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NavneetEducation(NELIIN)

Q2FY17PostResultConferenceCall&Therecentacquisitionofpublishing
businessinIndiaofEnclyclopaediaBritannicaTranscript

Representative:

Mr.SunilGalaMD
Mr.DeepakKakuCFO
Mr.RoomyMistryHeadIR

PLRep.:

NishnaBiyani+912266322239
KeyurPandya+912266322247

Date:November11,2016
Moderator
Ladies andgentlemen,good day and welcome to the Navneet Education Q2 FY `17Results Conference Call hosted by Prabhudas
LilladherPrivateLimited.Asareminderallparticipantslineswillbeinthelistenonlymodeandtherewillbeanopportunityforyou
toaskquestionsafterthepresentationconcludes.Shouldyouneedassistanceduringtheconferencecallpleasesignalanoperator
bypressing*then0onyourtouchtonephone.Pleasenotethatthisconferenceisbeingrecorded.Inowhandtheconference
overtoMr.NishnaBiyanifromPrabhudasLilladherPrivateLimited.Thankyouandovertoyousir.
Mr.NishnaBiyaniPrabhudasLilladher
ThankyouStanford,goodafternoontoallparticipantsandIwouldthankthemanagementofNavneetfortakingouttimefortodays
conferencecalltodiscussthequarterlyperformanceandtherecentlyacquisitionofEncyclopaediabusinessinIndia.Wehavewith
usMr.SunilGala,MD,Mr.DeepakKaku,CFOandMr.RoomyMistry,HeadInvestorRelationsatNavneet.Wewillbeginthiscall
with opening remarks from Mr. Sunilji following which we will open the floor for an interactive Q&A session. Before we begin I
wouldliketomentionthatcertainstatementsinthiscallcouldbeforwardlookingstatementsinnatureandaresubjecttorisksand
uncertainties which could cause actual results to differ materially from those anticipated. Such statements are based on
managementsbeliefaswellasassumptionsmadebyinformationcurrentlyavailabletothem.Iwouldnowhandoverthefloorto
Mr.Sunilji,thankyouandovertoyousir.
Mr.SunilGalaManagingDirector
ThankyouNishna,goodafternoontoallofyou.FirstofallIamreallyhappytodiscussQ2resultswhichweannouncedtoday.Solet
mestartwithanoverallviewthatfortheQ2ourbusinesshasgrownby46%.LetmejusttellyouthatQ1isalwaystherealnumber
thatwesee,Q2,Q3,Q4therevenueasapercentageoftotalrevenueislittlelower.SoanyincreaseofRs.3040croreswilldefinitely
showhighergrowthnumberbutinanycasethenumbersaregood.Soonquarterlybasis,revenuegrewby46%butonasixmonthly
basis,therevenuehasgrownby15.5%.Interestinglyoperatingprofitsofthequarterhasrisensubstantiallyby352%butatthesix
monthsresultsithasgrownby26%.AndProfitBeforeTaxalsohasgoneupsignificantlyby84%butagainonasixmonthsbasis
Profit Before Tax has grown by 22%. The growth has been witnessed in both the segments. As far as publishing segment is
concerned,thegrowthhasbeen58%forthequarterand26%onstationerywhereasforsixmonthspublicationrevenuehasgrown
almostby16%andstationeryby14%.Becauseofthehigherrevenueinpublishingsegment,quarterlypublishingrevenue,ratherthe
profitsisalmost31%andstationeryis2.3%(minus)whichisfarbetterthancorrespondingquarters.Butonasixmonthsbasis,the
publishing segment has shown a profit of almost 39% and stationery 15% plus. So at a company level our PBIT for six months is

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around30%.NowthisiswithregardtothecorebusinesssoifyouhaveanyquestionsonthebusinessofcourseIwillbehappyto
answerthemafterIcompletemydiscussion.
Further I would like to discuss about which I am sure many of you would be keen to understand about Encyclopaedia Britannica
acquisitionthatwearelikelytodo.EncyclopaediaBritannicaworldwideisaveryveryhugebrandincontentbusinessworldwide.
TheyalsohadoneIndiancurriculumbasedbusinessoftextbooksanddigitalproductsinIndiawhichtheyhadstartedaround8years
ago. What they have is that different items all together what Navneet has been publishing so far.Just to give you clarity that
Navneets major revenue in publishing is from supplementary books whereas Britannicas business is of textbooks and digital
products.SoyouallmaybeawarethatforlastcoupleofyearsNavneetalsohaddecidedtogoPanIndiaandaccordinglywestarted
publishing several textbooks or extracurricular books which we had already started marketing in India. But having seen this
opportunitythebusinesswithastrongbrandwhichalreadyhadafootprintofmorethan6,000schoolsacrossIndia,wethoughtit
was a good buy and therefore we decided to buy the business. Due diligence on various parameters are going on right now so
DefinitiveAgreementswouldbecompletedinnextonemonthorso.
I would also like to mention something about our eSense digital business. There you may not have the numbers with you but
revenue there have grown marginally. This year we have invested more on advertisements and new content creation which is
different, much different content than that we have been delivering or giving to the market right now. So we have spent good
moneyonboththesecountsandthereforewemayseetoplineandbottomlinenumbersatparwithlastyear,sothisisoneSense.I
wouldalsoliketomakeamentionofourtodaysdecisionofbuyback.SothecompanyhasdecidedtobuybackattherateofRs.125
pershare,totallywearegoingtobuy46,57,000shareswhichisapproximately2%oftheequitycapital.Andtheamountthatwillgo
outfromthecompanywouldbearound,betweenRs.5859crores.Andtherecorddateforthatwehavedecidedtokeepiton25th
ofNovember,2016.MoreorlessNishnabasicinformationIhavegiven,Iwouldbereallyhappytoanswerquestionstomyinvestors.
Moderator
Thankyouverymuch.Wewillnowbeginwiththequestionandanswersession.Anyonewhowishestoaskaquestionmaypress*
and 1 on their touchtone telephone. If you wish to remove yourself from the question queue you may press * and 2.
Participantsarerequestedtousehandsetswhileaskingaquestion.
Ladiesandgentlemenwewillwaitforamomentwhilethequestionqueueassembles.
Toaskaquestionyoumaypress*and1.
WetakeourfirstquestionfromthelineofMr.RahulJainfromPrabhudasLilladher.Pleasegoahead.
Mr.RahulJainPrabhudasLilladher
Goodafternoonsirandcongratulationsongoodsetofnumbersandofcourseontherecentacquisitionwhichyouhavedone.
Mr.SunilGalaManagingDirector
Yeah.

