S Chand and Company Ltd
NSE:SCHAND
S Chand and Company Ltd
NSE:SCHAND
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Earnings Call Transcript
Other Earnings Calls
Ladies and gentlemen, good day, and welcome to S Chand Q4 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 Ms. Stuti Beria from Prabhudas Lilladher. Thank you, and over to you, ma'am.
Thank you, [indiscernible]. On behalf of Prabhudas Lilladher, I welcome you all to the Q4 earnings call of S Chand and Company Limited. The management represented by the Mr. Himanshu Gupta, MD; Mr. Saurabh Mittal, CFO; and Atul Soni, Head of Investor Relations [indiscernible].
I would now like to hand the conference call to management for opening remarks. [indiscernible]. 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 call of FY '24 and thank you all for taking the time out and joining us here today. I'm extremely happy to share that FY '24 has been a milestone year for S Chand on many parameters.
I would like to highlight the following key points for the year gone by. We delivered the highest operating revenues in 5 years, up 9% on a Y-o-Y basis. We delivered the highest gross margin of 66% in 5 years, up 12% on a Y-o-Y basis. We delivered highest EBITDA and EBITDA margin in 5 years, up 14% on a Y-o-Y basis. We delivered the highest operating cash flow in the company's history. We delivered the best working capital in the company's history, demonstrating the quality of business that we're conducting.
We are proposing a final dividend of INR 3 per share. And to top it all, the company continues to be net debt free company in the last -- 3 of the last 4 quarters of FY '24.
The biggest achievement for this year has been the strong improvement in our working capital metrics, which are at historic close. This unrelenting focus on working capital management had led us to significantly free up cash flow system and help us to continue being a net debt free company in 3 of our last 4 quarters FY '24 with net cash balance of INR 600 million.
On the cash flow front, we have ended the year with the highest operating cash flows in the company's history. We continue to be free cash flow positive as well. Saurabh, our CFO will give you more details on these financial metrics in his remarks.
On the National Curriculum Framework by NCF front, FY '24 was a landmark year in terms of the announcement of the National Curriculum Framework for school education in August 2023. This long-awaited announcement has come after a gap of 80 years periods. We look forward to utilizing this opportunity to the fullest over the next 2 to 3 years.
During FY '24 contrary to our expectation, announcement of NCF for the school education did not impact the FY '24 season much since NCERT did not come in new syllabus books even in March '24. That led us to a [indiscernible] adoption of syllabus books and most schools continue with old syllabus books.
On the high education and test [indiscernible] segment, we saw continued challenges in the segment as the semester are [indiscernible] in certain universities and NEP implementation was not uniform even within states. There are also a lower number of job vacancies announced by the government, which impacted test segment, along with strict competition from youtubers.
We are working towards improving the performance of the segment by increasing collaboration with influential youtubers and coming out with content, which is relevant to larger audiences.
On the net debt front, our YouTube channel [indiscernible] continues to our phenomenal success. We now own 1,800 videos focused on higher education and secondary segment in topics covering science, engineering and test preparation and so far the channel have already notched up over 20 million views and 234,000 subscribers.
This further enables the promoting of our content, which can spur demand in that segment. This channel enables students to learn critical areas through top notch educationist, which will not be available in Tier 2 and Tier 3 colleges. We expect to add more than [ 700 ] videos from both student college segment this year.
We launched solid steps, our integrated K-5 curriculum solution, keeping in mind the co-concept of a new education policy 2020 during the year.
The K-5 program is meticulously designed to meet NCF 2023 guidelines, empowering young minds with essential skills, critical thinking, creativity and a love for learning. Milestone of K curriculum solution also continued to provide holistic learning to schools both in India and the Middle East.
Looking ahead, we expect FY '25 and FY '26 to see maximum adoption of new syllabus books in the school segment we should help our growth trajectory for the company.
Our strategic partnerships and collaboration has helped us to expand our offering and meet the changing needs of our customers. Our commitment is to continue this positive trend and enhance our financial position over the long term.
