Navneet Education Ltd
NSE:NAVNETEDUL
Navneet Education Ltd
NSE:NAVNETEDUL
Price:
155.65 INR
1.4%
Market Closed
Updated:
May 15, 2024
Section:
Earnings Call Analysis
Summary
Q3-2024
Q3-2024
Revenue Shift, Volume Decline, and Expanded Reach
The company transferred INR 15-17 crores of revenue from Q2 to Q3, but saw unexpected higher returns leading to no growth in sales despite anticipated spillover; reasons included a prevalent secondhand book market. Management foresees curtailing the secondhand market and anticipates a 10-12% volume decrease in the nine months period. Further growth is contingent on state government announcements regarding curriculum changes, which have paused some printing activities. High freight costs have temporarily slowed stationery export demand. CBSE business outreach expanded from 8,500 to 11,000 schools, with the company hopeful for over 6,500 schools to prescribe their products, an increase from last year's 5,300.
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Ladies and gentlemen, good day, and welcome to Navneet Education Q3 FY '24 Conference 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. Thank you, and over to you, sir.
Yes. Good morning, everyone. On behalf of Prabhudas Lilladher, I welcome you all to the 3Q FY '24 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. Rumi Mistry, who heads the Investor Relations function. I would now like to hand over the call to the management for opening remarks. Over to you, Sunil bhai.
Thank you very much, Jinesh. Good morning, and a very warm welcome to everyone present on the call today. Jinesh did introduce my team. I also would like to add here that our -- the SGA, our Investor Relations advisers are also on the call with us. Hope you all have received our investor presentation by now. For those who have not, you can view them on the stock exchanges and the company website.
During the first 9 months of the financial year '24, our publication business has faced various challenges due to external factors. This includes lower-than-anticipated offtake of channel inventory an unprecedented increase in the paper prices during the year, and the recent surge in the resale of secondhand books attributed to no major change in curriculum for last 6 years.
Now despite grappling with such challenging environment, the company has remained steadfast and reported similar sales compared to the same period last year. For the 9 months FY '24 of our consolidated revenue from operations grew by, though, only 2.2%, which stood at INR 1,316 crores as compared to INR 1,288 crores. Absolute EBITDA for 9 months FY '24 stood at INR 209 crores, while EBITDA margin stood at [ 59.9% ] and PAT stood at INR 158 crores, while PAT margin stood at 12%.
I purposely gave you all the numbers of 9 months just to repeat of my earlier speeches. Quarter numbers are always challenging for the company to establish or to compare year-on-year. Therefore, I spoke about 9 months.
Now coming to segment-wise performances. First, I'll speak about publishing. So during these 9 months of FY '24, our publication business experienced a steady revenue. As I just mentioned various factors, that led to negative carry on our sales volume. But overall, we could at least continue to remain at the same numbers. So there are some reasons to this.
For the SSC State board publishing business, we are still awaiting curriculum change announcements from the state boards of Maharashtra and Gujarat, and we are very sure that post which we anticipate better volume growth. Additionally, for our CBSE publishing business, which has PAN India presence, the ongoing trend of students transitioning from private English medium schools that is SSC schools to CBSE school is expected to have a significant positive impact on our addressable market.
Furthermore, our strategy of completing -- complementing our edtech business with our traditional publication business and offering products beyond conventional learning is gradually progressing not only in Maharashtra and Gujarat, but at several places in the country, including CBSE schools.
It is expected to fuel an increased demand in our publication vertical in the coming years. We are also working towards simplifying our structure to enhance collaboration and offer comprehensive digital education solution, leveraging Navneet resources, which will help us save costs and drive growth for both print and digital products.
Our subsidiary, Indiannica, which caters to CBSE market, we are confident in expanding our business by serving more schools and improving our products offering. As you are aware, for CBSE business, Q4 is the major quarter so we expect better sales compared to same period last year. So we may -- we did saw continuous losses in the first 3 quarters, but that is the nature of business as far as Indiannica is concerned.
Coming to stationery business, with rich brand equity over 6 decades, the company has established a strong presence in paper-based and modern non-paper stationery products across India. The company's stationery brands like YouVa and HQ have gained popularity in offering the diverse range of stationery products, catering to a wide range of customer needs.