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Mr.RahulJainPrabhudasLilladher
Myfirstquestionrelatestothisacquisitionitself,typicallywhatkindofsynergieswhichwewillhavewiththisacquisition?Andwhat
kindofgrowthEncyclopaediahasseeninlastfewyears?AnddoyoufeelthatgrowthcanbefurtheracceleratedwithNavneetbeing
thereintermsofsynergiescomingfromsayadistributionnetwork?AndalsoIseethisdealifIamrightitisfor7years,Ijustneedto
understandthenwhatafter7years?
Mr.SunilGalaManagingDirector
Okay.Isthattheonlyquestionyouhaveor....?
Mr.RahulJainPrabhudasLilladher
And also the margins in Encyclopaedia are they similar to our business also? And in terms of digital initiative if you could share
something more how we are headed because I understand in your initial remarks that investments are being made in terms of
advertisement and content creation. Are we talking about content creation in the way of new content being developed or the
contentnowbeingpresentinadifferentmanner?Thatsitfrommysideatthispointoftime.
Mr.SunilGalaManagingDirector
Sure.So,IwouldliketoanswerRahulyourquestions,firstonsynergieswithEBandNavneet.Thereareseveralsynergiesrightfrom
sourcing of raw materials to selling the products. So slowly slowly we will try and synergise which benefits both the companies.
InitialphaseforatleastnextsixmonthsoddwewouldnotreallytrytogetintotheoperationsofEBmuchordisturbtheiroperations
becauseatpresenttheircorebusinessofmarketingisonandbyMarchApriltheywouldreallyendupsellingtheproducts.Sowe
would not disturb anything there but there are lots of synergies as I just mentioned.As far as dealfor 7years isconcerned, it is
usage of brand Encyclopaedia Britannica for 7 years which is extendable on a mutual consent by paying fees. Now here we will
decideinacourseoftimeduringtheyearthatwewanttohaveouradditionalbrandorwejustwanttocontinuewithEncyclopaedia
Britannica.Soifwedecidetohaveadditionalbrand,soitwillbecobrandedforcoupleofyearsandwemayphaseoutEncyclopaedia
Britannicabrandattheendof7thyear.
Butimportantforusis,actuallythoughthebrandisveryverystrongbutimportantforusisnotonlythebrand,thattheprofessional
management that they have, the distribution reach across India that they have, the number of schools that they are already
marketinginthecountry.Soalltheseadvantagesaremuchmuchhigherthanjustthebrand.Definitelygrowthbybothbusinesses
joiningtogetherthatIamsurewillhelpbothcompaniesmoretoBritannicasowearegoingtoworktowardsthatalso.Onmargins
frontsincethedealisnotcompleted,wehavenotsignedDefinitiveAgreementsyetsoIwouldrefrainfromgivingmarginsandall.
ButsinceitisapublishingbusinessandIamjustgivingyouageneralviewthatinpublishingbusinesswhichisintextbooks,allIndia
themarginsarelittlelowerthanwhatinsupplementarybooksthatweenjoy.Butdetailedmarginswewillbeabletoconveyonly
whenwesignDefinitiveAgreements.
YoursecondquestionondigitalinitiativesinoursubsidiaryeSense.SotherewearedevelopingnewcontentwhenIsaiditisactually
thesamecontentorsamecurriculumthatwearedesigninginadifferentwaybywhichadoptioncouldbemuchbetter.Ithelpsnot
onlytothestudentsbutfarfartotheteacherstoplantheirlessonplansintheclassroom.So,onthatlinewearedevelopingthe
content.AndsimultaneouslywhatevercontentthatwehavetodaywehavestartedB2Cprogrammeandthereforewehavestarted
advertising in a big way. Conventionally Navneet has never really advertised that way but to create this new product or new
offeringswethoughtthatcreatingtheawarenessthroughadvertisementisveryimportant.Thereforewehavespentmoneyonthat.

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Mr.RahulJainPrabhudasLilladher
Sure.
Moderator
Thankyou.Participantstoaskaquestionyoumaypress*and1.
WetakeournextquestionfromthelineofMr.BharatChhodafromICICDirect.Pleasegoahead.
Mr.BharatChhodaICICDirect
Sir,congratsonagoodsetofnumbers.
Mr.SunilGalaManagingDirector
Thanks.
Mr.BharatChhodaICICDirect
Justwantedtoknowthatthisrevenuegrowthhasbeenexceptional,right.Normallywetendtobeevenwhenthepublishinghere
withthecurriculumchangeswehavea1520%kindofagrowth.Sothistimewehaveclockeda46%growthonYOYbasis.Sowhat
hasactuallydriventhis?
Mr.SunilGalaManagingDirector
So,inmyinitialremarkonlyIsaidthatforustojudgethegrowthonehastolookmoreonQ1numbersthanonQ2,Q3,Q4.Sothis
timethegrowthinpublishingsegmentwhichintermsofsalesisaround58%.So,shiftofsomerevenueofJunetoJulywouldmake
thatdifference.Addedtothatbecauseofgoodmonsoonthisyearwereallywitnessedthedroughteffectthatwesawlastyearthat
wasnomorethereandwecouldseetherewererepetitivebuyers,bybuyerswhatImeanistheretailers.Thereforetheyalsohave
been able to sell good quantities to the end consumers. So the reason of degrowth or very muted growth last year, this year it
wasntthereandthereforegoodnumbersinQ2also.
Mr.BharatChhodaICICDirect
Soifyouarelookingonanannualbasisprobablywewouldbestilllookingata1520%kindofagrowthontopline?
Mr.SunilGalaManagingDirector
Yeah,around15%weareconfidentof...
Mr.BharatChhodaICICDirect
Andwewouldbemaintainingsimilarkindofmargins?

