E Factor Experiences
- E Factor Experiences is coming out with an initial public offering (IPO) of 34,56,000 equity shares of face value of Rs 10 each in a price band Rs 71-75 per equity share.
- The issue will open on September 27, 2023 and will close on October 3, 2023.
- The shares will be listed on SME platform of NSE.
- The share is priced 7.10 times of its face value on the lower side and 7.50 times on the higher side.
- Book running lead manager to the issue is HEM Securities.
- Compliance Officer for the issue is Anushka Chauhan.
Profile of the company
Incorporated in 2003, the company is an award-winning Indian event management company engaged in providing the consumers and community with event experiences, event services, technology based permanent & semi-permanent multimedia light & sound installations and specialized turnkey event assignments, wedding management, private and social event solutions. Its portfolio of services includes turnkey assignments in the form of Government commissioned Tourism Events and Festivals, techno-cultural light & sound shows, Sporting Events & Contests, Conferences, Mega Ground Concerts, Televised Events, private and social events like wedding and anniversary celebrations etc.
The company’s strength lies in the quality of the events and the experience of the events felt by the audience during its events which includes institutional turnkey assignments, private & social events including wedding, anniversary celebrations and other sort of celebratory functions for undertaken by it across the globe. It offers its customers with a wedding management process which is designed based on the customer requirements, that ensures a hassle-free wedding management experience.
Apart from all the events that it curates and creates in its events business, the company entered into a permanent and sustained business with its experiential tourism brand, “Sky Waltz” owned by its Subsidiary company namely E-Factor Adventure Tourism Private Limited. Skywaltz is engaged in the business of managing and operating hot air ballooning and yachting activities in multiple locations in India and is a government approved commercial hot air balloon operator for the last 12 years. As on date the subsidiary company has a fleet of 2 yachts and 11 hot air balloons.
Proceed is being used for:
- Investment in subsidiary
- Meeting working capital requirements
- Repayment and/or pre-payment, in full or part, of certain borrowings availed by the company
- General corporate purpose
Industry Overview
India’s Events and Experiential marketing Industry has observed an exponential growth in the past two decades with more than 1000 entities operating in various levels and segments that are spread across 100+ Indian cities. There is a large unorganized events and activation sector as well, which could be as large or even larger than the organized portion of the industry. While managed events and activations form the core services provided, intellectual properties have been developed and exploited by only a few companies. The key strengths of the Indian events and activation industry are the ability to “get things done” under adverse strong vendor base across price points. Growth can be stimulated if certain issues such as onerous regulations around permissions, a plethora of taxes (particularly entertainment tax), inadequate events infrastructure, transparency of costs and the absence of a universal standard for demonstration for return of investment are addressed. The industry needs to own, in whole or in part, rights to intellectual properties to protect against economic downturns and maintain a stable top line.
Staycation is seen as an emerging trend were people stay at luxurious hotels to revive themselves of stress in a peaceful getaway. To cater to such needs, major hotel chains such as Marriott International, IHG Hotels & Resorts and Oberoi hotels are introducing staycation offers where guests can choose from a host of curated experiences, within the hotel. India’s travel and tourism industry has huge growth potential. The industry is also looking forward to the expansion of e-Visa scheme, which is expected to double the tourist inflow in India's travel and tourism industry has the potential to expand by 2.5% on the back of higher budgetary allocation and low-cost healthcare facility according to a joint study conducted by Assocham and Yes Bank.
It is irrefutable that the décor tourist industry is becoming a more significant economic force and has the potential to be used as a tool for development. The tourist industry not only drives growth, but it also raises people’s standards of living with its ability to provide significant amount of diverse employment opportunities. It promotes environmental preservation, champions diverse cultural heritage, and bolsters international peace. By 2028, Indian tourism and hospitality is expected to earn US$ 50.9 billion as visitor exports compared with $28.9 billion in 2018.
Pros and strengths
One stop solution to all event needs: The company is providing one stop solution to all the event needs of its customers. Any event whether its cultural, heritage or even a private function including weddings are one of the most special and joyous occasions which should be planned in the most beautiful manner. The company’s strength is to provide its customers with quality services and a one-stop shop for their planning needs. The company is keeping the clients on the center of all the arrangements that they make to ensure that they can do their part in making their dream events or wedding a living reality, which they as well as all of their guests can witness. Its team can provide their services for a variety of occasions which can range from pre-event, during the event, to post-event functions.