We also see continuous demand for quality product as well as branded product in stationery markets across India for last 1 year or so. So for 9 months FY '24, domestic business grew by around 11% to INR 257 crores. Traditionally, Q4 and Q1 are the -- our strongest quarters in domestic stationery market. However, in the third quarter, revenues were marginal growth, which stood at INR 68 crores.
We are committed to strengthening the foundation of our stationery business and are very optimistic that the domestic stationery business will continue to gain momentum and grow between 12% to 15% in FY '24. Of course, the outlook and the demand that we see -- foresee going forward looks very, very positive. Now on our exports of stationery business. As you may know that we export to 30-plus countries globally, having a strong presence, mainly in the U.S.
The company's largest Indian exporter of stationery to highly reputed retail chains like Walmart in the U.S., company holds a positive outlook on this business fueled by advantages of the China Plus One strategy and other in-house initiatives of introducing new non-paper products for our clients.
As communicated earlier, one of our product category is currently being evaluated for potential antidumping duty in the U.S. We expect to service orders from this category in FY '25, as necessary arrangements have already been made. A little bit on a slowdown, we are seeing early signs of slowdown in the U.S. markets. And the main reason that we have realized is due to the supply chain constraints resulting in unprecedented increase in fright cost from India, which we believe to be a temporary phenomenon.
Even with the U.S. slowdown for 9 months FY '24, our exports business just de-grew only by very marginally to INR 456 crores, while the third quarter revenue stood at INR 98 crores. So this was on the business.
Now I request my CFO, Kalpesh, to give you the financial highlights, please. Over to you, Kalpesh.
Thank you, Sunil bhai. And good morning to everyone. Let me take you through stand-alone performance first. Revenue for 9 months financial year '24 stood at INR 1,299 crores as compared to INR 1,268 crores in the same period last year. Revenue for Q3 FY '24 stood at INR 253 crores as compared to INR 259 crores in the same period last year.
EBITDA for 9 months financial year '24 stood at INR 264 crores as compared to INR 290 crores in the same period last year. EBITDA for the quarter -- Q3 '24 stood at INR 25 crores as compared to INR 32 crores in the same period last year. PAT for 9 months financial year '24 stood at INR 199 crores as compared to INR 206 crores in the same period last year. And PAT for Q3 stood at INR 12 crores as compared to INR 24 crores in the same period last year.
Now let me take you through the consolidated performance. Revenue for financial year -- 9 months financial year '24 stood at INR 1,316 crores as compared to INR 1,288 crores in the same period last year. And the revenue for Q3 FY '24 stood at INR 259 crores as compared to INR 264 crores in the same period last year.
EBITDA for 9 months FY '24 stood at INR 209 crores as compared to INR 238 crores in the same period last year and EBITDA for Q3 FY '24 stood at INR 4 crores as compared to INR 10 crores in the same period last year. PAT for 9 months FY '24 stood at INR 158 crores as compared to INR 181 crores in the same period last year. And Q3 FY '24 registered a loss of INR 22 crores as compared to the profit of INR 31 crores in the same period last year.
Thank you. And I'll now hand it over to Sunil bhai for closing remarks.
Thank you. So I take this opportunity to thank everyone for joining the call. I hope we have been able to address many queries, could be, of course, after Q&A. So before really, I give my closing remarks, I request everyone and the floor is open for Q&A now.
[Operator Instructions] First question is from the line of Deepan Sankara Narayanan from Trustline PMS.
So firstly, in the publication business, so last quarter, we have mentioned that Gujarat examination books have been shifted to third quarter. So what was that amount that has got transferred from previous quarters in publication business?
Yes, that was INR 15 crores to INR 17 crores that got transferred from Q2 to Q3. Yes, that was the number.
Okay. Okay. So adjusted for this -- so we have seen -- so year-on-year, there has been a fall in number. So what kind of volume de-growth we have seen during this quarter? And about the issue of students moving back to older books, has that been addressed -- to address this volume de-growth?
Yes. So basically, as far as Q3 sales are concerned of publications, there, we are not seeing any de-growth. But unfortunately, we had more returns than expected of the earlier quarters. And we -- frankly, how do we address the secondhand book market on our own, the only solution is that we continuously added many of our products, even though curriculum change is not happening.
So management is quite aware of this. And accordingly, for next academic year, we have revised several products. We have -- we may have removed certain extra content that we otherwise were willing to be given, but now market is not expecting. By that, we are trying to reduce the volume of the books also.
