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S. Muralidhar

SHAREHOLDERS of Macmillan India can continue to hold on to the stock with a medium-term perspective. The increased liquidity in the stock, post-bonus issue, and its listing on the National Stock Exchange augur well for the shareholders.

Sluggish profits: Macmillan India reported net sales of Rs 81.4 crore and a net profit of Rs 23.9 crore for the year ended December 31, 2002. Sales and net profit rose 18 per cent and 5 per cent respectively over the Rs 69.2 crore and Rs 22.6 crore recorded during the previous year ended December 31, 2001. Net profit growth rate was lower than the sales growth rate mainly due to exceptional returns in the publishing division. The results are not comparable with the previous nine months accounting year ended December 31, 2001 as much of the publishing division sales take place from January to June.

For the quarter ending December 2002, Macmillan posted net sales of Rs 14.8 crore compared to Rs 12 crore in the corresponding previous quarter. The net profit was Rs 3.1 crore (Rs 2.1 crore). The earnings per share for 2002 amounted to Rs 14.2. The company's financial position is strong with zero debt, significant cash and cash equivalents and healthy cash flow. The financial results for the year ended December 2002 also include the merged accounts arising out of the amalgamation of Scientific Data Bank Services Private Ltd, Scientific Books Bombay Private Ltd, Scientific Books Calcutta Private Ltd, Scientific Books Delhi Private Ltd and Scientific Books Madras Private Ltd with Macmillan India Ltd, effective from April 1, 2002 as approved by the Madras High Court on December 27, 2002.

During the year under review, the growth of the company's publishing business was minimal compared to the corresponding previous year ended December 31, 2001 and contributed about 49 per cent to sales. This trend is expected to continue till Macmillan makes inroads into local language publications. The company undertook a major restructuring exercise to rationalise its distribution network to reduce debtors level and to recycle the stocks lying with distributors, resulting in lower investment in new printings. This was largely the reason for the exceptional sales returns from the publishing business.

Background: Macmillan is the largest player in the English language teaching market with a strong presence primarily in national board schools. The company has chalked out a new strategy to promote its publishing business.

This involves penetration into the low price segment, entry into vernacular medium, increased focus on higher secondary and university segments, expansion of educational institutions coverage and increasing its market presence in the dictionary and atlas segments.

Thriving on reading habits.

The information processing business, a new thrust area for Macmillan, grew 28 per cent over the corresponding previous year ended December 31, 2001 and contributed about 48 per cent to sales. Growth was attributed to new customer additions, wider service offerings and expanded capacity. The increased focus on the information processing business is also evident from the steady increase in staff costs for the company, which rose 24 per cent year-on-year.

Customer addition: New major customers such as Blackwell Publishers and Nature Publishing Group are expected to add over 100,000 pages in 2003. Key new investments in the US, including the Yellow Pages business and E-data division, are expected to propel Macmillan India's marketing initiatives.

The Yellow Pages division now employs 125 staff, which is expected to double in 2003. In all, the company has added over 200 employees, taking the total strength to 735 in the information processing business. Similar additions are planned for 2003.

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