The presentation was done during April 2017 for Bangalore Investor Group monthly meeting. Presenter has highlighted his investment rationale for Repro by providing a details of overall business and valuation
2. DISCLAIMER
This is not a buy or sell recommendation by any means and one is responsible for his own
decision. The purpose of the presentation is only to discuss and understand overall
business, operations, financials, opportunities and risk associated with company.
Disclosure: Presenter owns shares of company
10. How Turnaround Product Offering is Shaping Up
Repro
Publishing
Domestic
International
e-Retail Rapples
Expanding in
south and west
Restricted to quality
accounts and waiting for
oil crisis to cool down
Continued implementation of the three pronged strategy: i.e.
Right customers, MNC focus and stringent cash flow measures
New digital/e-commerce
business lines
11. How Publishing is performing now
Parameter Q4'15 Q1'16 q2'16 q3'16 Q4'16 Q1'17 Q2'17 Q3'17
Export 37% 45% 44% 23% 7%
Domestic 63% 55% 56% 77% 85%
Export 35 52 43 36 15 6
Domestic 46 52 68
Total 117 89 79 82 67 80
EBITDA (excluding
RAPPLES)
11.4 16.65
EBITDA Margin #DIV/0! 14.2%
Debtor Days Export 133 141
Debtor Days Domestic 233 203
Debtor Days Digital 75 67
Debtor Days Overall 147 128 141 123
Total Debt 196 170
Orber Book Domestic 16 17
Order Book
International
12 16
Order Book Overall 45 60 45 57
EBITDA Margin -
Domestic
14.7% 11.5%
EBITDA Margin -
Export
19.1% 17.8%
Receivables Collected 39+14.5
Receivables Pending 150 *142 (25-30 Cr
old export)
• Focus on consolidation of “Right” customers
• Focus on MNC domestic and global businesses
• Focus on Financial consolidation
• Focus on cash flows and collections
• Focus on reduction of expenses
*Domestic: 83 and export : 67
13. e-Retail Opportunity Size Estimate: Approach 1
$55 Billion ~ Rs. 3,50,000 Cr
Rs 1,75,000 Cr.
Rs. 17,500 Cr.
Rs. 8,750 Cr.
~ Rs 875 Cr.
E-Commerce Market Size
most conservative
estimate 2020
50% contribution is from e-tailing
10% of e-tail comes from book sales
50% of book sales could be hard sales
(75% in USA)
10% of market share
At 20% EBITDA Margin, this turns out to be Rs 175 Cr
(As per management 20% EBITDA Margin in this business, historically, traditional business worked
on avg. 13% EBITDA Margin and 8% PAT Margin)
http://economictimes.indiatimes.com/small-biz/policy-trends/why-indias-ecommerce-industry-grew-a-paltry-12-in-2016/articleshow/56871572.cms
http://www.buchmesse.de/images/fbm/dokumente-ua-pdfs/2015/india_book_market_2014-2015.pdf_53157.pdf
https://en.wikipedia.org/wiki/E-commerce_in_India
http://www.livemint.com/Companies/Ig34ixeE1nJZAjMSl5Wg0O/So-what-is-the-state-of-Indias-online-retail-market-anyway.html
http://www.livemint.com/Companies/aUc1Fakj6EyuKgb0a2GBiP/Has-Amazon-overestimated-the-size-of-Indias-ecommerce-mark.html
http://economictimes.indiatimes.com/small-biz/policy-trends/why-indias-ecommerce-industry-grew-a-paltry-12-in-2016/articleshow/56871572.cms
14. e-Retail Opportunity Size Estimate: Approach 2
http://economictimes.indiatimes.com/small-biz/policy-trends/why-indias-ecommerce-industry-grew-a-paltry-12-in-2016/articleshow/56871572.cms
http://www.buchmesse.de/images/fbm/dokumente-ua-pdfs/2015/india_book_market_2014-2015.pdf_53157.pdf
https://en.wikipedia.org/wiki/E-commerce_in_India
http://www.livemint.com/Companies/Ig34ixeE1nJZAjMSl5Wg0O/So-what-is-the-state-of-Indias-online-retail-market-anyway.html
http://www.livemint.com/Companies/aUc1Fakj6EyuKgb0a2GBiP/Has-Amazon-overestimated-the-size-of-Indias-ecommerce-mark.html
http://economictimes.indiatimes.com/small-biz/policy-trends/why-indias-ecommerce-industry-grew-a-paltry-12-in-2016/articleshow/56871572.cms
• By most conservative estimates, when not much discounts were given in 2016,
e-tailing market grew by 12%. In 2016, e-tailing market was Rs 94,250 Cr.