So that way, lots of revisions have done at our end for the next academic year. But in this particular year, the sales actually did not grow even though there was spillover from Q2 to Q3. Main reason is the returns were higher than expected.
Okay. Okay. So what was that kind of volume de-growth we have seen in Q3 and 9 months? And also, do we foresee this continue until our new curriculum comes on stream?
I may not be able to really comment very confidently on this. But yes, whatever management could decide and think that to avoid the usage of secondhand books, lots of revision that was required, even though curriculum is not changing, has been taken -- it has already been done.
So for next year onwards, we foresee that at least secondhand book market will get curtailed. But with respect to your question on how much de-growth in volume, so around 10% to 12% de-growth that we have seen in 9 months period.
Okay. Okay. And also could you please provide some visibility on the implementation of this curriculum in the state board market? And what kind of growth do we expect in FY '25 and '26 in terms of revenues?
So as I made one remark that we are dependent on the curriculum change by the respective state government as far as SSC business is concerned. I already mentioned in my remarks that we are still awaiting that clarity from them.
Unfortunately, for several reasons maybe at the government level, they are not yet able to announce that change. We know that curriculum revision has already -- or changed curriculum activities have already started at the state government level, but they're still not announcing that.
So depending on the announcement, we will come to know for the standards or the grades that we know are likely to change. We have kept our printing on hold for a while so that whenever the decision comes, we can implement it immediately. Now with respect to growth that are expected in FY '25, '26, again, dependent on the decision of the state government.
But just from a mathematical point of view, the percentage contribution of each grade once we know, which I have communicated several times earlier, that will help understand the growth volume whenever curriculum changes. So Mr. Sankara we can talk this offline later on particularly grade-wise contribution to Navneet every year. So -- and then we'll -- you'll be able to understand depending on which grades are being changing, the growth will come in the company.
Okay. Okay. Sure, that is helpful. And lastly, from my side, on the stationery export front, so as you have mentioned also in the commentary that this slowdown in growth is visible. So this is particularly to the supply chain issues? Or it can again resume back in a couple of quarters time, the growth?
See, this is -- as we all know, there is huge disturbance as far as movement of material from Asia to the western world due to that Red Sea problem. Because of that freight costs have gone so drastically high, no doubt, we do not supply on a CIF basis. But finally, customer would look at their landed cost. And with that, we are seeing a slowdown in demand from them at present. And as I just mentioned, we believe this issue cannot remain for long. So it is a temporary phenomenon.
[Operator Instructions] Next question is from the line of Himanshu Upadhyay from BugleRock PMS.
I have a question on the -- our CBSE business. Can you give an idea of how many more CBSE schools we would be catering to in FY '24 versus FY '23? And how is the penetration or number of prescribed books moved in last few years? Secondly, besides overall sales, what are the parameters you are tracking closely for checking your progress on CBSE business? Some thoughts on this business.
Yes. So first question is how many more CBSE schools we would be catering this year? So in FY '23, we were marketing around 8,500 schools, and that number has gone up to now 11,000 schools from the house of Navneet, which includes our Indiannica subsidiary. So that is the growth that we have expanded rather geographically and tried creating awareness of our CBSE products in those schools.
It's not only the new CBSE schools opening, but many English medium SSC schools are also converting to CBSE so therefore numbers are increasing in every state that is helping us to go to more and more schools. So -- but this year, we would have touched almost 11,000 schools for creating the awareness of our product. What was your second question, Himanshu?
So my second question was on the penetration or number of books -- prescribed books, okay? And how has that moved per school. So let's say, 8,500 schools, which you cater to last year, how many books could be...
Yes. So let me first clarify here, we were going to 8,500 schools in FY '23 and 11,000 this year, not necessarily all schools prescribe our books. So I was talking about the reach. Now as far as prescription is concerned, out of 8,500, around 5,300 schools had prescribed 1 title to 10 titles of ours versus this year, we are expecting, which we'll come to know by March and that in relation to 5,300, how many schools are prescribing, but my team is very hopeful of going beyond 6,500 schools as far as prescription is concerned or except -- by acceptance is concerned from them.
And see -- following on this only, see, this 5,300 schools where our books were prescribed from 1 to 10...
1 to 8. Or nursery to 8, I should say.
