FINOCO

Primary business of Electronics Mart India Ltd.

India's fourth-largest retailer of consumer electronics. Telangana and Andhra Pradesh being key markets, making EMIL dominant player in the South.

Electronics Mart India Ltd's main concentration is on large equipment including air conditioners, TVs, washers, and refrigerators and also sell mobiles, minor appliances, and IT equipments. Company offers covers 6,000 SKUs from 70 consumer durable and tech manufacturers and sells via retail, wholesale, and online.

Summary of Industry

The country's overall market for consumer electronics and appliances, including cellphones, washing machines, and wearable devices, rose 9 percent in 2021 compared to the year prior to the pandemic. 

SWOT analysis of Electronics Mart India Ltd.

Strength

• The retailer model serves the purpose of "Touch and feel of the product" or "try-it-before-you-buy-it" for at least high value product and new in segment products.
•  Electronics Mart India Ltd. is India's fourth-largest retailer of consumer durables and electronics and the market leader in South India. Due to the scope of our business and  long-standing relationships with top consumer brands, EMIL are able to acquire products at reasonable prices.
•  One of the most rapidly expanding retailers of consumer durables and electronics, with a track record of sustained growth and industry-leading profitability. From Financial Year 2015 to Financial Year 2020, EMIL revenue grew at a CAGR of 25.60%, making the company one of the fastest-growing consumer durables and electronics retailers in India.
• Expanding market presence and geographic reach through clustering. There are strategically positioned logistics and warehouse facilities supported by tight IT-based inventory control.
• Strong customer care support, prompt delivery and installation assistance

Weakness

• Company don't make much money from online sales, and there's no guarantee that this strategy will work in the future.
• From Fiscal 2019 to Fiscal 2021, our operating income grew at a CAGR of 6.49 percent not a considerable growth in country like India.
• Debts and recovery:   Compared to previous years, both bad debts and sales returns have gone up by a lot in Fiscal 2021. Such a rise in bad debts could hurt ability to make money. From 19.46 million in Fiscal 2020 to 47.56 million in Fiscal 2021,  bad debts have grown by 144.40%. Bad debts went from 20.85 million in Fiscal 2019 to 19.46 million in Fiscal 2020, a drop of 6.67 percent. Most of these bad debts happened because customers didn't pay what they owed. Also, sales returns have grown by 9.19%, from 989.50 million in Fiscal 2020 to 1,080.41 million in Fiscal 2021, and by 9.05%, from 907.40 million in Fiscal 2019 to 989.50 million in Fiscal 2020. If bad debts and sales returns go up a lot, it could hurt our business, our finances, and our results of operations.

Opportunities

• Growth factors in India: Urbanization is one of the most important things that drives India's economic growth because it will lead to big investments in building up infrastructure. This, in turn, is expected to lead to more jobs, more modern consumer services, and a better ability to use savings.
• Over the five years from 2015 to 2020, nominal private final consumption expenditure (PFCE) grew at a CAGR of 11%. This was because disposable income went up, spending in rural areas got better, and key policy rates went down. PFCE is projected to increase at an 10-12% CAGR over fiscals 2021-26.

• Between fiscal years 2016 and 2020, India's retail industry grew at a healthy 9.5% compound annual growth rate (CAGR). This was due to more people living in cities, more nuclear family, higher disposable incomes, and better affordability and consumer sentiment.

• The scarcity of organised retail is a huge opportunity. Organized retail usually refers to large chain stores that are run by corporations, use modern management techniques, and have more self-service than a mom-and-pop store. E-retail is a part of organised retail, while brick-and-mortar stores are the only ones in traditional retail (B&M). B&M chains still make up the biggest part of organised retail.

• Rising levels of income and rising disposable incomes are the main things that make domestic consumption possible. India's per capita income has been going up; in fiscal year 2021, it grew by 3.1% from the year before. In the next five years, it is expected to grow much faster, at a CAGR of 6.7%. This will help retail growth.

• Favourable demographics: India has one of the youngest populations in the world, which is a good thing. By 2020, 90% of India's population was under 60 years old, while 74% of the US population and 78% of Brazil's population were the same age. With a younger population, people are more likely to spend money on the newest luxury items. This could lead to more retail sales, especially in the organised segment.

• Growing urbanisation and changing consumer preferences mean that more and more Indians are moving to cities. In the 1950s, only 17% of people lived in cities. By 2020, that number had risen to 35%, and it is expected to reach almost 37% by 2025. More people living in cities and having more money to spend are good signs for the retail industry. In addition, urbanisation gives an extra boost to the organised segment, which is mostly found in cities.

   

• With more people living in cities, the average size of a family has been getting smaller. The average number of people living in a home in the United States dropped from 5.57 in 1991 to 4.91 in 2011. When the number of people in a family goes down, people have more money to spend and buy more things.

• Rising income levels, education, and exposure to the rest of the world have all helped the middle class grow and change. Because of this, Indians' ways of buying things have changed slowly over time.

• Increasing brand consciousness :More people are buying branded goods because they want better quality, more convenience, and better value for their money. People are willing to give new things a try. This has made people spend even more on health and beauty products, as well as clothing, food, and household goods.

  With more exposure to global brands and higher aspirations among young consumers, brand awareness is on the rise as a whole.

• Credit is easier to get: India's personal loan market has grown a lot because it's easy to get credit. This has caused people to spend more on housing and consumer goods. In recent years, people have spent a lot more money because it's so easy to pay with credit and debit cards. Also, more people/corporate are getting into the business of finance. For example, the Future Group has teamed up with Bajaj Finance to offer easy EMIs on a wide range of goods, from clothes and groceries to high-end consumer durables.

Threats

• Competitions from E-commerce :Online retailers who can offer products at competitive prices and a wide range of products may hinder  business, financial situation, results of operations, and cash flows.
• Demographic consolidations: Our stores are mostly in the states of Telangana and Andhra Pradesh, which is where the majority of our retail sales come from. Any undesirable events that occur in these states that affect how we do business could hurt our sales and bottom line.
• The majority of our sales revenue comes from our mobiles segment. Any sudden drop in sales from the mobiles segment could hurt our finances and ability to make money.
• Seasonal Business : Overall business is affected by seasonal and cyclical changes, which can cause sales of products to go up and down. This could cause us to have more inventory at the end of the year, which could hurt the growth of  business.
• Increasing lease rentals
• Aggressive expansion
• Multiple laws, regulations and clearances required for operations

Electronics Mart India Ltd.’s Financial Informations:-

Profit and loss

Balance sheet

Cash Flow Statement

Utilisation of Capital raised through IPO

Electronics Mart India Ltd. through this IPO wants to raise RS .

Key Points to to be considered before subscribing for Electronics Mart India Ltd. IPO.