Navneet Publications expects to maintain the 15-percent growth rate in revenues and hopes exports to keep growing at 100 percent, says Sunil Gala, president-finance, Navneet Publications.
Speaking to CNBC-TV18, Gala emphasises that the company only measured it performance on a year-on-year basis and adds that high margin levels could be maintained if both the publications and stationery business continued to perform well.
Below is the edited transcript of the interview on CNBC-TV18
Q: The first quarter of the fiscal has always a great period for those in the textbook business? How are sales? How do you expect revenues to shape up?
A: The first quarter has been excellent till date and overall, sales have been strong. Education is in demand and we expect to post strong performance in the coming quarters as well.
Q: Your Q4 revenues were good. What kind of quarterly revenues do you expect to post? Can you give us an estimate of the quarter-on-quarter (QoQ) revenue growth?
A: The QoQ growth in revenue could be to the extent of 15 percent. Last year, we raked in revenues of around Rs 360 crore in the first quarter. So, we expect to close the quarter with 15-percent higher revenues.
Q: Though your full-year performance has been on the rise, at some point the base effect will catch up. In FY13, total income was up 30 percent to Rs 800 crore, EBITDA was up 46 percent and net profit was up 37 percent. With such a strong performance in the previous fiscal, what is your reasonable expectation of performance, going forward?
A: Last year, we posted a strong performance for various reasons. From the current year onwards, we expect minimum growth of between 15 - and 17 percent in both our businesses —publications and stationery.
Q: Is this 23.7-percent, 200-bps jump in margins sustainable?
A: Overall, if both businesses grow at the same pace, the company would be able to record higher margin-levels.
Q: What about performance of the stationery business? What is your expectation for the quarter and the year?
A: At Navneet, we never look at QoQ. We measure our performance on a yearly basis. Annually, I believe we should grow at 15-17 percent.
Q: What about exports since the rupee is favouring exporters?
A: As a practice, we always sell in forward as soon as we receive confirmed orders. We always have back-to-school orders which are only once in a year. So, as and when we get confirmed orders and if they match with our cost of production, we always sell those in forward.
Q: How is the competition in your segment?
A: As far as the stationery business is concerned, especially the domestic business, there is a severe competition in the organised sector. Though every participant has a share, the rate of overall demand for education is going up rapidly and there is a strong shift from unorganised sector to the branded stationery-product segment.
Exports grew almost 100 percent for us last year due to a lack of competition. There was an absence of competition because our present customers are all organised participants or rather organised retail chains mainly from the US where we are the only suppliers from India.