Okay, nursery to 8 and titles, you said 1 to 10 or you said nursery to 8?
All CBSE book publisher, private publishers would have titles from nursery to 8th grade. 9th and 10th grade, each CBSE schools are compulsory to use NCERT published books because students have to appear for the Board exam.
No, I agree. So I'm saying how many titles would they be using this 5,300 or SKUs we would be catering. And how that number would have moved in last 5 years because that -- is this depth of our relationship has moved in with our existing...
Relatively Navneet group is new in CBSE markets. So every year, volumes are increasing, but exactly how many volumes could be selling 5,300 schools that number will have to -- it's not readily available with us right now on the call. We can definitely discuss offline on these numbers and give you the overall growth for last 2, 3 years.
And 1 thing, besides just the sales numbers, okay, what are the parameters you are tracking closely, okay, for -- checking your progress on CBSE business? And how many sales people would have increased to cater to CBSE business in last 3 years?
So we had 80 people -- now I'm talking at a group level. I'm just not talking for Navneet alone and Indiannica alone. So from 82, we have moved to 170 people now, who are daily visiting the schools. This is across India. So that way, we have grown the number of schools -- a number of people to cater to this -- or be it awareness of our products.
So now what are the parameters? Of course, parameters would be first on the quality of the product, the features or couple of digital features that we give in the book, which is, of course, run through QR codes, any other digital asset that we can give it to them.
So all these are considered. And finally, what are the pricing that we offer to them. So these are the main criterias, on which they decide on the book while recommending.
So my question was the effectiveness of this 80 people to 170 people what we have moved, so what are the -- their KRAs, okay? And what are the top 3 KRAs for them? One would be obviously to meet more number of schools, but getting conversion rates and again -- what are -- what have you put the KRA?
The first KRAs, of course, the volume that they can get through the year for company that is the first KRA, whether they go to more schools or they go to less schools, as first criteria is getting the total volumes by an individual. Second, KRA thereafter is number of schools visited.
So these are the 2 main key criteria on which we judge a person. Of course, thereafter, how many visits do they have to -- compulsory they have to go to school to get the or confirm orders that is another 1 important KRA so that their effectiveness in convincing the school, how fast is that we try and measure. So these are primarily 3 KRAs that we often follow.
And I have a few more, but just 1 question. See, we have seen a price of paper reduced based on many other companies or what we see. Do you think the stationery margins can start moving better from here on? And any thoughts on that?
And will it be -- are you seeing -- or do you see the price of fall in paper is being completely transferred to the end consumer, okay, in the market, what is happening especially on domestic stationery...
So in this year, in particular, you would have seen fall in margin in our stationery products reason is we did not transfer all incremental cost or I can expect that we could not transfer all the costs. Because of the higher cost inventory that we used in the current year production, we saw a little dip in margin.
But now going forward, as paper prices have come down, we hope that it does not really go up fast as it had happened in last year. So if that happens, then we are very sure of improving in the margins.
And for this year, we would have already purchased the prices of paper for publications business especially on the CBSE...
No paper mill in the current scenario gives us fixed price for a long period. Most of them have given us confirmed price for 3 months maximum. Probably, the demand of paper, they also believe, will go up, and therefore, they are not able to give fixed pricing.
But till -- as we speak, I would say that 70% of the paper would have already been procured and balance will be procured by April end. So more or less for the next academic year, we are not really much worried on the pricing.
And how is the paper prices down versus last year...
So they have gone down by 20% from the peak level. It has gone up by 30%, 35%, which has come back to 20-odd percentages. Few paper mills have again started increasing prices by -- marginally by 5% to 7%. But overall, as we understand the market, for us, in the next academic year, we are already quite taken care of.
[Operator Instructions] The next question is from the line of Amit Khetan from Laburnum Capital.
So Gala-ji, last time, you mentioned that for the publication business, we expect curriculum changes for standards 1 and 2 for FY '25. Now your current commentary suggests that even this is at the risk of being delayed, is that correct?
That is correct.
So what would be our -- let's assume that there is no curriculum changes announced for FY '25 and they shift to the FY '26, what would be our growth outlook in the absence of any such changes for FY '25?
So growth outlook, which you are expecting minimum at 12-odd percent, if curriculum was to change. If that does not change, then we may fall back to a single-digit number. And the -- why we are expecting growth even at single digit, as I mentioned, in my earlier question -- answered to the earlier question that we have ourselves revised a lot many products. And therefore, the usage of secondhand books should reduce and with that confidence, we are saying that will it be able to grow even if curriculum does not change.
