide content on different medium whether it is the print medium or the digital medium. As far as competition is concerned, we are in the former sector, and we are not really in the supplementary education space. So while most of the competition that you're talking about would possibly be in the supplementary space. So on the formal education front, most of the players are doing the same thing. I mean, they are providing both print and digital content to the schools. And that's where we will continue to focus because that's what is core to us, providing quality content to educational institutions on a B2B or B2C basis, and that continues to be our focus. Currently, we don't have a plan of doing any supplementary.

Ajay, when you say competition, do you mean edtech competition, the likes of BYJU'S and all? Or do you mean publishing competition -- I mean, publishing competition?

I mean competition from the likes of BYJU'S and all because they're also like expanding into content, and they're also now dealing with schools. So I'm looking at the long term, maybe like 5 or 10 years?

So basically, Ajay, our focus is mainly because our strength is the relationship that we have with the schools and the team that we have and the content that we have. So basically, we are more a B2B2C kind of a player. So we would like to focus our energies on the B2B2C segment, where we believe a Learnflix like kind of an app, which is quite affordable, which is priced at INR 2,000, INR 2,500 per child per year. Whereas a BYJU'S or any other product in that category priced at INR 40,000 to INR 50,000 per child per year. So we are quite affordable. So we believe we could have done more if the schools would have opened. But whenever the schools start opening up, we are already in touch with them. We believe we'll be able to do a lot of contracts with the schools and be able to provide the content in the form of personalized learning app to the schools. So we believe we want to play to our strengths and not try to follow others in that way.

Okay. So in the next maybe 5 years, you're not so worried about potential competition from the edtech space in the likes of BYJU'S and all that?

In terms of the print business, I don't think so BYJU'S is going to enter the print business, I don't know, personally. But if you want to say that the books will be replaced by digital only, we still believe that books -- digital and books will go -- print will go on hand in hand. And still, it is going hand in hand because students do need books. And we have seen also through the onset of COVID in the last 15, 16 months, even I can talk about my personal experience with my kids, they are facing a lot of online education fatigue, sitting on the computer the whole day long and doing their classes. And still they need books for reference. So books are still being used by children, even when they're using online. But when the physical schools open up, definitely, the book sales will definitely increase in that.

[Operator Instructions] The next question is from the line of Devang Patel from NAFA Asset Management.

Sir, first question was on the edtech space. What kind of competition are we seeing in the B2B2C space? You earlier mentioned you will stay away from B2B. But in our particular space, what kind of competition is there?

So in terms of affordable pricing, there are some players that have come in. I think there was a player but we, I think, started one the learning -- are you talking about the Learnflix space or -- because Mylestone has a different set of competitors and Learnflix has a different set of competitors. So in terms of Mylestone, the competition is more or less with XSEED, with LEED, with IMAX, all these other players in Mylestone competition. In Learnflix, there are 2 or 3 players, but they are not substantial players because the school personalized learning app solution I think it's not a very old business. It only started, I think, 1.5, 2 years back. So there's still a new proposition. And no major players I have seen, which has cracked the market because the schools have been closed for the last 15, 16 months already.

Okay. Sir, I had a question on the inventory on the auditor's qualification. In the December results, the qualification was not there. So was it because it was a limited review of the numbers?

No. So we got an inventory. So we do a half yearly inventory verification. And last year, we got it done in October, November. But this time, normally, what we do it, we do it post season in the end of April or first week of May. Last year, also same thing happened and end of April was not possible. This time also end of April. The whole of May, it was practically impossible to do physical verification because warehouses were closed most of the time. And we barely had people on the ground to -- we started -- probably started our warehouses somewhere at the end of May because of the pandemic. So we couldn't get it done and hence we are trying to do the physical verification in the 1st week of July. So it will be out in a limited review of the next quarter.

Okay. And when the new content comes out, is there any risk to our older inventory of books? Would there be some write-off if a new curriculum coming on?