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Mr.SunilGalaManagingDirector
Yesplease.
Mr.BharatChhodaICICDirect
Okay.Andhavewereceivedanygovernmentordersoranythingonthat?
Mr.SunilGalaManagingDirector
WehavereceivedonlyoneorderthatwillbeexecutedinQ3.
Mr.BharatChhodaICICDirect
Whatisthequantumofthatifyoucanshare?
Mr.SunilGalaManagingDirector
ItisjustRs.12croresodd.
Mr.BharatChhodaICICDirect
Okaysir.Thatsitfrommyside.IfanythingIwillcomeback.Thankyou.
Mr.SunilGalaManagingDirector
Thankyou.
Moderator
Thankyou.
WetakeournextquestionfromthelineofMr.AkshatVyasfromKarvyStockBrokers.Pleasegoahead.
Mr.AkshatVyasKarvyStockBrokers
Hellosir.
Mr.SunilGalaManagingDirector
Yeah,hello.
Mr.AkshatVyasKarvyStockBrokers
Sir,justfollowingupwiththepreviousquestion,justtheguidancewhichyouaresayingisincludingthenewacquisition,Britannica?

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Mr.SunilGalaManagingDirector
No,no,no,itisonstandalonebasiswhatIwasmentioning.SoonBritannicaasIsaidthenumbersIwillbeabletodiscussonlywhen
we finally acquire that by signing Definitive Agreements. Thereafter we will be including them but right now I was talking about
standalonenumbersonly.
Mr.AkshatVyasKarvyStockBrokers
Anddoweseeanyonourmarginspostthesynergyhappening?DoweseeourmarginsaccretivewithBritannicacomingoritwillbe
littlebitlowerorstable?
Mr.SunilGalaManagingDirector
Soweareacquiringmeanswearegoingtokeepthatasasubsidiaryonlysoonstandalonebasisthemarginsarelikelytoremainthe
sameashasbeenthereforlastcoupleofyears.OnconsolebasisdependingonthemarginsthatwegenerateinBritannicabusiness
willbeabletosee.ButagainitrelatestoyouknowtalkingaboutnumbersofBritannicawhichIwouldliketoresistrightnow.
Mr.AkshatVyasKarvyStockBrokers
SurebutdoesBritannicahasmarginslowerthanusoraretheyatthesamelevel?
Mr.SunilGalaManagingDirector
Again same thing I am saying I will not be able to talk but in general I talked about that in textbook market which is marketed
throughoutthecountry,themarginsinpublishingsegmentsarelittlelowerthanthemarginsthatNavneetenjoys.
Mr.AkshatVyasKarvyStockBrokers
Andsironelastquestion.Theacquisitionwhichyouhavedonewasthroughinternalaccruals,right?

Mr.SunilGalaManagingDirector
Yes,please.
Mr.AkshatVyasKarvyStockBrokers
Okaysir.Thankyou.
Mr.SunilGalaManagingDirector
Thankyou.
Moderator
Thankyou.Aremindertotheparticipantstoaskaquestionyoumaypress*and1.
WetakeournextquestionfromthelineofMr.VinayKulkarnifromHDFCMutualFund.Pleasegoahead.

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Mr.VinayKulkarniHDFCMutualFund
Sir,thankyoufortheopportunityandIamreallygratefulthatyouareholdingaconferencecall.Itisveryniceofyou,Ithinkifyou
cancontinuewiththispracticeeveryquarteritwillbeverynice.
Mr.SunilGalaManagingDirector
Sure,sureVinay.
Mr.VinayKulkarniHDFCMutualFund
Greatresults,congratulations,Ihadcoupleofquestions.OnewasontheCBSEbookmarket,ifyoucanjustbriefusaboutwhatisthe
progresswehavemadeinthefirsthalf?Secondly,ifyoucouldjustbriefusonanynewdevelopmentsontheschoolbusinesswhere
youhaveinvestedsomeresources?Andthethirdofcourseisifyoucancommentonyourinternationalbusiness?
Mr.SunilGalaManagingDirector
SureVinay.So,onCBSEbookmarketasfarasNavneetsbusinessisconcernedforsixmonthswehavegrownbyaround30%.Again
justtoremindthetoplineitselfwasquitelowso30%willnotbereallysignificantatacompanylevelbutwehavegrownby30%.We
hadincreasedthetitlesandwealsohadincreasedsometerritoriesthereforewecouldgrowby30%.Doesthatsolveyourquestion?
Mr.VinayKulkarniHDFCMutualFund
Yeah,fine.
Mr.SunilGalaManagingDirector
That answers your question. There is no new development in school business that we have invested through K12 Technologies.
WhatImeanbythatisthatnowwehave12CBSEschoolsinthebrandnameOrchidsInternationalwhichschoolsareinMumbai,
Pune and Bangalore. So we have not added any more schools in the current year but from next year we are likely to add more
schools.Butasfaras12schoolsareconcernedlastyearwehadaround6,500studentsversusthisyearwehave9,500plusstudents.
SoadmissionsarereallyreallygoodandnowitisaqualitybusinessIwouldsay,theCBSEschoolscangetmorehigherfeesbecause
deliverables are much higher. So going forward that business looks very very attractive. And to answer your third question of
international business, with respect to exports of stationery, exports of stationery in last two quarters also has grown by around
25%.AndweareseeingmoreandmoreinterestfromourbuyersparticularlyfromtheUS.Wehavecreatedexcellentinnovative
productsforthemsotheyareintroducingallofthem.Andthereforegoingforwardwestillseethatinternationalbusinessislikelyto
growatthesamespeed.
Mr.VinayKulkarniHDFCMutualFund
Greatsir.Justonefollowup,whatdoyouthinkistheimpactofthisrecentdemonetisationthatwehaveseenbythegovernment.
Doyouthinkitwillimpactthetradewhichactuallypushesyourproductsandhenceitwillalsoimpactofftakeforthecompanyas
such?