Got it. Got it. And second question is on the export side. Is there any figure you can share? I understand there's been some kind of a slowdown. But over the last 3 years, have we gained any kind of market share? Say, in the U.S., is there any figures that gives us better color on this?
So market share as a percentage, I really -- sorry?
Say as a percentage of U.S. imports, our share has increased...
It will be very, very marginal because overall, U.S. imports from India was hardly between 3% and 4% of the total stationery imports. So -- and rest was majorly from China. So as a percentage, I wouldn't be able to really comment because it will be again very fractional, but I know the numbers that from -- we grew in last 3 years from around INR 400 crores to INR 550 crores, that much growth we could get.
But Amit, if you recall, I might have told this earlier that whenever they give us the new products or higher production or new customers also, did try with us for a year or so and then they ramp up their numbers. So they just don't blindly give us the higher order for -- in the first year itself.
So that base has already been made, and therefore, we believe going forward, we will definitely receive much larger orders. And accordingly, we are trying to build capacities internally and expanding and making investments also.
Understood. And lastly, on the export side, my sense is most of your clients would have finalized budgets for calendar year '24, what is the kind of growth or outlook you're sensing from their orders?
As we have received orders, but without confirmation on delivery period, we -- see the number that we have received is very attractive. But on delivery, and they have constantly said this time that till the time this issue is settled on a particular rate, they will not confirm the final delivery. So even we have not procured paper for that.
We are just -- on a daily basis, it is happening. So as far as the tentative numbers that have come to us, those are very encouraging. But finally, this will -- this decision on day-to-day they are making, how much quantity finally they should agree to buy from India. So we will need a couple of weeks to establish that now.
The next question is from the line of [indiscernible] Securities.
I have 2 questions. First is, as we have communicated earlier, 1 of our product categories is currently being evaluated for potential antidumping duty in the U.S.A. so what steps we have taken for the same, if you can please elaborate?
So we have arranged to get it manufactured in neighboring country and that way we will be able to receive back this volume back in the year FY '25.
Okay. Sir. And following up to that, can you please quantify what amount of loss are we expecting?
No. So I have already communicated in my last speech that because of this loss of order which is seasonal in nature, which was to the tune of around INR 40-odd crores, which we could not get, that will come back in the next year.
Okay. And my next question is, why is our raw material inventory base has gone up as compared to 9 months FY '23? Any reasons behind that?
So paper has been very, very volatile. And at times when we feel that paper is likely to rise again, we do little more inventory. And the other reason, which is clearly evident is the volumes that we were expecting in the current year to increase, did not happen and therefore, which are reflected in numbers also. And because of that, we do have a little higher inventory in the current year, but all inventories will be used, only lost to us is the carrying cost.
Next question is from the line of Mohammed Patel from Care Portfolio Managers Private Limited.
My first question is, when do we start seeing the impact of reduction of losses in the Navneet [indiscernible] business?
Reduction of loss is already seen in the current year compared -- if we compare it with last year. And whatever additional losses that we were incurring -- which we incurred rather in first 2 quarters are as on date has become 0. And therefore, from next year, you will see reduction in that number. And simultaneously, you will see increase in revenue also. So that will have a better impact on the reduction of losses.
Can you quantify the number?
Yes. So I had mentioned that in edtech activities, this year, we will end up losing around INR 45 crores compared to INR 60-odd crores that we lost last year and that INR 45 crores will come down to around INR 30-odd crores in FY '25.
Okay. Okay. My second question is in the Indiannica business, the losses have increased over last year. So does that mean that you are spending more in the marketing and hence, we should expect very good Q4 which is the largest?
It's not only the market -- the cost that we were incurring. But like our SSC business, even their returns were a little higher than expected, and therefore, we could not achieve -- whatever revenue in 9 months that we had achieved earlier year we could not achieve that.
And because of that losses, we are seeing a little higher. But as I answered in my previous question, that we have increased not only the number of team members of the foothold, we have increased number of schools. So on a daily basis, we are getting good orders for -- to be supplied by Q4. And therefore, we believe all these losses that we have seen in 9 months will turn positive at the end of the year.