We've already taken a provision for inventory across the group, which is already factored into the financials. Last year, it was around INR 10 crores. This year also, I think, it's around INR 10 crores, 12 crores, we've already taken that. Having said that, there is some risk. I'm not saying there's no risk at all. However, as the NCF comes out, the deployment happens over a period of 2, 3 years. And this year also we have time to look at our inventories. Our target for inventory reduction is to bring it down to around INR 80 crores by the end of this year. And a lot of the inventory that we have also includes higher education inventory and a lot of the general titles, which don't have the same kind of risk. So I would say, I mean, it's not substantial. It's not a huge risk to the system, but it is there and most of it has been provisioned for.

Sir, just to clarify, did you say inventory you're looking to bring down further to INR 80 crores next year?

That is our target here. We brought it down from INR 200 crores to INR 137 crores. Our next target is to bring it down to about INR 80 crores.

Right. Right. Sir, on the employee cost front, we've done very well in the last 2 years, and we've actually leveled probably in FY '16. What kind of headcount reduction have we done in this area that we pull down our headcount?

See, our total -- so the reduction in the employee cost would largely also be on account of the pay cuts that we had to introduce last year. Most of them have been rolled back and -- so I don't see employee cost going forward reducing as such, but we like to maintain at slightly -- this level of slightly maybe 10% higher. We've done about -- our number of people is down by about 200, 250 people across.

So what kind of [indiscernible] reduction?

Yes. So I mean, we've reduced our headcount by about 15%, 20% over the last 2 years. And largely, this is in the back-end operations. Front end, of course, we've not -- front end has been about 5%, 7% only. But I mean, the sales in editorial, we really retained most of the people. And back end, we've consolidated our locations into a few locations. So supply has been centralized, so that we have less locations, less people to handle it and that is also helping us on the inventory side. So less number of warehouses means less inventory to keep. Where there's a duplication of inventory like in multiple places. So we brought down our warehousing locations in the parent company from what used to be about 18, 19 locations to now we are down to 4. And that's helping us on the inventory side, both at the number of SKUs and also the cost of managing that.

In addition, we've also closed a number of offices. So if you close over, let's say, around 15, 20 offices, there are a lot of staff in every office, which is -- which goes in the usual running of the office. So a lot of those people have also been let go.

Okay. On CapEx, what kind of CapEx have we done this year and which area?

CapEx is around INR 12 crores out of the cash flow.

Okay. The total CapEx is about INR 12 crores to INR 15 crores, and it's largely around content development.

Okay. Sir, and we have 14 -- about 14 subsidiaries and associates all put together. Other than the digital subsidiaries, does it make sense to much the larger ones and take benefit [indiscernible]?

So the smaller ones, we're already merging and still in process, I think. So we should be reducing our first subsidiary by the end of next year. The larger ones have -- I mean we've not planned on as of now. But maybe going forward, we will have a relook at the structure. Since all of them have different operating cycles and a niche kind of product line. So for the front-end team and the content team has been kept separate, so that the culture of that company remains because most -- a lot of these are acquired entities. So we will bring it down to about 8, 9 entities over a period of time, but not -- we haven't planned for anything more than that.

Okay, sir. Sir, on the 3.0 initiative, what further could we expect both on margins and working capital?

S Chand 3.0 is complete for us. So cost reduction, yes, were not required. We will definitely be relooking. But now are focusing more on 4.0, which is -- which we'll share probably next quarter. We will look at our digital initiatives, how to move them on. We'll be looking at a lot of data points and developing our other initiatives. So currently, cost side, I don't see too much that we can do. We reduced INR 157 crores fixed cost over 2 years. I mean there is not much more you can do in that.

So I mean, in 2 years, we've gone from almost INR 330-odd crores of operating expenses to around INR 177 crores this year.

Right. Sir, lastly on the fund raise for the asset businesses, has there been any delay or feedback because of COVID?

Yes. I mean so we still have engagements ongoing with investors. And we are discussing with 2, 3 of them, very, very preliminary stage. We can't disclose anything as of now, but we still like it. Having said that, our own cash flows have improved. So we've not been very aggressive on the fund raise. But now it looks like we can manage a lot of things from our own internal cash flows without diluting at this point of time.

[indiscernible] B2B, B2C sales will come only after fund raise is it?

Yes. B2C, of course, we will not be investing to the time we have a fund raise. But rest of it, B2B can continue with the current -- and to be honest, our Mylestone is almost breakeven in terms of EBITDA. And so we feel we can continue to run it ourselves.

