S Chand: Targeting 50 million books

S Chand, the country's largest education content provider is bullish about the Rs 30,000-crore education book market. Recently, it secured a second round of funding of USD 27 million from IFC. Himanshu Gupta, the joint managing director at S Chand explains why the future is rosy for the education company.

28 Mar 2016 | By PrintWeek India

PrintWeek India met Himanshu Gupta, the joint managing director of S Chand, at the Sahibabad plant. The plant was set up recently, and it can churn out 2.5 million impressions per day and produce books on its online soft cover line with uncoated paper. Gupta says, "Next year, we are planning to produce two lakh books units from this factory."
He is bullish about the future. "According to the Nielsen report, the numbers for 2015 is Rs 32,000-crore. This is the size of the Indian book market, out of which 94% is for education books.
Only Rs 1,800 crore is non-education trade books, and Rs 30,000 crore is for education book market in India," he says. This is perhaps the main reason the education content provider secured a second round of funding of USD 27-million from the International Finance Corporation (IFC), a private equity arm of the World Bank.
As PrintWeek India readers are aware, Everstone Capital holds a minority stake in S Chand, which it had acquired in the first round of funding in 2012 with USD 28-million.
"IFC has picked up a minority stake for Rs 110-crore (USD 17-million) while Everstone has invested Rs 60-crore (USD 9 million) to retain its current stake in the company," Gupta explains.
With this year’s revenue of close to USD 100-million, S Chand is looking at a CAGR of 18-20% for its print business in the coming years.
Currently, 95% of its revenue comes from print and 5% from digital services. The company wants to increase the digital services share to 25% in five years.
Gupta says, "We see that the number of students are increasing per year. Plus, the number of schools are increasing. Today, even a poor person is looking to educate his children in an English medium school. Even a man from an economically backward class, a rickshaw puller or a vegetable vendor, does not want his or her child to be a rickshaw puller or vegetable vendor. Everyone wants their child to be educated in a good school, at least, an English medium school."
Gupta adds, "The government's total infrastructure for education is supposed to be 1.3 million schools. This infrastructure is not being fully utilised. The students drop out ratio and the quality of
education is not up to the standards. Due to these reasons, students go to English medium schools. Today, the problem is on the rise and as aspiration levels are rising, a lot more schools by private institutions are coming up. As a private publisher, we cater to these institutions, and to these schools."
Target: 50 million books
In 2016, S Chand will be close to producing and selling more than 45 million books, of which a majority of the titles are in English. This will be the largest in the country by any private publisher.
Gupta says, "As a group, we have become the largest Indian publisher with revenues of close to USD 100 million in FY 16."
Now, the company is looking to scale up. "We are looking at a market which is completely unorganised. We are looking to transform it into an organised and consolidated market," he adds. Today, there are more than 10,000 publishers in India and more than twenty with a turnover of Rs 100-crore.
And so, to achieve its target, the company is looking at aggressive acquisitions over five years.
It plans to acquire a 100% or majority stake in at least three or four regional publishing houses that offer products aimed at state education boards.
“In 5-10 years, a lot of consolidation is likely to happen in the market, and we will be on the lookout for an opportunity to buy out small and medium players and turn them around,” says Gupta.
In the past three years, S Chand has acquired a 100% stake in Vikas Publishing House and Madhuban Educational Books.
At the beginning of 2014-15, it bought out Saraswati Publishing House, in which it held a majority stake, which will go up to 100% by FY16. Also, S Chand invested USD 200,000 in a startup, Smartivity  Labs, which uses augmented reality and robotics for learning.
Gupta says, "It is a very simple philosophy. We want to provide quality content to the end consumer. This is our basic aim. The child should become educated. Every child should have a future. Books are very important part of his curriculum. We believe in total solution. We know we are an important facet of a child’s education."
He explains, "We believe a child's education is close to 18 years. A child may go to pre-school, a college followed by a university. This is 17-18 years of a person's life. We want to be a major part of it".
This is the reason, S Chand is growing at a CAGR of 18-20% and aims for a higher growth in the next five years. "The plan is to focus on a high margin, high growth, direct-to-consumer business
model," says Gupta.
Bharat and India
Gupta tells PrintWeek India, "India is a unique country. It is divided into two parts, India, and Bharat. India is urban and semi-urban and Bharat is rural and semi-rural, with a whole lot of categories and sub-categories. At S Chand, we cater to urban and semi-urban and semi-rural category. As yet, we are not able to achieve outreach and go deeper into villages, which will happen some years later."