With that, I would now request our CFO, Mr. Saurabh Mittal to apprise all of us on the financial performance of S Chand. Thank you.
Thank you, sir. Good afternoon, everyone, and thank you for your time. I'm Saurabh Mittal, group CFO of S Chand. In terms of numbers for the full year, our consolidated operating revenues came at INR 6,626 million versus INR 6,103 million during the same period last year, registering a growth of 9% for the year gone by. The school segment has grown by 13% and the higher education segment sales are lower by 27%.
We have achieved one of the highest annual gross margins at 66% versus 64% in FY '23 on the back of better product mix, lower paper prices and efficiencies.
Our EBITDA profits crossed INR 1,000 million for the first time in the past 5 years. We've reported an EBITDA of INR 1,098 million versus INR 963 million or 14% in the corresponding period. Despite taking salary hikes to a higher travel spend, spends on developing new content as per the NCF during the year. I'm happy to share that our operating income went up 65% with profits of INR 484 million versus INR 292 million in the same period last year. We reported a PAT of INR 511 million in FY '24.
On the back of solid profitability, we have recommended the dividend of INR 3 per share.
Our greater achievement in FY '24 has been a commendable work done on improving the working capital metrics, which has resulted in the highest operating cash flows in the company's history at INR 1,211 million versus INR 811 million last year, this was up 49%.
The healthy cash flow has enabled us to reduce debt, negotiate better terms and focus on marketing our products and services better.
I would like to bring your attention to Slide #8 to Slide #10, which showcases the results of the steps taken during the past years. We were building a lower working capital organization and with focus on positive cash flows.
In terms of working capital, trade receivables reduced to INR 2,601 million during Q4 FY '24 versus INR 2,653 million during Q4 FY '23. There was a INR 52 million decrease in receivables in spite of achieving incremental revenue of INR 523 million over last year.
In terms of receivable days, it stood at 143 days versus 159 days in the same period last year, a reduction of 16 days during FY '24.
This is the lowest Q4 receivables in the company's history. Inventory increased to INR 1,761 million versus INR 1,562 million. The inventory increase is driven by higher raw material paper of -- paper inventory of INR 633 million versus INR 436 million. Finished goods inventory was almost the same level of last year.
Net working capital reduced to 157 days verus 188 days, which is a reduction of 31 days during FY '24. This is the lowest Q4 net working capital rate in the company's history.
In terms of net debt, the company was net debt free in 3 of the last 4 quarters of the year, we were net cash positive as of March '24 at INR 600 million versus a net debt of INR 60 million at the same time last year.
As we go into FY '25, our guidance for the coming year is as follows. Firstly, I'll looking to grow operating revenues in double digit for the year. Secondly, we would be taking a single digit price hike across the product portfolio. Thirdly, gross margin should be stable barring exceptional movement in the paper prices during the year. Fourthly, we have a greater EBITDA margin band guidance to 17% to 19% versus 16% to 18%. Fifth, we look forward to continuing our focus on working capital metrics and cash flow to continue.
Finally, we shall continue to create content based on the new syllabus during CY '25. This should lead us into FY '25 sales season with a much larger repository of new syllabus books for our target customers. We expect the promotion of sales seasons of FY 25 to see higher adoption of new curriculum books by schools versus FY '24.
We should also see further announcements of new syllabus books from NCERT for more classes to happen during this year. This should lead to strong volume, revenue and profitability growth for next 2, 3 years period.
With this, I would like to open the call for your questions.
[Operator Instructions] The first question is from the line of [ Randeep Singh ] from Mass Capital.
While NCF was launched in August of 2023, but NCERT kind of spoiled the party by not implementing it. Are you confident of it being implemented for the next 2 years?
So, Randeep, it's not as if they haven't implemented they have announced classes third and sixth syllabus in April of this year. So our belief is that they will continue to announce new classes, and that is how the rollout will happen.
