© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, good day, and welcome to S Chand and Company Limited Q4 and FY '22 Earnings Conference Call hosted by Prabhudas Lilladher Pvt. Ltd. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Jinesh Joshi from Prabhudas Lilladher Pvt. Ltd. Thank you. And over to you, Mr. Joshi.
Thanks, Nirav. On behalf of Prabhudas Lilladher, I welcome you all to the FY '22 earnings call of S Chand Limited. We have with us the management represented by Mr. Himanshu Gupta, MD; Mr. Saurabh Mittal, who is the CFO; and Mr. Atul Soni, who head the Investor Relations Department. I would now like to hand over the call to the management for opening remarks, after which we can open for Q&A. Thank you, and over to you, sir.
Thank you. Good afternoon, ladies and gentlemen. I'm Himanshu Gupta, the Managing Director of S Chand Company Limited. I would like to welcome you all to our fourth quarter and full year results conference for FY '22, and thank you all for taking the time out and joining us here today. FY '22 has been a culmination of our efforts across the past 3 years to make this company a much stronger and efficient company. When we started this journey of S Chand 3.0 in 2019, we did not know that we would also have to go through the worst pandemic of the last 100 years during this journey as well. During FY '22, we faced 2 serious COVID waves, Delta variant in April -- May '21 and the Omicron variant in January 2020. In spite of these, I'm extremely happy to report that we grew revenues 13% year-on-year basis to reach INR 4,809 million, grew EBITDA to INR 757 million and had a PAT profit of INR 80 million. We are PAT profitable after 3 years. Our focus over the last 3 years has been to focus on internal efficiencies since the external factors were not within our control. Working with quality channel partners providing updated content and services, better production planning and credit control has resulted in an extremely strong financial position as compared to our competitors and peers. This advantage we take forward towards the implementation of NCF, which is National Curriculum Framework. The biggest turnaround this year has been in our working capital metrics. Our focus on reducing inventory also led to our lowest inventory levels in 5 years on a year-ending basis. Our receivables are low by INR 300 million versus last year despite having INR 557 million incremental sales versus last year. All this led to net working capital levels, which were the lowest in the last 5 years as well. I'm proud to share that we have reduced our net debt by over 61% since FY '20 and currently stand at INR 721 million, which led to our lowest net debt level for the group since June 2018. On the cash flow front, we maintained strong operating cash flows on a Y-o-Y basis. We continue to be free cash flow positive as well. Saurabh, our CFO, will give more details on these financial metrics in his remarks. As we start FY '23, we see that hybrid or blended learning is the way ahead. Schools and colleges have reopened with the new vigor and admission in schools are increasing. A lot of schools in smaller cities, which had challenges of online learning due to the lack of infrastructure are seeing students back at school, which is spurring demand. No supply changes -- sorry, no supply changes was seen in Q4 or even in Q1 as compared to the previous 2 years, where the start of the academic session was marked by lockdown and supply bottlenecks. Schools and colleges are adapted to the hybrid blended approach, which augurs well for any such natural calamities and pandemic. On the edtech front, we continue to focus on providing students, teachers, educational institutions with digital solutions required in a post-COVID world. The edtech industry is slowly also moving into the hybrid blended learning era, with physical centers opening up across India. Our personal learning app has over 3.2 -- Learnflix has over 3.2 lakh downloads. We launched S Chand Academy this year, which has already notched up over 2 million views so far, and have been well appreciated by the learners. We expect S Chand Academy to ramp up significantly with new content being provided every week, which will help the students understand concepts from the best facility. In addition, we have also relaunched TestCoach, our test prep and high education app during this year, with cumulative downloads of 170,000 to cover over 100-plus government examination tests. Madhubun Educate360, our K-12 learning management system is now implemented around 55 school and being -- is being used by approximately 1 lakh students. We also have taken a minority stake in iNeuron Intelligence in December 2021, which is seeing exponential growth in the technology learning segment. We see a lot of synergies, both on technology upgradation for S Chand and B2B business for the solutions. Now turning to more recent event as for FY '23. The cost of paper, which is our main raw material has been increasing in cost on back of global supply chains, plastic band production capacity being limited and increased demand of paper post-COVID. To mitigate the same we are looking to take 12% to 15% price hike across our product portfolio, along with improving terms with channel partners. In addition, we'll be looking at driving further internal cost efficiencies in printing and continuing to exercise cost control measures to manage our internal costs. On the revenue front, we're looking to do revenues in excess of INR 600 crores by FY '23, which would represent a minimum growth of 25%. Our Q1 numbers are tracking very strongly, and we are well on track to achieve revenues of INR 900 million to INR 1,200 million versus INR 358 million last year, spurred by the reopening of schools across the country. On the new education policy front, we are hopeful that the National Curriculum Framework or NCF would be launched this year. In higher education, some of the states have already implemented the NEP where we are seeing strong traction for our content. NEP has launched CUET, which will become one of the most important examinations for college admission apart from IIT-JEE and NEET. To be on the conservative side, at the start of the year, our current guidance does not include any impact of NCF announcement. Needless to say, our target would be revised upwards if we get a timely announcement on the NCF. With that, I would now request our CFO, Mr. Saurabh Mittal, to guide us all on the financial performance of S Chand. Thank you.