In all, S Chand caters to a large part of the country. The numbers are staggering. Total 60 offices. A field force of 700 people. A target of 25,000 institutions per year, thus, 25 million students per year. Gupta says, "We believe we can quadruple this number in the next five years. I think, the publishing market is going through a consolidation. There will be larger players and there will be smaller players, but it will not be thousands of players. Right now, the market is fragmented, but the situation will eventually evolve. It will definitely take its time. There would be five to six big consolidated players in the coming years. Some of them will be very small and niche players working in the regional market. But at an all-India level, there will be less number of players. This is the economic ground-reality in lieu of the currency fluctuations, plus the operating cost, marketing cost and production cost."
The role of government
Today, the S Chand Group is managed by Dinesh Jhunjhnuwala as the chairman – and Gupta. It has grown to be one of the largest content and service providers in the Indian education sector, publishing around 45 million textbooks and delivering over 4,000 hours of eContent to 20 million students annually. The company has been investing in the fast-growing ed-tech space, with a presence in tablet-based content delivery, online tutoring, and online test preparation for government and PSU entrance examinations.
Hence, the fund infusion by IFC, a member of the World Bank Group, one of the largest global development institution focused on the private sector in emerging markets. Working with more than 2,000 businesses worldwide, IFC expertise is its deployment of capital, expertise, and influence, to create opportunity where it’s needed most. In FY16, IFC’s long-term investments in developing countries rose to nearly USD 18-billion, helping the private sector play an essential role in the global effort to end extreme poverty and boost shared prosperity.
Gupta demystifies the capital infusion, "S Chand is an education company. We see the number of schools which are being added and how many students are attending these schools. So our analysis says 3-4% are the new children coming every year in new schools or the existing schools."
Today, a child needs much more help and not only NCERT books. "I am not saying that the NCERT books are not good but you need supplementary books, reference books and you need much more help as a student to compete in this competitive world. If you want to pursue engineering or become a doctor, you cannot depended on your school or your regular books. You have to go beyond it. A student takes the help of tutorials or a coaching class. Which is why, all these businesses thrive," he explains.
Indianism at S Chand
The beginnings of the S Chand Group in 1939 has been steeped in Indian nationalism by Shyam Lal Gupta. The aim was to publish Indian authors which was unable to locate a voice in colonial times. Today, S Chand has evolved into one of the biggest domestic publishers and exporters of textbooks but Gupta has a clear view about its role, 77 years later.
His rationale is, "If you want to be a capitalistic economy, then you have to help the private players reach their goals. Ultimately make the life of the people better." Private players can produce superior quality, plus at a competitive price.
Gupta feels, "Ultimately, the government is using the tax payers' money to subsidise the paper cost which is used by the NCERT books and therefore being made cheaper. The government is paying for the paper, and at S Chand, we are also paying for the paper. The government is subsidising it to the end students by using the tax payers’ money. So, ultimately, an Indian citizen is paying for it. You cannot say that the books are free or subsidised."
Future of education books
The SAP-driven S Chand is seeking alliances. Plus the company hopes to boost its reach at regional and state levels – a mere 5% at the moment. Gupta, a keen golfer, feels, "there is a huge potential in spite of an all the handicaps."
Gupta is keen to set up book factories in multiple locations. His concern is to achieve the efficiency of the mother plant of Sahibabad.
On the printed book versus digital debate, Gupta says, "A hybrid solution is what everybody seeks." And so, S Chand creates books with a CD or book with an app or a QR. All multi-platforms are available in a book. In spite of all this, books in India are here to stay and is not coming down for at least the next 10 years.
Gupta's assessment of the situation is, "The digital platform is not going to be simple for publishers. You will be able to eradicate the complete print market until one fine day there will be nothing but digital. Now, this is not even happening in the US and Europe, which are much more advanced than India. The other thing is the lack of infrastructure, which is a big issue in India. So, how will the teacher train through the digital media? Right now, teaching from the book is simpler and children are used to it. The ‘Chalk and Talk’ method has been used by teachers for decades. To eradicate the printed book and shift it to the digital level will take time."
A child in India is different from his counterparts in the United States. The purpose of education from an Indian parent's perspective is to make the children job-ready, while in the US education means training and evolving the child intellectually.
In India, the approach to education is very different. "India is a 'mark oriented system'. Plus, there is a competitive approach to education. We believe employment is the most important
criterion in India," says Gupta.
As a publisher, Gupta feels, the job is to create the high-quality product for Indian students. He concludes, "Today, there is global competition. India appeared in the Programme for International Student Assessment (PISA) test, and we performed very badly. I think, India was second last in the world. This is unacceptable. At S Chand, we feel, Indian students are very smart, and they get hired in the best of the companies in the world. A lot of them are at the helm of the best firms in the world. And yet, the education system in India is not up to the mark. It will take time. But we want to be a big catalyst in that growth by providing the best quality content as a student publisher."