• Assume same growth rate till 2020, e-tailing will be a 1,48,304 cr market
• Based on 15% contribution from books, market size could be Rs. 14830 Cr.
• 50% (75% in USA) of this will come from hard books and hence Rs 7415 Cr.
• 10% market share to Repro could be Rs 741 Cr
At 20% EBITDA Margin, this turns out to be Rs 148 Cr
15. e-Retail Opportunity Size Estimate: Approach 3
http://economictimes.indiatimes.com/small-biz/policy-trends/why-indias-ecommerce-industry-grew-a-paltry-12-in-2016/articleshow/56871572.cms
http://www.buchmesse.de/images/fbm/dokumente-ua-pdfs/2015/india_book_market_2014-2015.pdf_53157.pdf
https://en.wikipedia.org/wiki/E-commerce_in_India
http://www.livemint.com/Companies/Ig34ixeE1nJZAjMSl5Wg0O/So-what-is-the-state-of-Indias-online-retail-market-anyway.html
http://www.livemint.com/Companies/aUc1Fakj6EyuKgb0a2GBiP/Has-Amazon-overestimated-the-size-of-Indias-ecommerce-mark.html
http://economictimes.indiatimes.com/small-biz/policy-trends/why-indias-ecommerce-industry-grew-a-paltry-12-in-2016/articleshow/56871572.cms
• Current overall book market size : Rs 36,000 Cr
• Current Online hard copy book sales market is ~ Rs 1000 Crore (~3%)
• Book Market growth rate : ~ 20%
• By 2020, overall book market size : Rs. 80,000 Cr
• Based on 10% contribution from online hard copy book sales : Rs 8000 Cr
• 10% market share to Repro could be Rs 800 Cr
At 20% EBITDA Margin, this turns out to be Rs 160Cr
17. Is 18-20% Growth Rate as per Neilson Reasonable?
Scuttlebutt:
5 Year CAGR of Book price: 6-8%
GER : 1.5%, so, 2 Crore, assuming 1500 Rs per year book spend by 50%: Rs
1500 Cr which is ~ 6% of current market. So, book market growth ~ 6+7 ~
13%. Remaining can be attributed to :
1. Rising disposable income and intellectual capital
2. Ecommerce push
3. Instead of 18-20%, 15% seems reasonable
18. How e-Retail is performing
Parameter Q4'16 Q1'17 Q2'17 Q3'17
Number of Publishers signed on India 70
Number of Publishers signed on International 20000
Number of titles listed (Lakhs) 1 2 4.5 10
Revenue/Week (Lakhs) 2.5 10 20 30
Projected Revenue/Year (Rs. Cr) Online 1.3 5.2 10.4 15.6
Total India Book Sales Market
No. of Books a day 357 900
No. of Books a week 2499 6300
No. of books a year 912135 2299500
Price/Book 400 476
No. of books per day capacity (can be taken to 20,000 by <10 Crore investment) 6000
Investment, PoC testing, partnerships done and currently in scale up mode growing in triple digits quarterly,
yet to reach at stable growth levels
19. What is working in e-Retail
• Zero inventory, Books sold before they are printed
• They are Amazon prime partners, so delivery is ensured in 24 hours.
• Once they have the title they can print and supply while some others have to import which
could take 2-3 weeks. So title addition becomes crucial for them
• Reviving precious “out-of-print” titles
• Every e-commerce site works on a vendor recommendation algorithm which is a weighted mix
of rating, product portfolio basket, location, price, return ratio, tenure etc. Repro has a scale
advantage of product portfolio basket to start with and has been gaining good ratings
20. What is working in e-Retail
Repro seems to have an advantage over books where competitors are not amazon prime vendors
21. What is not working/may not work in e-Retail
When Repro competes with the big Amazon Prime vendors (one selling from long time with very high
count of ratings and positive feedback), they are not able to compete with them on price
22. What is not working/may not work in e-Retail
When Repro competes with the big Amazon Prime vendors (one selling from long time with very high
count of ratings and positive feedback), they are not able to compete with them on price
23. What is not working/may not work in e-Retail
When Repro competes with the big Amazon Prime vendors (one selling from long time with very high
count of ratings and positive feedback), they are not able to compete with them on price
24. What is not working/may not work in e-Retail
What is managements response to this? Can we vet the scuttlebutt?