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Mr.SunilGalaManagingDirector
No,tobeveryfrankwedonotforeseebecausetheamountthatstudentsspendforbooksarenotdemonetisedbecauseourbook
pricesarenotbeyondRs.100inanycase.Goodpartisthatourmajorrevenuewhicheveryyearwegetisinthefirsthalf,inthenext
twoquartersinanycaseourrevenuesarenotgoingtobethatsignificant.
And I am sure demonetisation effect on trade,
negativeimpactwillnotlastformorethansixmonths.So,whenweareinthenextyear,nextmainseasonIamsurethisimpactwill
nothamperourgrowthatall.
Mr.VinayKulkarniHDFCMutualFund
Great.Justonefinalquestionfromme.IsbuybackinviewofanydividendyouaretryingtopayforFY`17orthisisjust...?
Mr.SunilGalaManagingDirector
No,thisisnormalbuybackthatwehavedecidedtoannounceandondividendyouallknowthatwehaveadividendpolicyatplace.
SokeepingthatinmindIamsuregoingforwardboardwilltakeanappropriatedecisiononthat.
Mr.VinayKulkarniHDFCMutualFund
Okay.Soyouaresuggestingthereisnochangeinthedividendpolicyandthisisoverandabovethat?
Mr.SunilGalaManagingDirector
Yeah,dividendpolicyof25%thereisnochangeatallbutwehavebeendistributingmuchhigherthanthateveryyear.Soboardwill
takedecisionatanappropriatetime.
Mr.VinayKulkarniHDFCMutualFund
Okay,thankyousir.Wishyouallthebest....
Mr.SunilGalaManagingDirector
Thanks.
Moderator
Thankyou.
WetakeournextquestionfromthelineofMr.AlwinShahfromAthenaInvestment.Pleasegoahead.
Mr.AlwinShahAthenaInvestment
Sir,couldyoujustrepeatwhatwasthesizeofthegovernmentordertobeexecutedthisquarter?
Mr.SunilGalaManagingDirector
TobeexecutedinQ3isaroundonlyRs.12crores.

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Mr.AlwinShahAthenaInvestment
Thankyou.Thatsit.
Moderator
Thankyou.
WetakeafollowupquestionfromthelineofMr.RahulJainfromPrabhudasLilladher.Pleasegoahead.
Mr.RahulJainPrabhudasLilladher
Sir, in terms of a buyback do the promoters would also tender shares for buying back? Secondly, you mentioned the CBSE side
whereyouhad30%growthandofcourseyouhavediscusseditearlierintermsofNavneetplanningtogoinasizablewayinthe
CBSEmarketalso.SowheredoweseeourinvestmentsnowinCBSEfornext612monthsbecauseIamsureyouwouldliketobe
preparedforthenextseasonnextyear?Andinthenext23yearswheredoweseeNavneetgoinginthenationalspaceofcourseit
hastobethroughCBSE?AndlastlysiryoumentionedaboutEncyclopaedia,aretheyintotheICSEpartofthesyllabus?
Mr.SunilGalaManagingDirector
Okay.Iwillanswerallyourquestionssoasfarasbuybackisconcernedyespromotersarealsogoingtotendertothepercentageof
their holding. Now from CBSE point of view no doubt Navneet clearly sees that there is huge opportunity in CBSE market in
particularandthereforegoingforwardwearegoingtofocusonmoreandmoreproductsforCBSEfromNavneetaswellasfocus
Britannicas products and try to grow those markets. Any good opportunity in that segment we would definitely look at that
seriously.NowasfarasBritannicasproductsareconcernedtheyarealreadybeensoldinICSEschools,apartfromCBSEschoolsAll
IndiaandCBSEschoolswhicharepresentinternationally..SowebelievethebooksthatBritannicahas,hasamarketopportunityfor
allEnglishmediumschoolswhichincludesstateaffiliatedschoolsalso.
Mr.RahulJainPrabhudasLilladher
AndsirintermsofacquisitionIknowwe werelookingforacquisitionforsometimenow.Sodoesthatcompleteouracquisition
strategyfornext23years?
Mr.SunilGalaManagingDirector
No, I wouldnt say so. If we get right additional opportunities we would definitely look at them. But quality players or quality
business if you are getting in content for CBSE market we would definitely look at them. Sorry, I forgot to answer one of your
questionsthathowmuchfurtherinvestmentswehavetomakeinnext812months.SothebusinessismoreorlesslikeNavneetso
any further investments would be only for working capital. There will be no fixed investments that would be required to grow
businessofBritannicaalso.So,itwouldbealwaysincrementalworkingcapitalthatwemayrequireeveryyear.
Mr.RahulJainPrabhudasLilladher
And sir the acquisition if we are looking about, in case we have a decent acquisition at a good valuation. Are we talking about
acquisitioninthespaceofCBSEandICSE,Ithinkwewillbelookingintheschoolsectiononlyordoyouplantotakeacquisitionin
somesortofaprofessionaleducationtoo,isthatpossible?
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Mr.SunilGalaManagingDirector
No,ourfocusisK12marketonlyAllIndia.
Mr.RahulJainPrabhudasLilladher
Sir,justonelastthing,suggestionfrommysideifthatisokay.
Mr.SunilGalaManagingDirector
Sure.
Mr.RahulJainPrabhudasLilladher
Inourresultsreleaseifwecouldadd,ontheBalanceSheetsideIseeonlytheBalanceSheetforthecurrentsixmonthsason30th
September.IfyoucouldhaveacomparativeBalanceSheetason30thSeptember,2015.Ifyoucouldmakethatasapractice.
Mr.SunilGalaManagingDirector
Okay.
Mr.RahulJainPrabhudasLilladher
AndalsowhenwearehavingtheP&Lifwecouldaddthecolumnof
12monthsoftheprecedingyear.Solikeinthisresultifwecouldalsohavea12months31stMarch2016resultsthatisgenerally
veryhelpful.Sothatisjustasuggestionfrommysideifthatcouldbedoneitcouldbehelpful.
Mr.SunilGalaManagingDirector
ThankyouforthesuggestionwhateverhasbeenprescribedbySEBIandifitisnotreallyrestrictingustopublishthendefinitelywe
willtakeyoursuggestionsandpublishthemfromnextquarter.
Mr.RahulJainPrabhudasLilladher
Sure.Thankyousomuchsir,thanksforansweringallthequestions.Thankyou.
Mr.SunilGalaManagingDirector
Thanks.Noproblem.
Moderator
Thankyou.Aremindertotheparticipantstoaskaquestionyoumaypress*and1.
Participantstoaskaquestionyoumaypress*and1.
WetakeournextquestionfromthelineofMs.NamrataShahfromICICIBank.Pleasegoahead.
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Ms.NamrataShahICICIBank
Thank you for the opportunity. Sir, my question is related to buyback of shares what is the quantum you are looking at for the
buyback?AndanotherthingisthereanysimilaritybetweenthedigitalsolutionsthatBritannicaprovidesandlikeeSensethatwe
haveinhouse.Isthereanysimilarityoryouaregoingtohavethesynergiesbetweenbothofthemtogetherorisitgoingtobea
separateentityandworkingcompletelyseparately?
Mr.SunilGalaManagingDirector
Therearetwoquestions,right?
Ms.NamrataShahICICIBank
Yes.
Mr.SunilGalaManagingDirector
Yeah,sobuybackquantumis46,57,000sharesandthetotalamountisaroundRs.58,21,00,000oddfigure.Sothatisthenumberfor
buyback which is comprising of around 2% of our paidup capital. On digital solution there is no similarity between the digital
products that we have from eSense and Britannica. So digital solution that Britannica has as whatever textbooks that they have
published,theyhavedigitalproductsfocusingthosetextbooks.Sowhentheygototheschoolstheymarketbothtextbooksandthe
digitalproducts.WhereasineSensewehaveonlydigitalcontentwhichisbasedonthetextbookspublishedbythe
State Governments of Maharashtra and Gujarat, so markets are also different. Now as far as synergies are concerned whatever
digitalsolutionwhichBritannicawasoutsourcingfromvariousplaces,thatdevelopmentwillbedonebyeSense.Sotherewillbelots
ofsynergiesbetweeneSenseandBritannicawithregardtodigitaldevelopment.
Ms.NamrataShahICICIBank
Okay.Thankyou.
Mr.SunilGalaManagingDirector
ThanksNamrata.
Moderator
Thankyou.
WetakeournextquestionfromthelineofMr.VinayKulkarnifromHDFCMutualFund.Pleasegoahead.
Mr.VinayKulkarniHDFCMutualFund
Thankyou.Sir,Ihaveonefollowupquestionontheschoolbusiness,K12business.Iamawarethatthereisoneeducationcompany
planningtogopublicshortlywhichalsohasaschoolbusiness,theyplantoselloutbecauseforwhateverreasontheyhavealsonot
donesogreatinCBSE.Ithinksocanyoujustcommentonthegeneralschoolbusiness,whyfroma20,000feetitlookssoattractive