We would request the current participant to please come back in the question queue for any follow-up questions as we have several participants waiting for their turn. The next question is from the line of K.R. Senthilnathan from NAFA Asset Management.

Sir, if NEP comes, how much do we have to spend for our content? And already, we have started spending for that, one. And number two, and if NEP comes, what would be the -- I mean, will you be taking the price hike and how much that would be?

So currently, we haven't started spending. And see our content development, there's both a function of -- we have a good offer base for which we already pay -- we pay royalties to them. So upfront spend is not very large. On the whole, I would say, at the max, we probably end up spending about INR 10 crores to INR 15 crores on the implementation of the NCF. And...

See, a lot also depends on what comes in the NCF, right? So I mean depending on the number of changes -- see, I mean, you will appreciate that for subjects like maths and science, basic things don't change, maybe the ordering of the -- I mean the subject -- I mean the ordering of various topics can change. The way they are being brought about or being taught can change. But a lot of the content is there and will continue to be used in future years. So yes, for languages, things can change. So I mean, we need to see what the contours of the NCF are to be able to give you a firm answer to that.

And secondly, obviously, the price will also depend on the number of pages that the book will contain after the NCF comes in. So if the book becomes much more thicker, the price will increase. If the book becomes thinner, the price might remain same or decrease also. So that also we don't know until the time the book is ready to print in the market.

Okay. Okay. And how much would be the secondary sale market, sir, in the entire curriculum, approx?

In the -- sorry?

The secondary market -- the secondary sale market?

Secondary sales, what do you...

What do you mean by secondary sales market, sir?

I mean second sales market because like -- I mean if the curriculum comes, the new -- I mean, everyone has to buy the new curriculum. Whereas now already the used books will be in the circulation. So how much would be the number?

The CBSE schools is the secondary market sale -- the secondhand book market sales, I would -- this is COVID time, so this is a different situation. But in a normal situation where the COVID was not there, we expect 15% to 20% books could have been exchanged a purchase. But after the new curriculum, that number will be 0%. So that increase in sales in terms of units should come in. But maybe it doesn't come in the first year, maybe normally, the implementation takes 2 to 3 years for the new curriculum to set in. So the first 2, 3 years, we will see a good runway growth in terms of sales and unit sales also at that time.

So this runway growth will be more or less to the extent of this 20%, sir? Is that -- I mean, is that will be the right assumption to us moving towards it?

In terms of value growth, yes, value growth, we should have a good number. As the price part, we still don't know. So defining that number will be difficult. But yes, unit-wise, growth would be good for sure.

The next question is from the line of [ Anil Jain from HA Consultancy. ]

Yes. Sir, just wanted to understand your broader view on the digital business. So in the coming, let's say, next 3 to 5 years, what is the percentage of revenue, marketing spend, CapEx we are expecting from that segment?

So in terms of marketing spend, again, it depends on the kind of fund raise that we do, if we have to go with the B2C. B2B continues to be the same. I mean we don't really have too much of a spend in marketing except for the people that we will be made on the ground. So what was the other part of your question?

See, currently, digital is almost 6% to 7% of our revenues, and we target around this could reach upwards to 20% to 25% over a 3- to 5-year period.

Okay. Okay. And sir, what is the percentage of revenue we are looking from the digital business in the coming 3 to 5 years?

That's what I said 20% to 25%. Because the print -- I mean, the print business as of now is almost 90% plus. So that's not going to vanish over the next 2 years, right? So that business will stay with -- and with NCF coming through, that business is more stronger.

Okay. Okay. And sir, what is the -- yes. What is the active users for Mylestone and Learnflix?

See, my active users for Mylestone -- so they are about 1,40,000, 1,50,000 students on the Mylestone schools. And out of that, I think about 60% -- 70% are using the digital platforms, which is going through the Mylestone app. Learnflix, we have a total 200,000 downloads. Plus active users, I think we got 35,000, 40,000. And...

Okay. Okay. And sir, last question is on Convergia. So once the fund raise happens, how we are thinking to utilize that trend fund, whether it will be used by Convergia for expansion or there will be some upstreaming to S Chand?