Thank you, sir. Good afternoon, everyone, and thank you for your time. I am Saurabh Mittal, CFO of S Chand. In terms of numbers for the full year, our consolidated operating revenues came at INR 4,809 million versus INR 4,252 million during the same period last year, registering a growth of 13% for the year gone by. We maintained our gross margins at the same level as last year in spite of a sharp increase in paper prices during the latter half of the year as a result of product rationalization, inventory reduction, partial distribution of [ E ] specimens and timely ordering of paper inventory. We reported EBITDA profits of INR 757 million versus INR 748 million in the corresponding period last year in spite of undertaking salary hikes, higher travel spend, et cetera, during the year. Happy to share that we are PAT profitable after a period of 3 years with a profit of INR 80 million versus a loss of INR 65 million for the last year. I would like to point out that this is despite 2 COVID waves during the year. I would also bring your attention to Slide #5 -- sorry, Slide #5 to Slide #9, which showcases the results of the steps taken during the past 3 years towards building a cost effective and low working capital organization with focus on positive cash flows. We continue to focus on working capital rationalization and product rationalization for the coming year. In terms of working capital, trade receivables reduced to INR 2,921 million during Q4 FY '22 versus INR 3,222 million during Q4 FY '21. This reduction is despite an increase in incremental sales of INR 557 million over the last 1 year. In terms of receivable days, it stood at 222 days versus 276 days, a reduction of 54 days during the year. This is the lowest receivable days in the last 5 years. Inventory reduced to INR 1,276 million versus INR 1,377 million last year. This improvement in inventory is driven by various steps that we took in controlling print runs, optimizing book titles. Additionally, this inventory level includes raw material paper inventory of INR 277 million versus INR 133 million last year. Seeing the way paper prices were increasing, we had to -- we had ordered for higher levels of raw material inventory in March.
In terms of inventory days, it stood at 216 days versus 261 days, a reduction of 45 days during FY '22. We are seeing more inventory get liquidated in quarter 1 and expect the inventory levels to rationalize further. Net working capital reduced to 226 days versus 290 days, which is a reduction of 67 days during FY '22. This is the lowest net working capital days in the last 5 years. We ended the year with a net debt of INR 721 million versus INR 1,284 million last year, and gross debt of INR 1,572 million versus INR 2,300 -- sorry, INR 2,031 million the previous year. Our net debt has reduced by INR 850 million on a quarter-on-quarter basis versus INR 1,570 million in Q3. This is the lowest net debt level since June 2018. In terms of cash flows, our strategy of focusing on cash flow has yielded results over the past 3 years and where we have almost tripled our OCF in the past 3 years. We ended the year with OCF of INR 1,066 million versus INR 386 million in FY '19. And we have an OCF of more than INR 1,000 million for the second year in a row despite COVID, a trend we are keen to continue. As we get into FY '23, I would like to reiterate for the coming year. Firstly, we will be taking a price hike across our product portfolio to the tune of 12% to 15% to partially mitigate increase in paper prices. Secondly, we are looking to do annual revenues of over INR 6,000 million, which translates into a 25% growth rate for the year. We expect Q1 to be much stronger than previous years. We are looking to do INR 900 million to INR 1,200 million during the first quarter. In comparison, we had done INR 358 million in the first quarter last year and INR 740 million in the year before that. Thirdly, unprecedented hike in paper prices can put a pressure on the gross margins to the tune of 100 to 200 bps. We are looking to counter paper prices through price hike, improved terms with channel partners, internal efficiencies and continuing cost control through the year. Fourthly, on the debt front, we are we target to become net debt-free by the end of this year and further optimize working capital going ahead. Fifth, the biggest growth driver for our print business could come from the introduction of the new syllabus post the announcement of the NCF. This should lead to a strong revenue and profitability growth for 2, 3-year period. We have not included the impact of NCF in our current revenue guidance, but needless to say that if that comes through, then we can greatly change our FY '23 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 from Trustline PMS.