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butveryfewpeopleareactuallyabletomakemoneyonasustainablebasistheywanttorunthisbusiness.Couldyoujustshare
someideaonthat?
Mr.SunilGalaManagingDirector
SureVinay.So,thecompanythatyouaretalkingaboutwhichwantstogopublic,asperourinformationtheirmajorrevenueisfrom
statecurriculumschoolswherethereisahugelimitationofchargingfeestothestudents.Andthatbusinessfranklyisveryverylow
profitablebusinessalthoughthatcompanyhasCBSEschoolsandfewinternationalschoolsalso.Butasaproportiontotheirtotal
revenue, I believe their state curriculum schools are much higher and therefore that could be the concern. But what we are
witnessingatourendunlesswetrytogrowslowly,ratherifwetrytogrowslowly,areasonablywellthoughtofitgoodlocation
schoolsandchargingRs.80,000toaRs.1lacfees,Iamsuretheprofitabilitywoulddefinitelybeseeninthis.Soatpresentwith
9,500 school students also, our occupancy is around 5556%. So with every growth in number of students the profitability will
improve.Sothereforeweareconfidentaboutthatnumber.
Mr.VinayKulkarniHDFCMutualFund
Andarewestickingtoourmarginnumberofaroundsay2021%bythisyearendorearlynextyearfortheschoolbusiness?
Mr.SunilGalaManagingDirector
FortheschoolbusinessmarginsIdonotknowwhetherIhaveeverspokenbutmarginvariesfromtheoccupancies.Soforexample
in the current year we may be just breaking even or little bit of profits but next year with increase in number of students the
expenditureisnotlikelytoincreaseproportionately.Sowewillseemuchhighermarginssoatfullcapacitywemayenjoymorethan
30%margin.
Mr.VinayKulkarniHDFCMutualFund
Okay,rightsir.Thankyouverymuch.
Mr.SunilGalaManagingDirector
ThanksVinay.
Moderator
Thankyou.Participantstoaskaquestionyoumaypress*and1.
WetakeournextquestionfromthelineofMr.NishnaBiyanifromPrabhudasLilladher.Pleasegoahead.
Mr.NishnaBiyaniPrabhudasLilladher
Thankyousir.Sir,wehavetimeandagainheardaboutthedigitalopportunitywhichexistsinIndia.Howeverwehavenotseenany
scale up in terms of revenues and operating profits for the companies which operate in this space. So, by recent fund raising by
BYJUsandmarketingonalotofplatform,doesthatcreatethedesiredawarenessabouttheproductportfolio?Andalsowouldlike
tounderstandwhatisNavneetsgameplaninleveragingthishugeopportunitysaynotnowmaybe5years,whatisthescaleofthis

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opportunitywhichiscomingup?Thatwouldbemyfirstquestionandmysecondquestionwouldbethatofflatewehaveseenthat
Navneetistryingtobuildtractionbythetopscoreradvertisementcampaign.Sohowhasthattakenoff?
Mr.SunilGalaManagingDirector
Sodigitalopportunitieswhetheritistodayor5yearsdownthelineisstillaquestion.ButwhatmanagementofNavneetbelievesis
there is a huge huge opportunity in digital space in the country. Byjus have really created great awareness of digital media and
students have started buying it. But Navneet or its subsidiaries would always restrain from spending huge amounts on
advertisementsandtryingtocreatemarketbecausetilldatewehavenotbeenabletojudgethesustainabilityofthesebusinesses.
Sobycreatingawarenessstudentsmaytryoutoncebutwilltheybeourcustomersnextyearalsoornot,thatjudgementwehave
notbeenabletoget.Andthereforewewouldrathergolittleslowcreatingawareness.AgainwhateverImayhavemaderemarks,
excellentproductsByjushavecomeoutwithsothoughitisexcellentbutsustainabilitypointofviewwestillhavesomequestionsin
ourmind.Sowewillvouchthemandthenlookatit.
Secondly,NavneetoreSensecouldratherfocusmoreforthemassesinsteadofjustfocusingCBSEorICSEstudentsbecauseallof
you know that 95% of the students in the country they still learn through state curriculum. So the success of Navneet in state
curriculumforbookmarketorsupplementarybookmarketwewouldratherfocusinourdigitalopportunityalsoonthesamelines.
Withregardtoyourpointontopscoreradvertisements,yeswehavetriedthisyear.Asfarastoplinenumbersareconcernedwe
have not really seen good traction but as far as awareness is concerned or people knowing about this top scorer, people means
parentsorstudentsthathasreallygrownmuchfarahead.Sogoingforwardwemayhavetodothesameexercisefornext23years
in a limited way, we are not going to spend crores and crores of rupees creating awareness but we will continue to do the
advertisementsorvariousothermethods,marketingmethodsandtrytocreateawarenessbecausethefundamentalthingweare
veryclearandconfidentthatdigitalproductswillbemustforeachandeverystudentinthecountryanditwillbeagreatgreathelp
totheteachersandthereforewewillcontinuethisactivity.
Mr.NishnaBiyaniPrabhudasLilladher
SurebutsirthepotentialnowweareatsayRs.2025croresoddbutcanthescaleupsay3X,4Xopportunitypossibleinthenext35
yearsorhowshouldonelookintoitintermsof...?
Mr.SunilGalaManagingDirector
Forlast23yearswehavebeensayingthatwewillabletogrowbutIthinkthefundamentalproblemisnottheproductormarketing
capabilitiesofthecompany,thefundamentalissueistheadoptionlevelsattheteacherorstudentlevel.Nowthatadoptionlevelis
growinghowfastitwillgrowthisissomeonesguess,Idonotknowwhetheritwillhappenverysoon.Butthewaywehavebeen
hearingafterstudentswhoeverarebuyingourproductourmaybeourcompetitorsproduct,iftheyareusingittheyarebenefited.
Therefore then also with recent advertisement or the product that we have now we are confident that 34 times of our present
revenueweshouldbeabletodoinnext3yearsorso.
Mr.NishnaBiyaniPrabhudasLilladher
Good.Sothatshouldbeatwhatmarginstypically?

