S Chand announces initial public offering

According to new reports, the company will raise Rs 325 crore in primary capital through the IOP. Additionally, existing shareholders of the company, including Everstone Capital, which has 32.27% stake in the company, will collectively sell around six million shares worth Rs 403.5 crore, taking the total IPO size to Rs 728.5 crore.  

According to Samir Khurana, group head, strategy and investments at S Chand, out of the primary proceeds, the company will spend Rs 255 crore to repay the debt the company and its subsidiary Eurasia Publishing House availed for funding the acquisition of Kolkata-based Chhaya Prakashani. In December 2016, S Chand acquired 74% stake in Chhaya Prakashani adding four Chhaya brands to its portfolio.

The company will also repay some loans availed by other subsidiaries such as New Saraswati House and Vikas Publishing House.

S Chand has appointed investment banks JM Financial Institutional Securities, Axis Capital and Credit Suisse Securities (India) to manage the share sale. It had filed its draft IPO prospectus with markets regulator Securities and Exchange Board of India (SEBI) on 16 December and received approval in early March.

As of 31 December, the company offered 55 consumer brands across knowledge products and services, including S Chand, Vikas, Madhubun, Saraswati, Destination Success and Ignitor.

In 2012-13, S Chand acquired Vikas Publishing to bolster its offering in Hindi titles, while in 2014-15, it acquired New Saraswati House. Khurana told reporters, ““We will continue to look to grow through the inorganic growth route in the future too. The company has spent close to Rs 460 crore on acquisitions in the past.

When PrintWeek India met Himanshu Gupta, the joint managing director of S Chand, at its Sahibabad plant (it also has a plant in Rudrapur, Uttrakhand), he said the plant churned out 2.5 million impressions per day and produce books on its online soft cover line with uncoated paper. “Next year, we are planning to produce two lakh books units from this factory,” Gupta added.

Talking to PrintWeek India, Gupta was bullish about the future. “We see that the number of students is increasing per year. Plus, the number of schools is 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.”

At the time, S Chand was looking at a CAGR of 18-20% for its print business in the coming years. With 95% of its revenue coming from print, the company was looking to increase the digital services share to 25% in the next five years. Now, according to news reports, S Chand has also invested around Rs 33 crore to acquire minority shares in early-stage digital education companies.

“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,” Gupta had said. 

According to its red herring prospectus, S Chand recorded consolidated revenue of Rs 540.6 crore in 2015-16, against Rs 478.5 crore in the previous year. In 2015-16, it reported a profit of Rs 46.6 crore against Rs 32.7 crore the previous year.

The company’s consolidated revenue has grown at a CAGR of 33% over the past five financial years, from Rs 174.6 crore in fiscal 2012 to Rs 540.6 crore in fiscal 2016.

According to Khurana, the company’s revenues are seasonal and almost 75% of it comes in the fourth quarter due to the large contribution of the K-12 business segment where sales of new books occur in the January-March quarter ahead of the start of the new academic year. (With input from agencies)