Congrats for a great set of numbers. So firstly, I'd like to understand the number of schools which were there with us during pre-COVID times as customers. So what proportion of them have returned back to us during FY '22? Also, have you seen significant drop in student numbers as compared to pre-COVID period?
This is Himanshu. I'm just going to answer that question. Basically, we used to cover approximately at a group level, 35,000 to 40,000 schools all over the country, including religious schools in West Bengal as well. And we have been covering similar number of schools. There might be a slight dip, because a lot of schools, especially the affordable kind of schools got closed also, so we were not able to cover that. But now, we are seeing that some of the new schools are reopening up and a lot of admissions are coming in the bigger schools. So the school strength has started from 100 class -- per students -- class and dropped to 70, now, it's gone back to 100. So that admissions are coming back now, so we are seeing that. And we believe that it will continue to grow because, obviously, when this -- education, as you know, is a very aspirational kind of thinking for especially Indian citizens. So they want a child to become a doctor or an engineer or do an MBA. So they need to put them into good schools. And we believe that, that trend will keep on continuing. What was the second part of your question, sorry, if you can repeat it again, please?
So on the student number only.
So student number, I just answered.
Yes. So basically, I'm trying to understand the volume number of books sold during FY '18 and to current levels. So FY '18, we have done something around INR 800 crores in top line. So when we will be able to reach that level? So that's what I'm trying to understand.
Okay. So yes, obviously, that part we have not still reached, and this year, we'll try to grow the company above INR 600 crores of revenue, but reaching that number will take some time. It's not going to happen this year, but we believe that the quality of the business that we are doing and the quality of customers that we are now servicing is much better than earlier. And that is what is going to reduce our bad debt. That's what going to reduce our working capital cycle and reduce the inventory. So we are focusing on more, I would say, quality customers rather than only looking at sales. So that is more important for the company now, because as the prices of paper have increased and we have to make sure that the margins do not get squeezed too much, as Saurabh had earlier said, 100, 200 bps is the maximum that we can look at. And we want to focus our efforts towards good sales and quality sales.
Deepan, this is Atul. Just to add to what Himanshu has said, see, this year, we are targeting INR 600 crores plus kind of a top line. And with the advent of NCF, whenever that comes, we are hopeful that within -- once that is launched, then we can see those kind of numbers that you were referring to earlier.
Maybe not this year, but...
So I mean as we have constantly reiterated that once the NCF comes, we will see 2, 3 years of very strong runway of growth of double-digit growth at least. So I think that particular number will be taken when the NCF is launched.
Okay. Okay. Got it. And secondly, so we have guided for this INR 90 crores to INR 120 crores during Q1 versus last year of INR 36 crores. So this is mainly due to slippages of some revenues from Q4 or hereafter, we are expecting stronger Q1 like this?
So yes, so hereafter, we are expecting a better Q1 like this. Last year, of course, was impacted by the first -- the Delta wave. So that number is not really represented if you look the year before that is about 71. So there's a slippage as such. I think we continue -- of course, there were some deferral because paper availability became an issue in March. So some of it is a deferral. But we feel that we'll continue to have this kind of number in Q1 and going forward.
Okay. Okay. Okay. And lastly, so are we facing any challenges in scaling up of this Learnflix paying customers. So I have seen currently, it's 21,600 versus 21,000 last year. So now schools have opened up. So are we expecting some traction over this paying subscriber numbers?
Yes. To be honest, not really too much of a focus area at present. We were focusing on our print because schools were reopening and even schools were focusing more on getting the kids in school for physical learning. Online learning or apps have taken a slightly back seat. If you can see what all the other competitors edtech is doing, they're also opening up tuition centers across India. So I think we will relook at how we are going to market this in the coming year. We're focusing more on growing our core business, which is getting us the margins. Even if we double the number of subscribers on Learnflix, it doesn't add too much to my top line or bottom line. So while we continue to push that, we would expect it to grow organically rather than doing too much of an aggressive sale on that.
[Operator Instructions] The next question is from the line of Sanket Goradia from GC Ventures.