Okay. Okay. My last question is, so the rise -- the sharp price in the usage of secondhand books that we have seen in this year, so majorly 2 factors, price hikes and no syllabus change coming year. So which factor would have dominated amongst this 2?
Price rise, price rise.
Next question is from the line of [ Puja Mehta ] from JC Securities.
A couple of questions. How much our exposure be impacted due to this Red Sea issue is going on? And secondly, can you please throw some light on demand for the international business, like -- are we seeing the export business for the financial year '25? Like how are we seeing that?
So Puja, a little difficult question for me to answer that, how much will we get impacted. We are still in the month of February. And normally, our customers end up confirming orders between January and March. So we are still awaiting final response from them, based on which we will come to know what all numbers that are getting impacted.
But having said that, we have already started producing different stationery -- other stationery products where trade as a cost to the total imports is not really very much -- it's marginal and that way, we will try and achieve the similar or higher numbers than what we will do in '24. But very difficult to quantify right now the impact because of this Red Sea problem, right? As on today, as I said, I'll need a couple of weeks to establish that.
What was your other question, Puja?
Yes. Sir, can you throw some light on the demand for the international business? How are these index for business for financial year '25?
So demand-wise, as I just mentioned earlier, that the expected number that they are asking is very attractive for us to deliver if this Red Sea issue had not happened. So that way, demand is very high, and the demand is not additional demand in their respective country or customers, but it is because they want to ship their imports from 1 country to another.
And therefore, India being favored country now, demand has -- it looks very, very positive and so as we are seeing that. Only finally, as I said, the customer will have to look at their final cost to their destination where [ this rate ] has come as a new animal and disturbing factor.
[Operator Instructions] Next question is from the line of [ Krutika Vispute ] from Tata PMS.
I'm new to the company. Just wanted to understand if you are expecting any impact for the coming year because I would be assuming that if the NEP [indiscernible] destock in a way?
Yes. If -- so -- of course, NEP implementation is a very, very wide issue or wide topic for the state and the center to get that implemented. I'm not saying NEP has not been implemented even in the state of Maharashtra, Gujarat. In some way, it has already been implemented. For a company like ours, what matters is the curriculum change.
Unfortunately, that curriculum change that was informed to the trade or the schools earlier that it will start getting changed from FY '25, official announcement has not yet come out from both the states and we are still awaiting that. And -- but if that does not come, the expectation of change curriculum benefit that we were to have that expectation will have to melt down.
Okay. Got it. And by FY '25, you mean curriculum year starting FY '24 -- June of '24 or...
That's right. That's right. Yes. And that gives us an impact in our financials for FY '25.
But wouldn't it be case that for FY '25 that the curriculum year '24, '25, the sales would happen in Q4 of FY '24?
No, no. So particularly, when -- this I'm talking about the curriculum of Maharashtra and Gujarat, SSC curriculum where school starts from the month of June every year, and the books are being bought by the students and the schools in the first quarter of the academic year, that is in June quarter of '24, '25, they will start buying.
So it's unlike CBSE where major sales happen in Q4 of earlier year because most of the schools in the country starts from first April, so there is a little difference of academic years between CBSE and SSC.
Next question is from the line of Niraj Mansingka from White Pine Investment Management.
Only 1 question, you said that order received from the U.S. are good. Can you give some color that how much the potential order [indiscernible] color on that will be very useful.
So clearly, in percentage wise, of course, it depends from category to category, but broadly from a percentage point of view, the expected new orders is between 15% to 17% higher than what we had in FY '24. And beyond that, of course, we could have got, but we also have to look at our internal capacity. So these are the orders that we have indicatively have got from them.
Okay. Sir, in the last time also -- to almost a year back, you have been giving a guidance of 25% growth in the stationery side. What has changed, like -- I know that there has been duty on 1 of the products, which contributed a large number. But once that drop-down has happened, the growth also stay at a higher number. Just wanted to know, have your customers become more cautious? Or I'm just wondering -- some color on why the growth expected is lower than what you had expected a year back?
No. So let me clarify this. Of course, I recall having given this number, but for our domestic stationery, not for export stationery. Exports business, I have always maintained between 14% to 15% growth. Now that 14% to 15% growth also, we are not giving this year for the reason that I mentioned, 1 of the big category which is under investigation for antidumping that we did not receive, so almost 8% to 9% of our total volume we lost this year. That is the 1 of the main reasons.
