Newjaisa Technologies
- Newjaisa Technologies is coming out with an initial public offering (IPO) of 84,96,000 shares of Rs 5 each in a price band Rs 44-47 per equity share.
- The issue will open for subscription on September 25, 2023 and will close on September 27, 2023.
- The shares will be listed on NSE Emerge.
- The face value of the share is Rs 5 and is priced 8.80 times of its face value on the lower side and 9.40 times on the higher side.
- Book running lead manager to the issue is Indorient Financial Services.
- Compliance Officer for the issue is Poonam Jain.
Profile of the company
Started in 2020, Newjaisa Technologies is a Technology driven Direct to consumer refurbished IT electronics company providing quality refurbished electronics at significant discount as compared to new products. Its goal is to provide bestin-class, refurbished electronics at affordable prices. Its business model encompasses end to end reverse supply chain for IT assets. It involves procuring used IT assets (laptops, desktops and peripherals), refurbishing them to as close to new computer condition, and selling them directly to end use customers - businesses or retail. Currently the company is engaged into direct sales of IT Products i.e Laptops/ Chromebooks, Desktops/Chromeboxes/ Monitors and Accessories (Keyboard, Mouse, WiFi, Speakers) which is its key revenue model.
The company’s key goal is to reduce e-waste, by life extension of IT assets and to deliver High quality computing devices to end customer in as good as new condition, with warranty at affordable prices. The company currently is focused and operates in Indian market and cater to its Pan India customer base via ecommerce and its online platforms and caters its products across industries. The four key customer segments for it include students, home users, SME and working professionals.
The company’s business is helping it to reduce growing e-waste problem on one hand and, at same time, help serve large underserved Indian population that currently has low personal computing ownership, by delivering quality product at very affordable prices with service guarantee via its warranties. The company is solving complex problem of refurbishing multiple brand and models with in-determinant issues in various components by building technology driven pre-operatory refurbishing processes and infrastructure. This is helping it to deliver output at scale and importantly, quality and restoration of product to as good as new condition. The company’s Online first approach is helping it to cater and scale to Pan India customer base without high distribution and inventory overheads. It helps the company to also service customer faster and economically.
Proceed is being used for:
- Expansion of refurbishment facility and purchase of plant, machinery and equipment
- Investment in technology development
- Branding & Marketing
- Funding Working Capital requirement
- Repayment of Bank facilities
- General Corporate purposes
Industry overview
The refurbish IT devices market has expanded to meet the demand, as consumers and businesses seek more affordable alternatives to new devices. There has been a growing acceptance and trust in refurbished devices among consumers. As vendors improve refurbishment processes, enhance quality assurance, and offer warranty coverage, buyers are becoming more confident in the reliability and performance of refurbished computers and laptops. Refurbished laptops segment is expected to dominate the global refurbished computers and laptops market and will contribute the largest share of 74.2% in 2023. The segment will create opportunity of $23,782.70 million during the forecast period. The refurbished laptops segment would be the most attractive segment during the forecast period. The refurbished desktop computers segment is expected to grow at a CAGR of 8.4% during forecast period.
The online/eCommerce segment is expected to dominate the global refurbished computers and laptops market and will contribute the largest share of 65.4% in 2023. The segment will create $ opportunity of $21,495.60 million during the forecast period. The online/eCommerce segment would be the most attractive segment during the forecast period. Offline/Brick & mortar stores segment is expected to grow at a steady CAGR of 8.6% during forecast period. The India refurbished computers and laptops market is expected to reach $1,153.10 million in 2023, and is projected to reach $2,943.80 million by the end of 2033. The market is estimated to grow at a CAGR of 9.8% during the forecast period. Among the product, refurbished laptops segment is expected to dominate the India market with a 71.8% share in terms of revenue in 2023. By sales channel, the online/eCommerce segment is projected to exhibit relatively high growth in the market with a CAGR of 10.6% over the forecast period.
The refurbished laptops segment is expected to dominate the India refurbished computers and laptops market and will contribute the largest share of 71.8% in 2023. The Windows OS segment is expected to grow at a highest CAGR of 10.4% during the forecast period. The online/eCommerce segment is expected to dominate the refurbished computers and laptops market and will contribute the largest share of 62.9% in 2023. The refurbished market is set to see significant growth in India. The growth will be exclusively being driven by the change in buying habits of customers which itself has been sourced from impacts left on mindset by the global pandemic. People are now progressing more toward products that meet their requirements for functionalities and usefulness and are no longer excited about the brand-new appeal. If the refurbished product is serving the purpose at a much lesser cost, the demand for such refurbished smartphones is predicted to considerably rise in the coming year.