Sure, sure. I wanted to also understand there was -- I think in some of the earlier calls, you mentioned about monetizing the YouTube channel, S Chand Academy. Have you made progress in that space?
Not yet, to be honest, and we're still reviewing our strategy on the S Chand Academy at the moment because the focus was for the last year has been to bring out content according to the NCF. So that is why we are focused on the S Chand Academy, we are reviewing what we wish to do, and we probably by the next quarter call, we will have a definitive strategy on that.
Sure. Next, I wanted to understand, if I look at [indiscernible], which is a $6 billion company globally and dominate the U.S. publishing space. Have we tried emulating business models from them?
In terms of acquisitions?
Not just acquisitions, I think their business model varies across electronic media, publishing, there are various interesting business model. So I just wanted to understand, as the management kind of spend time understanding their business model, given they are the global leaders.
[ Pearson ] is already in India. [ Pearson ] have an office in India, but according to our sources and information. [ Pearson ] is not really fairing playing well in India and have sold a schooler education division to a company called [ Lead ] last year and those things are already happening. So [ Pearson ] has not been doing well in India. The things that we work in India, we will -- we're already working with them -- with our strategies. And because everything which happens globally cannot be replicated as is [indiscernible]. So we are very careful that what works in India where the market for us lies, so we should continue on those strategies.
Sure, sure. One last question. Given we are a debt-free company now and generating good cash flows year-on-year, how far have you progressed in our latest acquisition? I think you mentioned last time, I think we are towards the closure of our new acquisition. Any update on that?
Yes. I mean, so there's a gap in between. We are reviewing that in terms of the acquisition because there are certain things that they did not workout so we are in the review process, we're still in negotiation them.
The next question is from the line of Niteen S. Dharmawat from Aurum Capital.
A couple of questions. So we mentioned double-digit revenue growth for next financial year. Now double digit is [indiscernible] from 10% to 99%. So can we be a little more specific in terms of this guidance because that will help us understand where are we heading?
So, Niteen, I mean, to be honest, having looked at last year and reviewing, we will be in a better position once we start seeing the adoptions of schools somewhere around the mid of the third quarter. So I mean do we have any kind of guidance? I mean, of course, the baseline should be around 12% to 13% but of course, we're targeting higher number.
So, Niteen, there is a level of uncertainty right around this. So that is precisely the reason why we are we have not given a numerical guidance.
And, Niteen, the elections also just finishing up around the corner. So that will also depend on if the same government continues or the new government which comes in, what will be their policies, what will be the theme. So very difficult to say right now.
So I think we will be better equipped to answer that probably by the third quarter.
By the third quarter because most of our business comes in the last quarter of the year, I understand that.
Yes. Yes.
But in next example, after Forbes, we may have some clarity if the government is continuing or not continuing that way. And that would give us some indication about the possible revenues by implementation of NCS or discontinuation of NCS, whatever happens post [indiscernible]. So we'll have some idea about that.
Yes. So if the existing government comes and it's obviously a continuation of the previous policies. That part is correct. But I think let's wait for 4 June.
Got it. Okay. Okay. My next question is about the paper prices. So how is paper prices now and overall inventory level? And how do we expect the paper prices in coming months? Because a lot will depend on paper prices as well and if NCF is getting implemented and the demand for paper could be different and the prices would determine lot of profitability concerning the publication number though, we may be taking some eyes, but there's still -- paper prices will help us understand where are we heading?
Yes. So paper prices right now, I think last -- year before that have come down last year. And right now, as of -- as of now we speak, I'm not seeing an increase in paper prices, but people in the market are saying maybe after the second quarter or third quarter -- second and the third quarter, the prices might increase because of maybe buying from the government, buying from even export market and even domestic market comsumption will increase. So right now, it's very difficult to say where the paper prices will go, but I feel paper prices largely should be constant with minor increases this year.
And, Niteen, having said that, we've got a large inventory already in hand. So paper procurement this year should be 20% to 30% [indiscernible] of the previous year.