And secondly, overall fluctuation of paper prices during the year also, restricted us to finally confirm [ higher comp ] volumes with our customers. We actually did not want it to then -- at times, if we would have bought at the higher price, customers were not ready to revisit on the price that was fixed.
So these were the unprecedented things happened during the year, therefore we could not -- and as far as domestic stationery is concerned, only 1 reason, which is the price fluctuation during the year that made us reduce from expectation of 25% to now more or less 14%, 15% during the...
Got it. Sir, do you expect the domestic to pick up because the price impacts has been to almost all the players. So is it like people are down trading and using lesser value -- lesser quality products? So any more color on the domestic?
Yes, of course, we do talk to our competitors also on a regular basis. And finally, price rise was so high that everyone tells that if you try to pass that on to the end consumer, it will be a big challenge to all the industry players and prices has to come down and therefore, most of the players have taken a hit on their margins and at least focused on their top line, thinking that in long term that will help.
So it is not only with Navneet, but with all the competitors that we are -- I'm talking about organized players. Unorganized players, of course, every time they change prices depending on the month so I'm not comparing it with them.
Right. So is it that the unorganized players have increased their shares during this high paper prices period?
Probably very, very base products, particularly notebook type of a product. They might have succeeded particularly in 2 Tier, 3 Tier cities, where also we were selling. But simultaneously -- so that -- yes -- to answer the question, yes, they might have increased their share because of this.
But simultaneously, most of our organized players, we are trying to bring up better and better quality products, high value-added products so that is also gaining momentum. But for it to get really very big jump, may take a couple of quarters. It can't happen suddenly. So that way, even though this challenge was there, we will be -- by the year-end, we should grow between 14%, 15%.
And sir, last question. On the FY '25 on the stationery side, can you reiterate the revenue expectation growth on domestic and export?
So domestic, again, we are confident to grow by around 20%. On exports, I will not be able to comment because of this unprecedented issue that has just cropped up. So I will not be able to give you any view on exports, but we still strongly believe this issue is temporary and therefore -- and it does not remain for long. We'll definitely see double-digit growth.
Okay. And sorry, I'm taking time more. On the new products that you said that the company will take 2, 3 years to watch you and then scale that up. So any thoughts on that? Like how do you see that scale up happening because -- and is there order that is coming in including those orders? Or is it yet to scale up for those new products that you have?
We have introduced a lot many products in the current year, and it means the base has already created. Awareness among these 2 -- the user community is already created. So we are likely to see good ramp-up in the near future in FY '25 in domestic. As far as exports are concerned, of course, we are simultaneously developing various different categories also made out of paper and plastic.
So all those samples have already gone to the customers. They are evaluating, but final decision will be their end cost and delivered cost depending on which they will give us the orders. But as far as domestic is concerned, we are very, very confident that with introduction of new and new products every quarter or every month, we have been able to establish our strong brand in all the key markets of India. And that we will see the benefit in a couple of quarters.
Next question is from the line of Jinesh Joshi from Prabhudas Lilladher Private Limited.
Yes. Sir, in the opening commentary, you mentioned that the publishing division faced a decline because of higher-than-expected sales return despite a spillover of about INR 15 crores to INR 17 crores due to change in paper pattern in Gujarat board. So can you share what was the return number -- the sales return number in this quarter versus our expectation, that is one.
And a related follow-up is that now we have seen sales returns being higher than our expectations for 2 quarters in a row. So does this essentially revised our provisioning number for the next financial year? And also traditionally, how much proportion of our play comes back as a return to us, if you can give a rough indication in terms of percentage?
So of the total sales that we do, which is around INR 700 crores for the state of Maharashtra, Gujarat and Indiannica INR 750-odd crores. So of INR 750 crores -- so normally, around between -- as per our past experience between INR 80 crores to INR 90 crores worth of goods come back and the net revenue is INR 750 crores post returns. That INR 80 crores to INR 90 crores this year would have gone to almost [ INR 115 crores to INR 120 crores ] overall returns, and that has impacted.
Now these are all unprecedented. So we have been providing in our books as per past experiences and past year's actuals. But this year, in particular, because of the factors I mentioned, we did receive higher returns. And this is a little unprecedented, which is not the case every year. But now whatever numbers are there, auditors have clearly told us that they will -- from next year, they will make little higher provision and see for thereafter.