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Mr.SunilGalaManagingDirector
Marginsalldependsonhowmuchwehavetospendontheawarenesscampaigning.ButIwouldsay,wealwaystalkaboutPBDIT
butnow herePBDIT minusadvertisementexpenditure then margins would be ashigh as40%.Advertisement is such an expense
whichwedonotknowwhetheritwillbenefitinthesameyearorinsubsequentyearsbutthisbeingaveryverynewmediumof
learning,wewillhavetospendabitoncreatingawarenessandmakingstudentsusetheseproducts.
Mr.NishnaBiyaniPrabhudasLilladher
Thatshouldbegood.Sir,mynextquestionwasontheCBSEmarketwhichisopeningupinaveryverybigwayforcompanieslike
you.Youhavehistoricallybeenasupplementarybookcompanybutinthelast
twoyearswehaveseenthatalmostabignumberofschoolsareoptingtoCBSEandwhereyouhavestartedpublishingtextbooks
also.SowhatisthemarketsizeandNavneetsstrategytoleverageonthesamesir?
Mr.SunilGalaManagingDirector
So textbook market size if we talk about today wouldbe around Rs.3,000 croresodd for CBSE.But I would also like to addthat
marketsizeislikelytoexpandorgrowmuchbiggerthanwhatitistodaybecauseevenStateaffiliatedEnglishmediumschoolsalso
havestartedimpartingeducationinlinewithCBSEschools.Thatnumberofschoolsisveryhighwhichisalmost80,000schoolsinthe
country.Andoutofwhichhardlycoupleofthousandsmeans4,0005,000schoolsmaybeusingCBSEtypeofproducts.Andmostof
theschoolsaretryingtonowimplementCBSEcurriculumuptoGradeVIII.Therefore,weseebigopportunityinCBSEmarketssothe
Rs.3,000croresoddthatIamjustmentioningthatmarketopportunitycouldgotoalmostRs.10,000croresinnext5years.
Mr.NishnaBiyaniPrabhudasLilladher
Okay.Andwhatkindofmarketsharewouldyoubelookingatinthat?
Mr.SunilGalaManagingDirector
Iwouldntreallycommentonthatbecauseletusfirstworkonwhateverwehaveacquiredorhavemadeproductsourselves,letus
provelittlebitbecauseatpresentweareveryveryinsignificant.Somaybein2yearstimewewillbeabletosaybutofcoursenow
weareveryfocusedthatwewanttogrowinCBSEmarketssoalleffortsandexperienceof50plusyearswilltryandputinCBSE
markets.
Mr.NishnaBiyaniPrabhudasLilladher
Ireallyloveyourmodesty.Sir,justwantedtounderstandifyoucouldthrowsomelightoncompetitioninthisplaceandhowisthat
takingshape?
Mr.SunilGalaManagingDirector
ThereisahugecompetitioninCBSEtextbookmarketnodoubtaboutit,mostofthepublishersarefromDelhiinthismarket.But
simultaneously, as I just mentioned about the opportunity being growing all of us will benefit out of this. So, it all depends how
frequentlywemakechangesinourbooks,howbetterwecanserviceourschoolsright.Thereisonemoredemandfromtheschools
aboutteachertrainingthatisalsowehavebeenreceivingrequestsorallpublishersmayhavebeenreceiving.Sowhoevercanreally
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NavneetEducation(NELIIN)

providegoodservicetheirproductswillgetsoldinthoseschoolssoopportunitiesaregoodwewillhavetoreallyworkveryhard
towardsthat.
Mr.NishnaBiyaniPrabhudasLilladher
Okay.Sir,lastlytwobookkeepingquestions,whatshouldonebuildasasteadystatemarginsforyourstationeryexportssegment.So
ifyoucouldthrowsomelightonthat?AndsecondquestionbeonthefullyearFY`18kindofaCAPEXguidance?
Mr.SunilGalaManagingDirector
FY 17 for exports of stationery at EBITA level now we are confident about generating around 17% odd EBITA level but domestic
stationerymarginsarestillgoingtobeinsingledigit.Soblendedmarginforstationerywillagainhoveraround13%odd.Andyour
secondquestionwason...?
Mr.NishnaBiyaniPrabhudasLilladher
Sir,theCAPEXfornotthisyearbutfornextyearFY`18?
Mr.SunilGalaManagingDirector
CAPEX,soaftercurrentyearsmajorCAPEXIwouldconsiderCAPEXofinvestmentsinBritannica.Sonextyeariftherearenosuch
opportunitiesthenhardlyRs.20croresodd.
Mr.NishnaBiyaniPrabhudasLilladher
Goodsir.Thankyousir.
Moderator
Thankyou.Aremindertoparticipantstoaskaquestionyoumaypress*and1.
Participantstoaskaquestionyoumaypress*and1.
As there are no further questions from the participants I would now like to hand the conference over to Mr. Nishna for closing
comments.
Mr.NishnaBiyaniPrabhudasLilladher
Thankyouandsirwouldyouliketogivesomeclosingcomments,therehasbeenafantasticyearforNavneetaftertwooddyears
andFY`17isnowlookinggreat.Wouldyouliketojustgiveclosingcommentsfornext23yearsifyouwouldliketosaysomething?
Mr.SunilGalaManagingDirector
FirstofallIwouldliketothankPrabhudasLilladherandNishnainparticulartoholdthisconferenceandgivenustheopportunityto
discussaboutNavneet.Fornext23yearsnowclarityonbothincontentisverymuchvisibleontwocounts,oneisthecontinuous
curriculumchangeinthetwostates,corestatesthatwearein.Andsecondly,withourfootholdinCBSEmarketthroughBritannica
orisownproducts,Iamsurehugeopportunityisthereandthereforewillbeabletogrowatadecentspeed.Thepercentageof
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NavneetEducation(NELIIN)