Yes. So paper, procurement in terms of this year will be less than last year, much less.
I got it. I got it. And any other plans of acquiring any companies in the foreseeable future now. Are we looking for any opportunities for inorganic growth as well?
We always are open, we always look out for opportunities if the right opportunities strike us when we evaluate it and if the deal happens, it happens. So we always on the lookout. It's nothing like we have stopped looking out. But the problem is getting the right opportunity, the right value that becomes a big tough.
My final question is related with our investments in new [indiscernible] companies wherein we are providing some small capital or capital over there. So whatever plans are we investing looking for any other opportunity now actively? Or we are continuing where we were? And are we planning any exits over there in any of the invested companies?
So currently, we have 2 investments, not exactly looking at exit in any of them. Both of them are doing [indiscernible] well. [indiscernible] we had a very stable year last year. We always -- we continue to get investor decks investments. There are some on going discussions but not anything to talk about at this stage. As and when something comes up, we will definitely inform.
I got it. Regarding Smartivity, have they taken any other funding now or the last one that's taken after that they haven't done anything. Any idea about that?
So they are cash positive, they're generating money. So as of now, they really don't have a requirement to raise debt, but as and when there is something that comes up definitely we will -- I mean they have the -- discussions are continuing on that line. But as of now, there is no fund raise in the next 6 months as I see.
And what was the last valuation around when they have raised the capital?
I think around INR 120 crores odd.
[Operator Instructions] our next question is from the line of [ Pradeep Rawat from Yoga Capital ].
So my first question is regarding our margins. So we had margins like 20% plus kind of margin for 2018. And now it's much lower than that. So what I can understand is paper pricing has much to do with it, with this lower margin. So are there any other factors which are limiting us to achieve those margins back?
Yes. So if you look at prior to '18, of course, there's a lot of aggressive growth during that period. I mean the working capital metric also was not great. what we have also done is, relooked at our working capital metrics. I mean just margins -- to increase margins of 2% to drive that kind of volume growth is not efficient to working capital.
So that's the 2, 3 factors, which have led to decline in margins as of now but we, of course, have upped are EBITDA margin guidance for the current year. So 2 3 issues. One, of course, was the implementation of GST in 2017, which you had about 100 bps to 150 bps impact because we do not get input credit on any of our products so there have been issues of reverse charge GST on royalty and increase in the GST of printing outside plus the GST data at 18% for almost everything. So that's one.
The other thing, of course, is because of during COVID, of course, the volumes and the revenues were lower. Of course, the baseline costs, which we done quite a bit on the baseline cost, but the, of course, beyond a point you can't really go low.
So as and when volumes start going up post the NCF implementation, the margins will improve. But of course, they should improve on a regular basis. There can't be any major movement of margins. We are working around looking at each and every aspect of it. If you look at most of our working capital metrics, we are far better than what we were pre-COVID. I mean these numbers in terms of net working capital days, in terms of receivable days are far better and even on the operating cash flows. And INR 800 crores, even at 20% EBITDA margins we were making...
We're making around INR 38 crores of operating cash flows at that time.
So we are at INR 120 crores plus. I think that's more important for us generating cash rather than just looking at one part of it, which is the margin percentage.
So also if you look at the operating metrics, most of them, I mean, most of them are down by 50%, 50% from 5 years...
Sorry to interrupt. Sir, your voice is sounding very muffled.
Okay. So can you hear me now?
Yes, sir.
Yes. So what I was saying was that if you look at our operating metrics, most of them have -- they have declined by 50% over the last 5 years. So we have to look at these numbers in terms of the cash that we are generating, which is probably up 3x in the last 5 to 6 years and the operating metrics, which have seen a huge improvement. So I think we would like to look at it like that.
Okay. And so with respect to sustainable margin. So could we expect a margin near 18%, 20% or more than that in coming years?