Sure. For this quarter, basically, can you share the number versus our expectation?
So our expectation was INR 10 crores of return versus that we have received around INR 80-odd crores.
Got that. And sir, secondly, I mean you did highlight that for FY '25, the syllabus change schedule has not been communicated to you as yet. But given the fact that the NEP got announced a while back and especially for the CBC market, it is already under implementation. So any idea why is it taking a bit longer for implementation with respect to state boards so to say?
The only reason that I can see is less attention by respective state governments on education. One more thing that what we are realizing while during various teacher training program that implementing NEP in totality is so difficult and challenging for the schools and therefore, the teachers. So government may be rather still trying to establish a base that what all changes will be required to be done in imparting education.
I think their focus is more on stabilizing or explaining to the schools and the teachers what all is expected and therefore, they may not be wanting to give an overhang of additional curriculum change also to the schools that we believe could be the reason. But otherwise, it has -- as you rightly said, in CBSE, the implementation is on -- is in line with the decision.
But unfortunately, state governments are not able to -- it's not Maharashtra, Gujarat, most of the states have not yet announced when are they going to decide on curriculum change. We know that the content is already ready with them, but they are not announcing that or implementing that.
Got that. Got that. But, sir -- I mean X of NEP to every year, there are certain standards which undergo syllabus change, why is that not being followed? Because if I recollect properly, even in FY '24, we hardly had any standards for syllabus change...
Yes, we did not hear any.
And even in '25, so what is the reason for the state board X of NEP to not implement the routine syllabus change schedule? NEP, I can understand, the reasons you highlighted. But then X of that, why is it not happening?
I tried explaining that, that NEP is a very, very wide subject. It's not only the classroom teaching. But there are so many other activities that schools will have to follow implementing. So probably the focus of the respective state government is to at least make every school understand that what are the changes that are required to be done in overall school management.
Their focus seems to be there, and therefore, they don't want to additionally dump the burden of curriculum change, which also is very, very different curriculum than what was there in the states earlier. So that could be the reason we believe that they are not able to announce.
Next question is from the line of Madhur Rathi from Counter Cyclical Investments.
Sir, you have guided on what -- like various scenarios in which our margins -- in which our revenue could effect. Sir, could you just highlight on the margins because in April will be procuring 70% of our paper. So what kind of margins can we expect next year, FY '25?
So FY '25 as far as what publishing business is concerned, we are, again, very confident that this year, because of the higher paper input cost, we could not really -- have input cost of paper versus today's paper price. So we had to keep all MRP or pricing based on current paper prices, whereas our buying pattern was, a little earlier, at a higher cost.
And therefore, we saw dip in margin. So now that if paper prices stabilize, we believe to attain back to the original margins, should not be an issue. This is as far as gross margins are concerned. Now with respect to EBIT level margins, all depends on the growth simultaneously that we achieve because our fixed costs are definitely increasing year after year.
So we will have to see to it that we at least grow to the extent of fixed cost increase, which are taken care of. So that much growth, if we have, then definitely EBIT margins will come back to what it was.
And sir, on the stationery side?
Stationery side, again, similarly with respect to domestic, same issue had come of fluctuation of paper prices. So that number also should come back to what it was in FY '23. And on domestic front, if we finally end up getting the same volumes as expected or as indicatively given to us, then their margins should improve around a percentage or so.
Okay. And so final question on the exports that around 15% to 17% higher order that we can get. So will this be margin accretive as well as what kind of margins can we expect from the segment as a whole?
Segment, you mean to say stationery segment?
Yes, sir, the export stationery segment.
So I would say independently trying to understand stationery segment, but blend will be always challenging because there are so many common things happening between domestic and exports. So at a blended level, what we were showing earlier 12% to 13% that we should be able to achieve.
Ladies and gentlemen, due to time constraints, that was the last question of the day. I now hand the conference over to management for closing comments.
Yes. So I take this opportunity to thank everyone for joining the call. I hope we have been able to answer most of your queries that you had. But if you still have more queries or further information, kindly get in touch with us or our strategic growth adviser our Investor Relation advisers, will try and answer all of them in going forward. Thank you very much. And thanks, Jinesh and Prabhudas Lilladher for arranging this call. Thank you.
Thank you everyone.
On behalf of the Prabhudas Lilladher Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.