Pros and strengths
Experienced key managerial personnel: The company is managed by its Board of Directors, assisted by qualified and experienced professionals, who are permanent employees of the company. The company’s promoters Vishesh Handa and Mukunda Raghavendra are responsible for the execution of its business strategy and have been actively involved in the day-to-day operations and management since the incorporation of the company. Moreover, the inputs and experience of its Key Managerial Personnel, senior management, in particular, and other key personnel are valuable for the development of the company’s business, operations and the strategic directions taken by the company.
Simplified supply chain: The company has simplified the existing supply chain by eliminating distributors, dealers and retailers in the process. The company sources used IT equipment directly from corporate clients and recyclers, runs an exhaustive refurbishment process and distributes final refurbished product directly to consumers via online e-commerce channels, own website and direct enquires.
Uses multiple marketing strategies: Being a customer focused company, the company uses multiple marketing strategies including Online marketing, which plays a significant role in reaching the end customer, paid and organic marketing on various ecommerce platforms, paid and organic marketing via social media platforms Google and Facebook and its own website. The company sells its products to end customers via online e-commerce channels, its own website as well as handling direct enquires from corporate clients and educational institutions.
Risks and concerns
Business is subject to seasonality: The company’s business is subject to seasonality as it sees higher demand of its products from its customers during the festive seasons which generally starts from Dusshrea/Diwali/ Christmas / New Year onwards and higher demand from SME clients in month of February and March. Accordingly, its results of operations and financial condition in one quarter/period may not accurately reflect the trends for the entire financial year and may not be comparable with its results of operations and financial condition for other quarters/periods. Additionally, any significant event such as unforeseen economic slowdown, political instabilities or epidemics during these peak seasons may adversely affect its business and results of operations.
Concerned for disposal of e-waste: E-waste can be toxic, is not biodegradable and accumulates in the environment, in the soil, air, water and among living things. Electronic waste contains substantial quantities of toxic elements like lithium, mercury, arsenic, barium, cadmium, cobalt, etc. These chemicals cause detrimental impacts on the environment and human health calling for urgent responsible e-waste management. India has very few recognised and government-approved recycling centres to dismantle and repurpose electronic waste efficiently and purposefully. The majority of the e-waste collected in India is managed by unorganized sector. The company works with a government registered e-waste company for disposal of its e-waste. However, it cannot assure that its vendor would necessarily comply with all e-waste handling rules and government guidelines which indirectly could make the company susceptible and liable for adherence to any such environmental regulations and further could lead to additional cost and an impact on its business, overall profitability and financial performance.
Significant working capital requirement: The company’s business requires a significant amount of working capital. It needs to fund cost of procurement of used IT inventory in advance, the inventory is then passed through the refurbishment process including internal test and controls before it is ready for sales and dispatch. As per restated financial statement, its average working capital requirement was Rs 883.97 Lakh, Rs 223.51 Lakh and Rs 48.63 Lakh during the Fiscal 2023, 2022 and 2021 respectively.
Outlook
Newjaisa Technologies provides refurbished electronics at discounted prices. The company procures used gadgets such as laptops, desktops, and peripherals, refurbishes them and sells them directly to end-use customers’ businesses or retail. Currently, the Company is engaged in direct sales of IT Products i.e. Laptops/ Chromebooks, Desktops/Chromeboxes/ Monitors, and Accessories (Keyboard, Mouse, WiFi, Speakers) which is its key revenue model. It caters to the Pan India customer base which includes students, home users, SMEs, and working professionals via e-commerce and online platforms. On the concern side, the market for refurbished products is relatively new and evolving. If the market does not develop further, develops more slowly, or in a way that it does not expect, the business will be adversely affected. Moreover, the company generates e-waste during the process of refurbishment of used IT products. Major for which the company has not been able to have sustainable, efficient and effective arrangement for disposal of e-waste.
The issue has been offered in a price band of Rs 44-47 per equity share. The aggregate size of the offer is Rs 37.38 crore to Rs 39.93 crore based on lower and upper price band respectively. On performance front, the company’s revenue from operations had increased by 59.50% from Rs 27.92 crore in Fiscal 2022 to Rs 44.53 crore in Fiscal 2023. The company’s strong continued sales growth is driven across customer segments of student, professional, household and SME segments. Its competitive offering, ever increasing ecommerce and personal computer market growth rate have been the key drivers for its growth. Moreover, the company reported a net profit of Rs 6.76 crore in Fiscal 2023 as compared to a net profit of Rs 1.80crore in Fiscal 2022.
Meanwhile, the company is planning for sales diversification. In this regards, the company is building D2C offline channel. The company is also tapping into colleges and schools and offering laptops and desktops under attractive schemes / payment terms. Further, the company plans to expand into International markets, build sales presence across Africa and South Asia - Position India as CoE for refurbishing. Further, the company is planning to leverage existing refurbishment platform to newer product categories aligned with its current expertise.