So see, we are looking at it year-on-year. And I think in a year where we have paper prices declining a bit, of course, we could at that 20%. But a lot of factors involved in this. I mean, of course, product prices cannot increase beyond a point. Paper, of course, is the biggest lever in terms of that. And of course, everything depends upon volume growth. So once you have volume growth. I think we can look at improving margins.
[Operator Instructions] The next question is from the line of [indiscernible] from [ Quest Investment ].
Part of my question was these -- please new course that we are talking, which is we announced in August '23, how does we really going to play out for us as well as overall on the whole education, what NCF [indiscernible]
Sorry, you want to ask how will play out for us with the new syllabus you mean to say?
[indiscernible] the overall industry because yes, ultimately overall leader -- because [indiscernible] what I mean differently will be then on the exit [indiscernible]
The new syllabus means are getting new books in the market. And when you get new books in the market -- the used books or secondhand books come out of the market and the schools take all the new books for their use. And that increases the market share of companies, which have good brand, good content and good relationship with the schools that affects them positively. So that's how it will have a positive back in the group for the next 2 to 3 years.
Okay. And what I understand that you said that it is not [indiscernible] implemented from standard [indiscernible]. Is that correct understanding?
No, no. They have announced the new books for only class third and Class 6 as of last month. We expect over the next couple of months, there should be more announcements of more classes. So, so far, the new syllabus is only there from classes prep to third and now sixth.
So before whatever came [indiscernible] that we will be at least to that extinct will benefit this year?
Yes, yes. But that is as of today. We expect that over the next 6 months, you will see more classes, new syllabus being announced.
How much -- whatever we announce can help us -- I mean what will your revenue contribution from those whatever [indiscernible]
So for the school segment, our -- I mean, till our class 8 is almost 60% of our school revenues.
[Operator Instructions] The next question is from the line of [ Vikas ] [indiscernible] from [ Focus Capital ].
I had a couple of questions. So one is -- so year-on-year, there has been a great improvement in the receivables that every year, it is reduced. And so is there a scope for improving this further? Or this is like -- I know this is among the best, but is there scope to improve this further?
Yes, definitely, the scope. I think we still have to work on the inventory side of it. Receivables also to the extent that there's always scope to improve. So I think that is still scope to improve.
Okay. That's very heartening to hear, sir. The second thing is [indiscernible] I came across maybe in your DRHP, sir there are 10,000 publishers in India, right? It's a very fragmented market. And I think in one of the interviews, you had said something like you had about 12%, 13% kind of a market share.
So my question is the industry consolidating or likely to consolidate any time soon? Are you seeing some trends in that direction?
So I would like to say here that the market got affected financially quite badly after the COVID -- in terms of COVID. So COVID had actually had shaken up things and a lot of publishers. And a lot of publishers we are seeing that are financially not able to compete properly and they have issues of buying paper, printing, paying the suppliers, paying the salaries to the employees and receiving collections from the markets. All those things are factoring up and we are seeing it -- players are getting weaker. And fortunately, we have been on the strengthening our company. So that's a good part for us.
So I feel the market is -- I will not call it exactly consolidating, but yes, market is trying to play for the strong players in the market. So the strong players will definitely have an edge over the weaker players. And that is where we feel, a company like us or a group like us will have an advantage over others. And that's what I feel.
Okay. Got it, sir. And one last question, sir. I was unable to understand the exact role of the on dependence on NCERT as far as the NCF implementation goes. So if you don't mind, could you just provide sort of explanation on that, sir?
So what happens is that when NCERT comes out with the new books, that becomes the benchmark, right? So -- so thousands of schools across the country will say that now since the new book is out, they will say that we want to now purchase the new syllabus books for our students as well. So it becomes a trigger. As long as the NCERT books are not out, people can choose to or opt to go with the older syllabus books as well. So that becomes like a big trigger for moving to the new syllabus.
It becomes like the benchmark. So for example, if you are a school owner or a teacher or a HOD of a particular subject. If there is a new syllabus booked by NCERT, then you can't be using the old syllabus books. I mean people will question you. The parents will come and question you. So that is why it is the biggest trigger for movement or adoption of the new syllabus books from private publishers like us as well.