So -- for Convergia in terms of what we'll use the money for, it's going to be used in 3 ways. One, is to drive aggressive growth. We would, of course, enhance the team. The current team is small. Secondly, we have to do a lot of product development in terms of the platform itself to add further features to the platform. And of course, then -- third, of course, is the content development required to make -- required for Learnflix to become a complete K-12 solution. Currently, it's 6 to 10 maths and science solution. We are adding social studies this year, but it has to be a K-12 solution for -- to have a wider spread.

Just to give a clarity there, it will be purely used by Convergia and for Convergia. It will not be used by the publishing business. Because the fund raise will be in the name of Convergia. So it will be used -- the proceeds will be used for that particular endeavor.

Okay. Okay. And is there any expectation on the maximum stake we want to dilute?

Maximum about 25%, 30%.

The next question is from the line of [ Rahul Ramakrishnan from Invest ED ].

Sir, am I audible?

Yes, please go ahead.

Yes, sir. Congratulations on a good set of numbers. I wanted to ask about this Mylestone, sir, because, see, what I've noticed is that just like you have Mylestone, a lot of other people are also offering these learning management systems. So how much pressure are you kind of facing from schools to -- I mean not pressure, I would say, but how much competition is there really for people to push this?

So Mylestone is set here, because it's a good product. It solves the problem because it goes to the affordable private schools where they have a problem of quality teachers. So it gives them a complete 360-degree benefit of telling them what to teach, how to teach, when to teach. So there is a complete blueprint on what the school needs to do. And currently, apart from LEED and -- apart from LEED -- LEED is probably the one that is taking the -- going ahead most aggressively. Apart from that, we've been growing well in the last 4, 5 years. And this has been well accepted and appreciated across other schools.

Targeted to be [indiscernible] INR 1,000 to INR 4,000 per month?

Okay, sir. Sir, just a follow-up to that. So when you offer this Mylestone, does that also kind of ensure stickiness for the content that S Chand has? At the same time, does Mylestone also offer content from other publishers as well?

No, the Mylestone is complete curriculum K-8, all subjects. So it has its own curriculum, of course. S Chand content has not been used, but it has been reviewed by the S Chand experts and it's completely independent content, which goes to the school.

So there is no other publisher book which goes in Mylestone content. See, I mean the whole content -- all the subjects in that particular class, the content for that book is basically Mylestone content only.

Okay. Okay, sir. Clear. Clear on that.

I think, let's say, 5 books from 5 publishers, you have all the book for all subjects by Mylestone.

Right, sir. Right, sir. And sir, is it possible in your future presentations to just explain the revenue model of Mylestone because I understand you won't have enough time on this con call. But is it possible in the future presentations to just to -- for us to understand the revenue model of Mylestone versus Educate-360. Because to a layman, it just seems the same. Like we're not able to understand the difference between Educate-360 is offering versus a Mylestone.

So what I suggest is that let's do a call separately, and we can explain it more in detail to you.

[Operator Instructions] The next question is from the line of Deepak Mehta, an individual investor.

Great set of numbers. So my question is around the aspect of the cost. So if you see raw material such as paper prices has been increased. So how long it take to pass back the cost to the customers?

So in this case, as last year, COVID situation has set in, and we decided to help the students and the schools management that we should not increase the prices. So we didn't increase the price and a lot of the industry people also didn't increase the prices in this regard. But as the paper price has increased last year, we believe the paper price has a little softened down after the increase. But we normally do annual paper contracts, which makes our paper prices quite stable. But last year was an exceptional year where the price increase was 30% to 40%. Normally, the price increase happens 5% to 10%, that's still in the contract. And this year, we are going to pass on the paper prices to the -- in the books where we are going to increase the paper -- the book prices between 5% to 10% depending on book to book. So that should be able to help absorb the paper prices increase there.

Okay. And my last question is around the digital content. So you are targeting the revenue of around 25%. So how much overall growth you are expecting from digital content? And you said that 20% value growth we can expect in the next 3 years overall revenue, right, sir?

No, sir. Currently, digital is around 6% to 7% of our total revenues. It takes to become 20% to 25% over the next 3 years.