A few questions from my side. So first question, as you said for the previous participant, that INR 90 crores to INR 120 crores is the run rate you're looking forward in quarter 1. So what has changed in quarter 1 this time versus the last few years? Even in the pre-COVID levels, we have not done such kind of top line in the quarter 1. And you are telling that this will be a sustainable number for going forward also. What has changed actually in quarter 1 and for the long run rate, it will be there in the quarter 1?
So basically, as I said earlier to the last person who is asking the question that a lot of school admissions are happening now. So basically, what happened is that has shift -- that school admissions are as unexpected that the schools are expecting, let's say, 100 students, they're getting 120 students per class. They were not expecting that. So a lot of schools are getting admissions at a very, I would say, a fast rate and that they are reordering with us now. So that reordering in this quarter, the quarter 1, we are seeing a good traction happening in the market. And this is, I would say, a good opening and for the year. And which will boost our moral and give us motivation to our people to continue to do this work. So that is a very big reason that the schools have opened up. Pre-COVID and all, it used to be a normal year. So pre-COVID, the people never used to have that many admissions -- unexpected admissions happening in the Q1 kind of scenario. So that is why the numbers are slightly tweaked this year.
So going forward, this number will get normalized from the next year onwards?
To add to that, I'll just add to that. See, pre-COVID and what we used to do earlier in terms of -- we used to do a lot of stock order supplies to the market, to distributors, et cetera, if you remember. And that used to be a cause of concern for a lot of sales return. That kind of thing, we stopped. We are only taking orders, which have actual school back orders behind them, and those are coming subsequent in the first quarter. So we are now focusing on all of that. Plus additionally, the 9 to 12 segment is something that sales happened in the first quarter. And that is a segment that we -- now we are focusing more on. So 9 to 12 should grow faster in the next 2, 3 years.
Okay. And sir, next question on the working capital. Sir, what kind of sustainable inventory and data we should look at going forward that the company is targeting to maintain at? And what will be the change if the new policy gets implemented? So what will be the change in the working capital that can come in?
So we are targeting year-end receivables of 180 to 210 days going forward. And in terms of inventory, anywhere between around INR 80 crores to INR 90 crores at the end of this year. Whatever -- I mean, we are selling in quarter 1, it should be the kind of inventory that we have at the end of the year. So we'll try to be as inventory light as possible because, again, with changes in the education policy, we have been very, very stringent in terms of the print runs. We may have lost certain orders because we didn't want to go for large print runs, but that's something that is acceptable to us rather than having inventory at the end of the year, that's cash block for the complete year.
We are sustainably seeing Q1 revenues to be in INR 100 crores kind of a level. So that kind of Q4 ending inventory will be required to suffice for those orders.
And getting liquidated in the Q1 -- the Q4 inventory as well.
Okay. Got your point. And once the new education policy gets implemented, so there can be some increase in the data days for some limited portion of time so as to gain the market share or something like that?
No, no, that's nothing that we are focusing on. We continue to follow our rigorous credit controls and collection policies. We will not dilute that for.
We will not go that path.
Yes. That is something that we are focused on.
Okay. Got your point. And sir, on the net debt target for a debt free company, we have been targeting FY '23 end. So -- and we have also mentioned that we will be monetizing any some assets. So does that also include the cash flow for the net debt figure?
Yes. Yes, it does. It does.
Okay. And sir, last, and can you quantify the same? What can be the revenue from that?
Revenue for what?
The monetization of assets, whatever we are going -- planning to do is?
It's about INR 15 crores to INR 20 crores.
Okay. And sir, last one, bookkeeping question, sir. As a depreciation, what we report is post Ind AS 116. Can you just quantify what is the cash component of that depreciation?
Cash component in terms of?
Depreciation comes post Ind AS 116 -- the rent gets bifurcated in depreciation and interest costs.
Yes, yes. So it's 42 -- out of 42, 15 is from rate. If you look at the cash flow, it will tell you that. The cash flow has that figure. INR 156 million was the -- INR 156 million was the rent rate.
It's around INR 16 crores.
I It is mixed between depreciation and finance.
Ideally, the reported EBITDA should be lower by around that INR 15 crores mark, so that you get the pre-Ind AS 116 EBITDA broadly.
Yes, if you want to compare that with.
[Operator Instructions] The next question is from the line of [indiscernible], Individual Investor.