Okay. Okay. Got it. One last question, sir. Sir, on the balance sheet, we have a big chunk of our total assets is actually sitting in goodwill. And we have that we don't tiered that amount because you don't see any impairment in the acquisition. So my question is, sir, because of that large amount sitting in the goodwill, that is artificially [indiscernible] the return metrics like return on equity and return on capital. So is there any thoughts that you could share or do you plan to monetize this in the future? Or this will remain the way it is?
Yes. So I mean, we've had this conversation multiple times on goodwill. And it only -- if you look at it, it stands in the consolidated financials, not on the stand alone financials. If you look at the stand-alone financials of each individual entity, of course, the return ratios are much better. It's only because the premium that we paid on the acquisitions that our return ratios are impacted. So somebody has to look at the return ratios net of that we're going to actually see what kind of returns we are making. So there is no -- at this point of time, there is no conversation to impair that goodwill because again -- it's on the consolidated financial numbers. It's not part of individual balance sheet.
Okay. So sir, actually, you would know this better than me, sir. So because we've have been paying on our debt, our total assets are actually reducing. So the goodwill as a percentage of total asset is actually increasing because the denominator is reducing. And so therefore, our equity component is also going up. And as a result of which artificially the return on equity looks much lower than -- it's only when somebody looks deeper into all the wonderful things that you've done and how the cash flow has improved it's only then that we understand this.
So the only other is to write off the goodwill in the financials. So we'll -- we haven't had that conversation, to be honest, that's not something that we are looking at, at any point of time, possibly, if we can merge the companies into a single entity at that point of time may be possible. But at this point of time, we don't see a major impact because of that.
[Operator Instructions] The next question is from the line of Punit Mittal from Global Core Capital.
A couple of questions. One is the extension of goodwill. I think on the consolidated, there is an increase of INR 50 crores of intangibles, which I recognise as goodwill. Can you explain what is that to increase with us?
During this year?
No. There is actually -- there is no increase in the intangible goodwill in this current year.
Is the Goodwill marked under intangible or is it marked under something else?
So goodwill is separately, if you look at the financial statements, goodwill is at 33%, 25%, INR 3,357. It's reduced by about INR 32 million or something.
Okay. I think [indiscernible] sorry for that. Now coming to the new syllabus, these are the [indiscernible] correct that they have to come out with the new syllabus with the next few months because if someone is using the new syllabus [indiscernible] when they go to the next year, they can't be moving to the old syllabus. So if someone is adopting the new syllabus, they will have to continue with the new syllabus until K-12, right?
So I think syllabus has already come out last year thing that has not come out is the NCERT books. So NCERT comes out with books as per the syllabus, which become the benchmark for the market. Now a lot of schools use NCERT books, a lot of school do a mix of NCERT books and private publisher books. So the catch here is that does not come out of the complete set of books, schools are in confusion on whether to follow the NCERT books, so whether to follow the NCF, the syllabus, which has already come out.
So a lot of schools have already transitioned -- I would say, 10%, 15%, 20% of the schools have already transitioned to the new syllabus and taken books across all classes from private publishers even if NCERT has not come out with the books. It is the other 80%, 85%, which are sitting on the side, waiting for the NCERT to come out with books and see what other changes done and then go ahead with whatever class they want to work with private and whatever classes they want to work with NCERT.
So just to make an understanding, NCERT books are about 30% to 35% of the total market in that segment. So the market share of NCERT is about 30% to 35%. Rest of it is with the private publishers. So that's the impact because it's being the largest player, a lot of schools would use a mix of both.
Yes. But my question -- I understand but my question is new syllabus book that they've come out is only until year 6 [indiscernible] year 6 have they come out now?