Okay. And at the same time, what will be the growth in our legacy business in paper money?

The print business, sir, depending again on the COVID situation, as Saurabh has earlier mentioned, we like to cross INR 500 crores revenue this year. And when the new curriculum comes in, then the growth part and the sales growth will be more aggressive, and you will see a much better -- double-digit number growth at that time. But till that time, we would be looking at normal organic growth.

Okay. So the curriculum changes is going to be happen in the next 3 years...

Impact will happen in 2 to 3 years. The syllabus might come in next year, that we are hoping for. We are hoping for coming this year, but looks difficult because the schools might not likely change the syllabus in this COVID times, looks difficult.

The next question is from the line of Jinesh Joshi.

Yes. Sir, 2 questions from my side. First is on the revenue front. Obviously, we were flat in this year because of COVID. But can you highlight how have our peers done in FY '21? Have we seen such kind of a flattish number on the sales side? Or have they seen some kind of erosion in sales? And also given the fact that last 2 years have been very bad for the publishing industry, are we going to witness any kind of reduction in the number of players going ahead?

Yes. So to answer that question, there's only 1 listed company on the stock exchange, which is Navneet, which does almost similar kind of our revenue in terms of publishing and they do stationary also. So what we have seen in their numbers, the reduction in terms of the sales last FY '21 number, the publishing was close to around 45%. So that has been -- the sales has been quite seriously dropped. And as for the other players in the market that we have come to know, there is a phase of consolidation because a lot of people are taking difficulties on the financial front and especially the small and medium players are facing the difficulty. The market is going -- now started to go through a phase of consolidation. And in next 2 to 3 years, there will be lesser players in the market, but the players that will remain will be bigger and more serious players in the market, and that is good for people like us.

Jinesh, NCF should also help that process. Once the new syllabus comes in, then lesser number of players will be able to come out with books catering to that new syllabus. It will take some time for the smaller guys to develop their content or copy the content either way. So I mean, that will also accelerate this process of the big becoming more bigger, like we are seeing in many other industries.

Sure. Sure. And secondly, on the receivables side, I mean, I see that our receivables are at INR 320 crores odd. On inventory front, we mentioned that we intend to bring it down to INR 80 crores. So is any kind of optimization possible on the receivable side as well?

Jinesh, see, you have to also take into account that most of our sales happens in Q4. And the academic session starts only in March, April. So till the time the school gets the books and they are able to sell the books, even the money will come in. So I don't see a substantial movement of -- in the receivables at the end of March. But having said that, subsequently, this number will change. So if you look at Q1, we'll probably end up with collection of close to INR 100 crores. So we are getting better in terms of Q-on-Q numbers subsequently. So in terms of receivables, we probably should look at our receivables numbers by the end of Q2 and Q3 to really assess if there has been an improvement. March would not really represent any. But having said that, it is -- in terms of the quality of receivables, last year despite the pandemic, we've seen a better collection come and our older collections come and even our provision for doubtful debt has actually been reversed in this year. So that means we've actually gone ahead and recovered a lot of our old receivables despite the situation. So at similar sales, our receivables have been lower. It will gradually go down. I don't think we can do -- but we can target about -- at the end of March about between 240 to 260 days at best.

Fair enough. Sir, 1 last question. Any target you would like to share on the cash flow front because our NCF in FY '21 was probably the best ever we have ever reported. So any specific target you have in mind for FY '22?

Again, see, the situation is difficult and -- but we continue to work according to this. And with the reduction in entry that we are looking at and receivables, I think we should target a similar or a slightly higher number for next year.

That's the last question. I would now like to hand the conference over to the management of closing comments.

Thanks a lot, everyone, and this has been a complete turnaround journey. And we will continue on this path, where we will try to conserve capital, conserve cash and focus on our -- how to grow our cash flow from operations. And at the same time, we will also look at new growth opportunities whenever they are available to us and focus our energies on the digital front as well. And I just like to say that please be safe, your families should be safe, take care of yourselves. And have a good day. Thank you.

Thank you so much.

Thank you. On behalf of Prabhudas Lilladher, that concludes this conference. Thank you, everyone, for joining us, and you may now disconnect your lines.