25. What is not working/may not work in e-Retail
Name Description
1 month
+ve
Ratings
3 month
+ve
Ratings
12
month
+ve
Ratings
Lifetime
+ve
Ratings
Ratings
1 Month
Ratings
3 Month
Ratings
12
Month
Ratings
Lifetime
Repro 89% 93% 95% 95% 54 110 243 243
Amazing Buy
mazing Buy is powered by the Online Business Division of India Book Distributors (Bombay) Limited or IBD as the company is popularly
known. India Book Distributors (Bombay) Limited is India’s leading distributor of Books & Magazines. A truly great link in an extensive supply
chain, IBD has specialized for over three decades in sourcing and supplying a very wide range of books from publishers across the globe to
brick-and-mortar and on-line bookstores across the Indian sub-continent.
97% 98% 93% 90% 2406 6445 35524 152108
uRead uRead has a network of over 10,000 Publishers across the Globe and an exhaustive collection of over 11 million Indian and International
titles, across hundreds of categories and sub-categories. 99% 99% 97% 96% 2407 5905 33487 98571
JBCPD
JBC Publishers & Distributors deals in all kind of books. We are simply one stop shop for all major Indian & International Publishers. We
have huge collection of books with considerable strengths in the Science & Technology, Humunities, General. Therefore our expertise in
selling makes us unique in this scenario. Our strong commitment to our customers makes us popular among the learning fraternity. We are
committed to our customer service by regularly practicing and adopting continuous improvement in our business.
We are the whole seller and supplier of all kinds of different major publishers books like- Tata, PHI, Pearson, Oxford, Macmilan, S-Chand,
Vikas, Ane and many more.
100% 99% 99% 99% 932 2554 8619 18965
Buybooks
Your favourite book is just a click away! Buy Books India is an online bookstore that allows all the bibliophiles to indulge in a wide variety
of books. Not only does it offer information, knowledge and reviews, but it also offers you books at an unbeatable discounted price. Buy
Books will surprise you with the variety of stocks that it has. From romantic novels for the young-at-heart to educative books that help
students to prepare for competitive exams, buy books has it all. Facilities like ‘Return and Exchange’ policy makes it easier for customers to
replace the books if they are not satisfied with the purchase.
Buy Books consistently tries to make the customer shop and order easily. Since its inception it has gathered a lot of recognition by
featuring books and novels by famous authors and their work.
98% 98% 99% 98% 248 1164 8549 15924
Books@all We've been in business since 1984.You can expect Fast delivery and great customer service. We aim to please 88% 81% 88% 89% 49 113 631 1765
A2Z book house
A to Z Book House is dedicated to bringing the best of Books to the Indian book lover at attractive prices and in a completely reliable
fashion to every doorstep. A to Z Book House showcases a wide range of bestsellers from all the reputed Publishers. In addition there are
superlative titles from lesser known Publishers that have been specially selected by the team at A to Z Book House. Discerning readers who
may face difficulties in obtaining the books of their choice through normal channels will find A to Z Book House a delightful alternative. You
may contact A to Z Book House to provide suggestions or feedback by writing to us after logging in to Amazon.in and clicking on the
`Contact Seller link provided. Your comments and suggestions are a valuable source of improvement for the team at A to Z Book House
91% 86% 94% 93% 43 103 393 766
Books Punch 100% 100% 94% 92% 10 21 113 538
Bookswagon
Bookswagon offer huge collection of books in diverse category of Fiction, Non-fiction, Biographies, History, Religions, Self -Help, Children. We
also sell in vast collection of Investments and Management, Computers, Engineering, Medical, College and School text references books
proposed by different institutes as syllabus across the country. Besides to this, we also offer a large collection of E-Books at very fair
pricing.
81% 85% 91% 92% 121 263 919 1829
PBC Mart We deal on fully imported books with direct-tip up of top publishers / distributors in USA , UK and Many European countries We are
specialist in IBDP, MYP, PYP, 'A' LEVEL, IGSC, CIPP books. Founded in 1967 we are committed in providing excellent customer experience. 88% 94% 96% 97% 222 548 2001 3401
B2A UK B2A UK started trading in 2000 and we have spent over 13 years offering a wide selection of books at competitive prices. We are
committed to providing excellent customer service and an enjoyable shopping experience 100% 77% 84% 88% 28 139 1649 5498
Bookreadersindia We are the resellers of the book 90% 94% 96% 96% 230 603 1816 2428
More than
4 year old
26. Another way to estimate scale up opportunity
Name Description
1 month
+ve
Ratings
3 month
+ve
Ratings
12
month
+ve
Ratings
Lifetime
+ve
Ratings
Ratings
1 Month
Ratings
3 Month
Ratings
12
Month
Ratings
Lifetime
Repro 89% 93% 95% 95% 54 110 243 243
Amazing Buy
mazing Buy is powered by the Online Business Division of India Book Distributors (Bombay) Limited or IBD as the company is popularly
known. India Book Distributors (Bombay) Limited is India’s leading distributor of Books & Magazines. A truly great link in an extensive supply
chain, IBD has specialized for over three decades in sourcing and supplying a very wide range of books from publishers across the globe to
brick-and-mortar and on-line bookstores across the Indian sub-continent.