No. So K-2 came out the previous year already in the market, kindergarten to Class II. Additionally, on March, they came out with Classes 3 and 6. The Classes 3 and 6 also, they came out with digital versions. They did not put it into print. So the schools could not prescribe them in schools because til the time books are not available. Printed books are not available. The schools cannot prescribe it. So that was a challenge. Now probably by the end of this -- by October, November, I'm sure they'll probably come out with all the books up to class 8 and then it will be the complete implementation during the next season.
Okay. Okay. Got it. Now the last question naturally, I think on the capital allocation side, we're becoming debt free and hopefully, our cash generation would be north of INR 120 crores that we did last year. What is the management thought process and plan for the capital allocation? I know that are talking about inorganic acquisition and all. But what is the thought process now I mean that becomes even more relevant given that kind of cash flow [indiscernible] on top line and [indiscernible] market cap. So any clarity on that would be really helpful.
Yes, in terms of that, so we've already commenced the dividend distribution last year and we are retaining the same amount this year because profits are also around the same range. In terms of acquisitions, we are -- we were discussing one, of course, there are always opportunities. So we would like to keep some money aside from that. And of course, once we hit the sweet spot of about, let's say, INR 100 crore plus in terms of cash, then we'll probably start thinking of a buyback.
Okay. So that buyback is in the mind of the Board and the management already.
Yes. Definitely. Definitely.
[Operator Instructions] The next question is from the line of [ Manan Patel ] from [indiscernible] individual investor.
First of all, congratulations on the great work on profitability and the balance sheet. So sir, first question is regarding the investments that you have mentioned that you are making in employees developing new curriculum and marketing.
So can you throw some light on what kind of improvement in number of schools that we are addressing, number of geographies, number of classes. So could you quantify those number so we can have some idea on kind of market share that you can gain going forward?
So in terms of geography, we are there pan-India. So I don't think there is any location that remains uncovered. We are there pan-India plus, of course, Middle East, which is a large market for us. In terms of content also, we -- K-12, we are across all subjects. Of course, we've added a couple of subjects in terms of artificial intelligence, coding that has been announced for that's part of the robotics and all, which have been part of this thing.
So we're slowly building on the additional subjects that have been included in the new curriculum. We're having some reasonably good success in that.
In terms of number of schools, again, the coverage is there, about 40,000, 45,000 schools, and almost 60% of the schools are user schools, which use our product. So again, we have to -- and of course, in terms of state board, we have a large offering in West Bengal. So that's where we are in terms of coverage.
Understood. And sir, as the 3 to 6 class new books are out. So do you think like [indiscernible] understand 15% to 20% of our revenue -- like any impact on our June revenues. So do we see a growth in June quarter from those classes?
No, the academic session starts in April. So I mean...
June is close box because summer of holidays.
[indiscernible] session already started. So whatever adoptions for this academic year already have happened. So we don't see a substantial jump because of the -- anyway, the books are still not out, I think probably by the end of June -- July, the books will be out in the market. So I don't -- we don't see any impact from this...
[indiscernible] not going to happen any impact on June quarter.
Okay. And sir, so while the timing is uncertain, but when all of these NCERT comes with books for all of these classes. So do we see ourselves setting a revenue of INR 900,000 crores, we have done INR 800 crores in FY '18 but can we reach a INR 900,000 crore revenue when all these books are in place in the next 2 or 3 years?
That is definitely our target. But having said that, we will be prudent in terms of the kind of revenue growth we're also looking at because we continue to focus on our working capital and cash flows.
And quality sales.
Quality sales. quality business, we will not dilute as the cost of [indiscernible].
Sir, sorry to interrupt. In between your audio was going really bad.
So basically Saurabh is saying that we want to continue on the path of quality sales. So just to increase the sales, our growth in sales, we're not going to compromise on the quality of the sales, which make sure that the collection is in line, the working capital metric is in line and all those factors. Otherwise, collecting payment from bad customers becomes very tedious job and then the returns also become high.