growth will be higher than what we have been enjoying in Maharashtra, Gujarat only because their toplines are still lower. But
overallwiththisacquisitioncontentgrowthof15%plusisdefinitefornext3years.AndonstationeryIwouldliketoremainlittle
conservativebecauseofthedomesticstationerymarketbuttherealsobetween1215%growthisdefinitelytheremajorlybecause
ofexports.
Mr.NishnaBiyaniPrabhudasLilladher
Sir,weasinvestorsoranalystswouldaddthat8%ofBritannicatoyourtoplineoverandabove8%youaregoingtogive1215%
organicgrowth.
Mr.SunilGalaManagingDirector
Nishnathatwillhappenonceright,oncethatwillbeseenasagrowthbutnowIwastalkingyearafteryearfor3years.Sowecant
addup8%everyyear.
Mr.NishnaBiyaniPrabhudasLilladher
Excellent.
Mr.SunilGalaManagingDirector
SothankyouonceagaintoallofyouandIwishwehaveagood3yearsgoingforward,goodfuturegoingforward.
Mr.NishnaBiyaniPrabhudasLilladher
Allthebestsir.
Mr.SunilGalaManagingDirector
Thankyou.Thankyouallofyou.
Moderator
Thankyouverymuch.OnbehalfofPrabhudasLilladherPrivateLimitedthatconcludesthisconference,thankyouforjoiningusand
youmaynowdisconnectyourlines.
END

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NavneetEducation(NELIIN)

PrabhudasLilladherPvt.Ltd.

3rdFloor,SadhanaHouse,570,P.B.Marg,Worli,Mumbai400018,India

Tel:(9122)66322222Fax:(9122)66322209
RatingDistributionofResearchCoverage

PLsRecommendationNomenclature
BUY

Over15%OutperformancetoSensexover12months

60%

Accumulate

OutperformancetoSensexover12months

50%

Reduce

UnderperformancetoSensexover12months

40%

Sell

Over15%underperformancetoSensexover12months

TradingBuy

Over10%absoluteupsidein1month

TradingSell

Over10%absolutedeclinein1month

NotRated(NR)

Nospecificcallonthestock

70%

%ofTotalCoverage

30%

60.7%

25.6%
13.7%

20%
10%

0.0%

0%
BUY

Accumulate

Reduce

UnderReview(UR) :