My question is with regard to Himanshu's comment which he just made about the Learnflix paid subscription numbers, which don't seem to be doing -- seem to be doing well. There, I heard in saying that even if that number goes up, doesn't affect much of our revenues. So I wanted to understand, is there a change in our strategy and focus towards [indiscernible] business? Because as I understand, we've been continuously investing in that. You have just launched Learnflix Bangla also, and then you plan to add [ SST ] subject. We thought that it is quite a scalable and high promising business, which will continue to fuel growth. So is there a change in terms of strategy? That's number 1 question I have.
Yes. So of course, there is a slight change in strategy because what we have seen from schools and from students is the cost of acquisition is very high for that business, and that the whole edtech industry is realizing that, the cost of acquisition is high. They are not able to ramp up quickly. You will start seeing the impact of no incremental funding coming into various companies. You can see the number of people being fired across edtech. So we adhere to that. Our investments are there, but we are not investing highly into that segment. We will want to grow it organically with lower cost of acquisition and organic growth is always -- having inorganic growth driven by pure marketing, where the cost of marketing is higher than the revenue growth. So we are here to making money in that business, not really burning money while which the rest of the industry is doing.
And as for Learnflix, the Learnflix Bangla investment that we had done was only a translation into Bangla. It was very -- I would say, small cost, but not a large cost. And now that Learnflix Bangla is getting incorporated with the books. So basically, our idea is even if the app platform, we are not able to sell directly in a large number, we're going to integrate it with the book and give it as a part of the book plus kind of a model. So that will help us in making sure that we increase the number of unit sales of that book, and that will give us a better traction in the market. So in case of Learnflix Bangla also, we will be doing it this year. And the cost was not very large, not very substantially translating it from English to Bangla. But the unit sales increases, let's say, even by this effort, by 8% to 10%, that's a very substantial increase, and that can help us monetize these kind of apps. The only challenge we are seeing is now because the schools, when they were locked down 2 years, they were looking at some solutions, but now after the schools have opened up, we are seeing that schools are more focused towards buying printed books, which is good for us. And if after the summer holidays, let's say, July, the schools reopen and we see there's a possibility of getting business in Learnflix. We will definitely try to do that, for sure.
Okay. Great. A related question to that is somewhere at the PPT, you have mentioned, monetization of digital business. So are we already in advanced discussions with some people there is it? And when do you see this monetization happening?
So one of our investments is getting monetized this quarter. So beyond that, I cannot say because we are under nondisclosure, but one of it -- one of the investment is getting monetized in this quarter itself.
[Operator Instructions] The next question is from the line of Devang Patel from NAFA Asset Managers.
Sir, our working capital and debt levels are going back to pre-2018 levels. But on the EBITDA margin, we are still below the 20% plus margins that we were making earlier. So my question is going to be see going us back to 20% plus EBITDA margins and what do we need to do from here on to get there?
So -- I mean, for this year, it's a bit difficult considering the kind of paper price increases that are coming in, which is beyond our control. And of course, the prices of books cannot go up beyond a point. But your comment on the margin, I think we would rather focus on our cash flow from operations that are coming in. Even pre-COVID, look at 2018, our cash flow from operations on INR 800 crores of only INR 38 crores. So I mean, we are doing INR 100 crores plus of cash flow from operations, which is far more critical to us than just having an EBITDA number, which does not translate into cash. So our focus is converting all the EBITDA that we get into cash. And currently, last 2 years, with INR 75 crores of EBITDA, we're converting into INR 100 crores of cash. That gives us more satisfaction in terms of having a healthy balance sheet, having more -- having lower debt. And then going forward, if whether raw material prices stabilize, and we are able to drive more efficiencies and more operating leverage with the NCF coming in, our EBITDA margin will definitely go up.
On a sustainable basis, what would be your margins be now?
See, our gross margin will anyway be with 53% to 55% is what we are looking at. And EBITDA margins of 16% to 18%.
Sir, and the reported number -- the reported numbers would include some drag on the digital business. So what was the burn rate last year and how is it trending?
Last year, we were about -- we burned about INR 25 crores, INR 26 crores in the digital business. This year, we're trying to bring it down to under INR 15 crores. So that would definitely help in the current year.
Sir, in the presentation last year -- EBITDA from digital business was INR 7 crores. Is that a like-for-like number when you said it's INR 25 crores more?
No. The margin will be much higher this year. I think the EBITDA from -- negative EBITDA from the digital business should be north of INR 14-odd crores.
Sir, on the NCF side, any update? We are expecting some development by August, October, so is it along those lines? Or are you hearing of any more delays?