97% 98% 93% 90% 2406 6445 35524 152108
uRead uRead has a network of over 10,000 Publishers across the Globe and an exhaustive collection of over 11 million Indian and International
titles, across hundreds of categories and sub-categories. 99% 99% 97% 96% 2407 5905 33487 98571
JBCPD
JBC Publishers & Distributors deals in all kind of books. We are simply one stop shop for all major Indian & International Publishers. We
have huge collection of books with considerable strengths in the Science & Technology, Humunities, General. Therefore our expertise in
selling makes us unique in this scenario. Our strong commitment to our customers makes us popular among the learning fraternity. We are
committed to our customer service by regularly practicing and adopting continuous improvement in our business.
We are the whole seller and supplier of all kinds of different major publishers books like- Tata, PHI, Pearson, Oxford, Macmilan, S-Chand,
Vikas, Ane and many more.
100% 99% 99% 99% 932 2554 8619 18965
Buybooks
Your favourite book is just a click away! Buy Books India is an online bookstore that allows all the bibliophiles to indulge in a wide variety
of books. Not only does it offer information, knowledge and reviews, but it also offers you books at an unbeatable discounted price. Buy
Books will surprise you with the variety of stocks that it has. From romantic novels for the young-at-heart to educative books that help
students to prepare for competitive exams, buy books has it all. Facilities like ‘Return and Exchange’ policy makes it easier for customers to
replace the books if they are not satisfied with the purchase.
Buy Books consistently tries to make the customer shop and order easily. Since its inception it has gathered a lot of recognition by
featuring books and novels by famous authors and their work.
98% 98% 99% 98% 248 1164 8549 15924
Books@all We've been in business since 1984.You can expect Fast delivery and great customer service. We aim to please 88% 81% 88% 89% 49 113 631 1765
A2Z book house
A to Z Book House is dedicated to bringing the best of Books to the Indian book lover at attractive prices and in a completely reliable
fashion to every doorstep. A to Z Book House showcases a wide range of bestsellers from all the reputed Publishers. In addition there are
superlative titles from lesser known Publishers that have been specially selected by the team at A to Z Book House. Discerning readers who
may face difficulties in obtaining the books of their choice through normal channels will find A to Z Book House a delightful alternative. You
may contact A to Z Book House to provide suggestions or feedback by writing to us after logging in to Amazon.in and clicking on the
`Contact Seller link provided. Your comments and suggestions are a valuable source of improvement for the team at A to Z Book House
91% 86% 94% 93% 43 103 393 766
Books Punch 100% 100% 94% 92% 10 21 113 538
Bookswagon
Bookswagon offer huge collection of books in diverse category of Fiction, Non-fiction, Biographies, History, Religions, Self -Help, Children. We
also sell in vast collection of Investments and Management, Computers, Engineering, Medical, College and School text references books
proposed by different institutes as syllabus across the country. Besides to this, we also offer a large collection of E-Books at very fair
pricing.