Understood. So just to -- so given the good quality of customers that we want and our learnings from the past. So is there a market enough for us to reach INR 1000 crore [indiscernible]
Market is quite bit. Market is quite sufficient. It is just that, as I said earlier, there is a kind of consolidation happening in the market where the weaker players are not able to compete with the stronger player. So there stronger players like us will be able to capture the more market share in the market. And that's what I feel we will be doing in the next 2 to 3 years. We were just waiting for the syllabus change. Now the syllabus change has already started. So next 2 to 3 years, I think we should have a good runway if the syllabus changes happen on time from the government.
Understood. And sir, lastly, on understanding the capital allocation, I understand previous participant mentioned about the capital allocation and you mentioned the buybacks. So I understand you mentioned a INR 100 crore number before you want to think about the buyback. But sir, market being what they are very unpredictable and given we are at around INR 850 crores to INR 900 crores market cap generating around INR 120 crores of cash flows. So would it not be more prudent to buy back when the stock price is available cheap and we might not have imminent CapEx plan and still have a INR 60 crore balance of cash in hand. So it's just a suggestion and would love to hear if you have any comment. So better do it when the prices are available once the new syllabus start coming in market might recognize and the price might also move up. So it looks like a very cheap stock at this point, would love to hear your thoughts on this, yes.
So on this -- see, if you look at follow-up numbers on a quarter-to-quarter basis. Quarter 3 still, we have debt at the end of -- in our books, right? We are a cyclical industry where we have to invest upfront and then -- and the money flows at the end of Q4 to us. So we are slightly prudent because we do not want to be strapped for capital at the end of Q3 building into the new season. That is why we have put in a certain number.
We know that once we cross INR 100 crores, probably we will have enough cash to ride us through the season where we require capital. And then -- so I think another year's time would definitely give us that kind of strength. So we've had 2 good years, but also, we've got -- we've had 3 very difficult years of COVID. So we would like to conserve some cash so that we continue to have runway in our books so that we are not borrowing or we're not -- we don't have to go back to markets to raise money.
So at the same time, it's prudent if you come out with a buyback when you come out with a buyback for a decent amount. I mean just having a buyback for -- with the small amount of capital allocated to it. I don't think it does justice as well.
Completely understand, sir. But when you are talking about the numbers that we are planning to do or will happen with syllabus, the prices will also not be at the same level -- it should not be at the same level ideally. So...
See, the thing is that from a business perspective, we have to balance risk as well as reward, okay? So I mean, we have to see in terms of debt, we might do acquisitions. I mean who knows -- I mean nobody foresee COVID coming, right? So that's what COVID has taught us. So I think that, that's a tricky balance to achieve, and that is what we keep on deliberating even in our board meetings, and we are cognizant of that fact. Yes, the timing of it will be dependent, as per the Board thinking as well.
[Operator Instructions] The next followup question is from the line of [ Pradeep Rawat ] from [ Yoga Capital ]
So another question regarding the NCF. Do you see any [indiscernible] implementation within deals and being done in a phased adoption manner from the side of NCERT.
Not really. I don't think so. I mean there's any risk to it not being implemented. Of course, unless there's a complete change from the government side. It depends on what happens on the 5th of June.
So I think that answer you will get on the fourth of June.
Okay. And can you share the number regarding your revenue for class till class 6 and then 6 to 9 and then 9 to 12.
No, we have said that out of the total school revenues, [ K to 8 ] is almost 60%, 60% to 70% of the revenues. And I think in our earlier releases, we had mentioned [ K to 2 ] was almost 10% to 15%. So 2 to 8 or 3 to 8 will be approximately, let's say, 50% of the school business.
[Operator Instructions] As there are no further questions from the participants, I now hand the conference over to the management for closing comments.
Thank you, everyone. Thank you for your questions. It was nice to talk to you. And We're happy to have good results, and we'll continue on the path of quality sales and ensuring that we deliver a good -- better results next time. Thank you for all your support and completion. Thank you.
Thank you. On behalf of Prabhudas Lilladher Private Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.