So we are hearing that there might be an announcement by the government by July or August regarding the NCF and we are waiting, crossing our fingers. So if it happens in August, then there might be a syllabus change happening for the next academic year, and that will affect the financial year FY '23 in a positive manner. And -- but it happens late -- it happens in February, March, then it will be difficult to implement next year that will happen in the following year. So it depends. Again, we are crossing our fingers, we don't know when the government is going to announce. But we are hearing in July, August might be -- they might announce.
[Operator Instructions] The next question is from the line of Jinesh Joshi from Prabhudas Lilladher.
Yes. I need one small clarification. We are guiding for a 25% kind of a top line growth in FY '23, and given that 12% to 15% price hike is envisaged, which effectively implies that the volume growth, which we are targeting is somewhere in the region of 10%. But in the opening remarks, you mentioned that the reach in terms of number of schools is more or less intact at about 35,000 to 40,000. So would just want your thoughts on how do we plan to achieve this 10% volume growth which are reaching in the number of schools remaining intact?
So the school coverage this year will increase, that was for last year, I was talking about. And plus, the number of students per school or per class is going to increase. That is going to help us achieving. Plus, we are seeing the market is getting consolidated because as the raw material prices are increasing, and there is no credit available from the paper mill side, so that will affect a lot of smaller players in the market. So there will be a demand and supply shortage. So that has also helped us increase the volume numbers. So all these factors combined will give us -- or should give us I would say, 10% to 12% additional volume than last year plus the price increase.
Fair enough. And sir, in this financial year in terms of volumes, are we similar to the pre-COVID number? Or are we lower than that, given the fact that we took a 5% to 10% price hike in FY '22?
We are almost there. I mean, we had 3%, 4% gap from pre-COVID. But of course, we're not chasing too much of the volume numbers, to be honest, Jinesh. Again, as we said, we are focusing on quality and margins all through the last 2 years, and that is what is reflecting in our cash flows. And again, organic growth, as it comes rather than pushing too much through. So the bottom line and the cash flow should look much better going forward.
Sure, sir. And one question on the digital side. If I look at our Mylestone reach, it has come down in FY '22 with the number of schools coming down to 250. I understand that we have changed our strategy during the year, whereby we are focusing on bigger schools, which gave us a business of about 5 lakh per annum. So any specific reason as to what has led to this change of stance? Because now, the reach may get impacted. So your thoughts on that?
Yes. So that was a conscious call that we call because a lot of the smaller schools were facing financial stress in the last 2 years and were unable to pay and they were returning products. So we took that conscious call of working with them. And since it's not of a service business where you need to service the school throughout the year. So we do a conscious call on that. And that is why the number for Mylestone may be slightly lower than last year. Having said that, we are now going to integrate that with our existing publishing business, and there'll be more people selling Mylestone in the coming years from the present 25-odd people, it'll probably go up to 70, 80 people selling Mylestone. So we expect that number to almost go double in the current period.
Sure. One last bookkeeping question from my side. What are our targeted CapEx spend for FY '23? And if you can guide us with the tax rate, because the tax rate to fluctuate quite a bit during the quarter.
Yes. So the CapEx for this year, there's no substantial CapEx except for a INR 5 crore CapEx and our print facility, which has -- we've done no CapEx for the last 2, 3 years. So that we will be upgrading to ensure that it is in line. Apart from that, only if the NCF comes, of course, the CapEx may go up in content development. Otherwise, the total CapEx will probably be around 15 -- between INR 15 crores and INR 20 crores.
On similar lines as last year.
On similar lines as last year. And in terms of your second question, tax rate. On tax rate, see, tax rate, because of the various mergers and the restructuring that is in place that is happening. Very difficult to give you a tax rate through the year, but we would expect to guide around a 25% average tax rate. And in terms of cash outflow, that will be the tax rate. What comes under deferred tax and what is the reverse as deferred tax, that becomes a bit complicated because that is more of a call that is taken at the year-end based upon the performance of each of the individual subsidiaries. Whether it is profitable, whether deferred tax can be recognized. So that's a challenge that we also have.
[Operator Instructions] I now hand the conference over to the management for closing comments.
So thanks, everyone, for your time and your patience and hope that everyone is safe at their homes. And I -- we wish and we hope that COVID wave #4 or #5 doesn't hit India. And we -- the schools remain open, the colleges remain open, and the business happens as usual. And we hope to give a better quality business and the more margin-oriented and a better cash flow oriented business this year to our investors. And thanks a lot for joining in. Thank you.
Thank you.
Thank you very much. On behalf of Prabhudas Lilladher Pvt. Ltd., that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.