81% 85% 91% 92% 121 263 919 1829
PBC Mart We deal on fully imported books with direct-tip up of top publishers / distributors in USA , UK and Many European countries We are
specialist in IBDP, MYP, PYP, 'A' LEVEL, IGSC, CIPP books. Founded in 1967 we are committed in providing excellent customer experience. 88% 94% 96% 97% 222 548 2001 3401
B2A UK B2A UK started trading in 2000 and we have spent over 13 years offering a wide selection of books at competitive prices. We are
committed to providing excellent customer service and an enjoyable shopping experience 100% 77% 84% 88% 28 139 1649 5498
Bookreadersindia We are the resellers of the book 90% 94% 96% 96% 230 603 1816 2428
Matured player has 50 times higher monthly rating
27. Another way to estimate scale up opportunity
Parameter Q4'16 Q1'17 Q2'17 Q3'17
Number of Publishers signed on India 70
Number of Publishers signed on International 20000
Number of titles listed (Lakhs) 1 2 4.5 10
Revenue/Week (Lakhs) 2.5 10 20 30
Projected Revenue/Year (Rs. Cr) Online 1.3 5.2 10.4 15.6
Total India Book Sales Market
No. of Books a day 357 900
No. of Books a week 2499 6300
No. of books a year 912135 2299500
Price/Book 400 476
No. of books per day capacity (can be taken to 20,000 by <10 Crore investment) 6000
Correlating Ratings with Revenue, if Repro can reach to scale of matured players, this translates into Rs15.6
Crore * 50 times Revenue = Rs 750 Crore Revenue ~Close to our estimate of Rs 800 Crore Revenue in 4 years
Top seller might be doing 20-30% less as he is playing in mass market as per scuttlebutt. This could be additional vetting* if can get data from MCA
32. RAPPLES Opportunity Size Estimate
http://www.ey.com/Publication/vwLUAssets/role-of-private-sector-on-K-12-education-in-India/$FILE/EY-role-of-private-
sector-on-K-12-education-in-India.pdf
Company concall transcripts
Company Quarterly Analyst Presentations
• Revenue per student per month : Rs 100-180
• No. of students on an average per school : 400-800
• Revenue per school per year (avg.): Rs. 10.8 Lakhs
• Revenue per school per year as per mgmt. : Rs 20-30 Lakh
• Target Market : CBSE, ICSE and International Schools
• Assume by 2020, 20% of target market tapped: 20% of 16400 = 3280
• Let us say RAPPLES take 10% market share : 328 schools
• Total Revenue Possibility Range by 2020: 300*11 to 300*20 Lakhs
A market size of 33 to 60-90 Crore
At 20% EBITDA Margin, this turns out to be Rs 7 to 18Cr
33. How Rapples is doing now?
Rapples solution deployed for CBSE, ICSE, MSEB, IGCSE and IB
Boards in 20 schools.
Annual 2016-17: Rapples on path to break-even.
35. What looks good
• Ethical Promoters with no bad history and a strong board
• Historical attitude and behavior
• Cutting salary in bad times
• Paying frugal to new joiners from family
• Have been able to recover receivables consistently so far
• Partnership with Ingram (Ingram has 8 such partnerships worldwide)
• Export business is at the bottom of oil cycle
• All CAPEX while building new business (RAPPLES and e-Retail) have been recorded as revenue expenditure
• No additional investment CAPEX is required till Rs 700-800 Crore
• Current revenue fall was due to company knowingly cutting on risky revenues
• Even though accounting profit (PAT) was –ve due to lower revenue and revenue CAPEX, CFO was healthy due to
receivables recovery
• Going forward, more chances of debt reduction
• In quick time, gaining Amazon prime status and e-Retail business scale up living up to plans
• Huge market opportunity size
36. What are risks
• Business does not have strong MOAT apart from INGRAM partnership which is not exclusive
• Highly competitive commodity type traditional and RAPPLES business. RAPPLES also can be copied easily. They
need to sign the schools faster.
• Inability to recover receivables in future from export business
• Continuation of sluggishness in export business
• Assumptions of e-Retail not playing out due to intensified competition, reputation damage etc.
• What stops other publishers from copying the one book factory models?
• Inability to pass raw material cost (paper) to clients
• Export business may have difficulties due to rupee appreciation though currently it contributing only 6%
37. So what we are betting on
YAn honest, ethical and experienced management and board
Market size opportunity and turnaround play (e-Retail)
Price Value gap
Strong historical financial performance with high quality business
A long term business model with strong barrier to entry
Y
Y
N
N
38. How to Value the Company
http://www.ey.com/Publication/vwLUAssets/role-of-private-sector-on-K-12-education-in-India/$FILE/EY-role-of-private-sector-on-K-12-education-in-India.pdf
Company concall transcripts
Scenario Rationale Projection:FY20 : Current EV/ FY
20 EBITDA
Conservative
Considering half of historical annual EBITDA (Rs 54 Crore) and half of new
revenues sources tentative EBITDA (86 Crores), tentative PAT,
by 2020, EBITDA is Rs 140 Crores
4.64
Moderate
At 5% growth rate of historical traditional avg. PAT and 75% of new
revenue sources tentative PAT,
by 2020, EBITDA is Rs 190 Crores
3.42
Aggressive
At 5% growth rate of historical traditional avg. PAT and 100% of new
revenue sources tentative PAT,
by 2020, EBITDA is Rs 230 Crores
2.83
EV : Approx Rs 650Cr
40. THANK YOU
Thanks to the wonderful community and its members who
pitched in with immediate reply on lots of questions, data
points for validating various research hypothesis and
contributed to the presentation
41. Management Comment on e-Retail strength & Competition
http://www.ey.com/Publication/vwLUAssets/role-of-private-sector-on-K-12-education-in-India/$FILE/EY-role-of-private-sector-on-K-12-education-in-India.pdf
Company concall transcripts