Established track record: The company is engaged in the event management industry for more than two decades and has an established track record in organizing and arranging various events for its clients. The quality of services provided by it is also recognized and awarded by various authorities. The company ensures customer satisfaction by providing qualitative services to its customers which not only helps in accomplishing new clients but also helps in retaining its existing clients. The company has been providing various services which include Tourism Events and Festivals, techno-cultural light & sound shows, Sporting Events & Contests, Corporate Events & Conferences, Mega Ground Concerts, Televised Events, etc.
Established relationship with hospitality & event partners: To make an event successful, the company need to manage the food and beverages booking, venues booking, invitation cards preparations, arrangement of gift hampers to the guest, transportations and the hospitality part of the event. For undertaking these activities, it has over the years established strong relationship with different vendors who take care of these tasks. These vendors have been selected by the company based on the previous experiences and quality of work undertaken by them. Further, due to its relationship with them it is able to procure priority and quality services from these vendors.
Risks and concerns
Significant portion of business and revenue comes from government authorities: The company’s business and revenues are substantially dependent on event/ projects awarded by government authorities or tourism department. Out of its total revenue from operation 89.55%, 93.26% and 79.23% for the Fiscal 2023, 2022 and 2021 was generated from the government authorities. It expects that contracts awarded by these authorities will continue to account for a substantial proportion of its business. The government authorities and tourism department undertake these activities generally to promote the tourism activities, general awareness or site promotion. Any adverse changes in the government policies, expenditures or fund allocations may lead to its agreements being restructured or renegotiated or terminated and could materially and adversely affect business, financial condition and results of operation.
Business is subject to occasional/ seasonal fluctuations: The company is engaged in the business of event management with increased focus on the government tenders related to fairs, events and festivals undertaken by the government and tourism department. Most of these events and festivals are undertaken during certain specific period each year. Thus, it is subject to the seasonality of business with regards to the date and timing of the events undertaken by the government authorities and tourism department. Further, the business of the company and its subsidiary involves events like balloon festival, Hot air balloon safari, fireworks at event site, light and sound shows etc., which may be affected by seasonal factors that may restrict its ability to carry on activities related to these events. Adverse seasonal developments may also require the evacuation of personnel, suspension or curtailment of operations, resulting in damage to equipment or personnels at the event site. Any such fluctuations may adversely affect its total income, cash flows, results of operations and financial conditions.
Geographical constrain: The company’s operations are based out of limited region like Odisha, Delhi, Madhya Pradesh, Uttar Pradesh etc. and it works with limited government departments. Exposure to projects in new geographies and with government authorities of other states may not be as profitable as its current contracts. This may have a have a material adverse effect on its business, results of operations and financial condition. Further, it derives a significant portion of its revenue from a limited number of customers. For instance, in its event management business it derives its total revenue from operations from 15-20 different customer for the year ended March 31, 2023 and March 31, 2022. As its business is currently concentrated to a selected number of states/ union territories, any adverse development with such customer, including as a result of a dispute with or disqualification by such major customers, may result in it experiencing significant reduction in its cash flows and liquidity. If its customers are able to fulfil their requirements through any of its existing or new competitors, with better services and / or cheaper cost, it may lose significant portion of the business.
Outlook
E Factor Experiences’ portfolio of services includes turnkey assignments in the form of Government Tourism Events and Festivals, techno-cultural light & sound shows, Sporting Events and Contests, Conferences, Mega Ground Concerts, Televised Events, private and social events like wedding and anniversary celebrations, etc. On the concern side, the company is dependent on government authorities for a significant portion of its business and revenue from operation. The loss of any of its key work order or projects could have a material adverse effect on its business, results of operations, financial condition and cash flows. Moreover, the company operates in limited geographies for a significant portion of its revenue and also depends on limited number of customers for its revenue from operations. Projects in new geographies may not be as profitable as the current major contracts.
The issue has been offered in a price band of Rs 71-75 per equity share. The aggregate size of the offer is Rs 24.54 crore to Rs 25.92 crore based on lower and upper price band respectively. On performance front, total income for FY23 stood at Rs 119.45 crore. Total income for the FY22 stood at Rs 57.00 crore representing significant increase of around 109%. Moreover, the company reported Restated Loss after tax for the Fiscal year 2023 stood at Rs 7.61 crore. Meanwhile, the company intends to continue to invest in its existing services so as to provide better experiences to its existing clients and also provide new services for increasing the client base of the company. For growing at a rapid pace, it is exploring new spaces for the company and is planning to venture into developing more technology based permanent multimedia installations, museum spaces, and sustainable luxury hospitality. Going forward, the company’s strategy is to widen its customer base geographically as well as demographically. Networking and maintaining healthy relationships with its customers by providing them with the best service experience at all times lays the foundation for ensuring repeated business from existing customers and that further supports in constantly adding new customers.
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