Sell

Ratinglikelytochangeshortly

DISCLAIMER/DISCLOSURES
ANALYSTCERTIFICATION
We/I,Mr.NishnaBiyani(BE,MBAFinance),Mr.KeyurPandya(Mcom,MBAFinance),ResearchAnalysts,authorsandthenamessubscribedtothisreport,herebycertifythatalloftheviewsexpressedinthisresearch
reportaccuratelyreflectourviewsaboutthesubjectissuer(s)orsecurities.Wealsocertifythatnopartofourcompensationwas,is,orwillbedirectlyorindirectlyrelatedtothespecificrecommendation(s)orview(s)in
thisreport.
Terms&conditionsandotherdisclosures:
PrabhudasLilladherPvt.Ltd,Mumbai,India(hereinafterreferredtoasPL)isengagedinthebusinessofStockBroking,PortfolioManager,DepositoryParticipantanddistributionforthirdpartyfinancialproducts.PLisa
subsidiaryofPrabhudasLilladherAdvisoryServicesPvtLtd.whichhasitsvarioussubsidiariesengagedinbusinessofcommoditybroking,investmentbanking,financialservices(marginfunding)anddistributionofthird
partyfinancial/otherproducts,detailsinrespectofwhichareavailableatwww.plindia.com
ThisdocumenthasbeenpreparedbytheResearchDivisionofPLandismeantforusebytherecipientonlyasinformationandisnotforcirculation.Thisdocumentisnottobereportedorcopiedormadeavailableto
otherswithoutpriorpermissionofPL.Itshouldnotbeconsideredortakenasanoffertosellorasolicitationtobuyorsellanysecurity.
Theinformationcontainedinthisreporthasbeenobtainedfromsourcesthatareconsideredtobereliable.However,PLhasnotindependentlyverifiedtheaccuracyorcompletenessofthesame.NeitherPLnoranyofits
affiliates,itsdirectorsoritsemployeesacceptsanyresponsibilityofwhatsoevernaturefortheinformation,statementsandopiniongiven,madeavailableorexpressedhereinorforanyomissiontherein.
Recipientsofthisreportshouldbeawarethatpastperformanceisnotnecessarilyaguidetofutureperformanceandvalueofinvestmentscangodownaswell.Thesuitabilityorotherwiseofanyinvestmentswilldepend
upontherecipient'sparticularcircumstancesand,incaseofdoubt,adviceshouldbesoughtfromanindependentexpert/advisor.
Either PL or its affiliates or itsdirectorsor its employees or itsrepresentatives or its clientsortheir relativesmay have position(s), make market, act as principal or engage in transactionsof securitiesofcompanies
referredtointhisreportandtheymayhaveusedtheresearchmaterialpriortopublication.
PLmayfromtimetotimesolicitorperforminvestmentbankingorotherservicesforanycompanymentionedinthisdocument.
PLisintheprocessofapplyingforcertificateofregistrationasResearchAnalystunderSecuritiesandExchangeBoardofIndia(ResearchAnalysts)Regulations,2014
PLsubmitsthatnomaterialdisciplinaryactionhasbeentakenonusbyanyRegulatoryAuthorityimpactingEquityResearchAnalysisactivities.
PLoritsresearchanalystsoritsassociatesorhisrelativesdonothaveanyfinancialinterestinthesubjectcompany.
PLoritsresearchanalystsoritsassociatesorhisrelativesdonothaveactual/beneficialownershipofonepercentormoresecuritiesofthesubjectcompanyattheendofthemonthimmediatelyprecedingthedateof
publicationoftheresearchreport.
PLoritsresearchanalystsoritsassociatesorhisrelativesdonothaveanymaterialconflictofinterestatthetimeofpublicationoftheresearchreport.
PLoritsassociatesmighthavereceivedcompensationfromthesubjectcompanyinthepasttwelvemonths.
PLoritsassociatesmighthavemanagedorcomanagedpublicofferingofsecuritiesforthesubjectcompanyinthepasttwelvemonthsormandatedbythesubjectcompanyforanyotherassignmentinthepasttwelve
months.
PLoritsassociatesmighthavereceivedanycompensationforinvestmentbankingormerchantbankingorbrokerageservicesfromthesubjectcompanyinthepasttwelvemonths.
PLoritsassociatesmighthavereceivedanycompensationforproductsorservicesotherthaninvestmentbankingormerchantbankingorbrokerageservicesfromthesubjectcompanyinthepasttwelvemonths
PLoritsassociatesmighthavereceivedanycompensationorotherbenefitsfromthesubjectcompanyorthirdpartyinconnectionwiththeresearchreport.
PL encourages independence in research reportpreparation and strivesto minimize conflict inpreparationof research report. PL or its analystsdid not receive any compensationor other benefits from the subject
Companyorthirdpartyinconnectionwiththepreparationoftheresearchreport.PLoritsResearchAnalystsdonothaveanymaterialconflictofinterestatthetimeofpublicationofthisreport.
ItisconfirmedthatMr.NishnaBiyani(BE,MBAFinance),Mr.KeyurPandya(Mcom,MBAFinance),ResearchAnalystsofthisreporthavenotreceivedanycompensationfromthecompaniesmentionedinthereportin
theprecedingtwelvemonths
CompensationofourResearchAnalystsisnotbasedonanyspecificmerchantbanking,investmentbankingorbrokerageservicetransactions.
TheResearchanalystsforthisreportcertifiesthatalloftheviewsexpressedinthisreportaccuratelyreflecthisorherpersonalviewsaboutthesubjectcompanyorcompaniesanditsortheirsecurities,andnopartofhis
orhercompensationwas,isorwillbe,directlyorindirectlyrelatedtospecificrecommendationsorviewsexpressedinthisreport.
Theresearchanalystsforthisreporthasnotservedasanofficer,directororemployeeofthesubjectcompanyPLoritsresearchanalystshavenotengagedinmarketmakingactivityforthesubjectcompany
Oursalespeople,traders,andotherprofessionalsoraffiliatesmayprovideoralorwrittenmarketcommentaryortradingstrategiestoourclientsthatreflectopinionsthatarecontrarytotheopinionsexpressedherein,
andourproprietarytradingandinvestingbusinessesmaymakeinvestmentdecisionsthatareinconsistentwiththerecommendationsexpressedherein.Inreviewingthesematerials,youshouldbeawarethatanyorallo
theforegoing,amongotherthings,maygiverisetorealorpotentialconflictsofinterest.
PLanditsassociates,theirdirectorsandemployeesmay(a)fromtimetotime,havealongorshortpositionin,andbuyorsellthesecuritiesofthesubjectcompanyor(b)beengagedinanyothertransactioninvolving
suchsecuritiesandearnbrokerageorothercompensationoractasamarketmakerinthefinancialinstrumentsofthesubjectcompanyoractasanadvisororlender/borrowertothesubjectcompanyormayhaveany
otherpotentialconflictofinterestswithrespecttoanyrecommendationandotherrelatedinformationandopinions.
DISCLAIMER/DISCLOSURES(FORUSCLIENTS)
ANALYSTCERTIFICATION
Theresearchanalysts,withrespecttoeachissueranditssecuritiescoveredbytheminthisresearchreport,certifythat:Alloftheviewsexpressedinthisresearchreportaccuratelyreflecthisorherortheirpersonal
viewsaboutalloftheissuersandtheirsecurities;andNopartofhisorherortheircompensationwas,isorwillbedirectlyrelatedtothespecificrecommendationorviewsexpressedinthisresearchreport
Terms&conditionsandotherdisclosures:
ThisresearchreportisaproductofPrabhudasLilladherPvt.Ltd.,whichistheemployeroftheresearchanalyst(s)whohaspreparedtheresearchreport.Theresearchanalyst(s)preparingtheresearchreportis/are
residentoutsidetheUnitedStates(U.S.)andarenotassociatedpersonsofanyU.S.regulatedbrokerdealerandthereforetheanalyst(s)is/arenotsubjecttosupervisionbyaU.S.brokerdealer,andis/arenotrequiredto
satisfytheregulatorylicensingrequirementsofFINRAorrequiredtootherwisecomplywithU.S.rulesorregulationsregarding,amongotherthings,communicationswithasubjectcompany,publicappearancesand
tradingsecuritiesheldbyaresearchanalystaccount.
This report is intended for distribution by Prabhudas Lilladher Pvt. Ltd. only to "Major Institutional Investors" as defined by Rule 15a6(b)(4) of the U.S. Securities and Exchange Act, 1934 (the Exchange Act) and
interpretationsthereofbyU.S.SecuritiesandExchangeCommission(SEC)inrelianceonRule15a6(a)(2).IftherecipientofthisreportisnotaMajorInstitutionalInvestorasspecifiedabove,thenitshouldnotactupon
thisreportandreturnthesametothesender.Further,thisreportmaynotbecopied,duplicatedand/ortransmittedonwardtoanyU.S.person,whichisnottheMajorInstitutionalInvestor.
In reliance on the exemption from registration provided by Rule 15a6 of the Exchange Act and interpretations thereof by the SEC in order to conduct certain business with Major Institutional Investors, Prabhudas
LilladherPvt.Ltd.hasenteredintoanagreementwithaU.S.registeredbrokerdealer,MarcoPoloSecuritiesInc.("MarcoPolo").
TransactionsinsecuritiesdiscussedinthisresearchreportshouldbeeffectedthroughMarcoPolooranotherU.S.registeredbrokerdealer.

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