electronics mart india ltd share price Directors report

Dear Members,

Your Directors are pleased to present the 01st Integrated Annual Report and 05th Annual Accounts on the Companys business, operations, and financial performance along with the Audited Financial Statements for the year ended 31st March 2023.

1. FINANCIAL INFORMATION

The Companys financial performance for the period ended 31st March 2023 is summarized below:

			(Rs in Million)
Particulars	Consolidated Result		Standalone Result
	2022-23	2021-22	2022-23	2021-22
Revenue from Operations	54,457.10	43,493.16	54,457.10	43,493.16
Other Income	110.45	37.55	110.42	37.51
Profit before Depreciation, Finance Costs, Exceptional items, and Tax Expenses	3,471.12	2,956.93	3,471.25	2,957.04
Less: Depreciation/ Amortisation/ Impairment	853.79	713.21	853.79	713.21
Profit before Finance Costs, Exceptional items, and Tax Expenses	2,617.33	2,243.72	2,617.46	2,243.83
Less: Finance Costs	985.41	846.14	985.41	846.14
Profit before Exceptional items and Tax Expenses	1,631.92	1,397.58	1,632.05	1,397.69
Add/(less): Exceptional items	-	-	-	-
Profit before Tax Expenses	1,631.92	1,397.58	1,632.05	1,397.69
Less: Tax Expense (Current & Deferred)	403.92	358.67	403.92	358.67
Profit for the year	1,228.00	1,038.91	1,228.13	1,039.02
Total Comprehensive Income	1,231.97	1,045.93	1,232.10	1,046.04

Note:

1. No material changes and commitments affecting the financial position of your Company have occurred between the end of the financial year and the date of this report.

2. Further, the nature of business of your Company has remained the same.

Consolidated Financial Statements:

The Audited Consolidated Financial Statements of your

Company as of 31st March 2023, prepared per the relevant

applicable Ind AS and Regulation 33 of the SEBI Listing

Regulations and provisions of the Act, form part of this

Annual Report.

• Consolidated Total Comprehensive Income increased to Rs 1,231.97 Million in 2022-23 from Rs 1,045.93 Million in 2021-22.

• Consolidated PBT increased to Rs 1,631.92 Million in 2022-23 from Rs 1,397.58 Million in 2021-22.

• Consolidated PAT increased to Rs 1,228.00 Million in 2022-23 from Rs 1,038.91 Million in 2021-22.

Standalone Financial Results:

On a standalone basis, your Company had:

• Standalone Total Comprehensive Income increased to Rs 1,232.10 Million in 2022-23 from Rs 1,046.04 Million in 2021-22.

• Standalone PBT increased to Rs 1,632.05 Million in 202223 from Rs 1,397.69 Million in 2021-22.

• Standalone PAT increased to Rs 1,228.13 Million in 202223 from Rs 1,039.02 Million in 2021-22.

Your Companys operational performance has been comprehensively discussed in the Management Discussion and Analysis Report, which forms part of this Report.

2. DIVIDEND

With a view to conserving resources for the expansion of business, your Directors have thought it prudent not to recommend any dividend for the financial year under review.

The Dividend Distribution Policy, in terms of Regulation 43A of the SEBI Listing Regulations, is available on the Companys website, www.electronicsmartindia.com.

3. CREDIT RATING

India Ratings and Research, a credit rating agency, has affirmed your Companys Long-Term Issuer Rating at ‘IND A-. The Outlook is Stable.

The instrument-wise rating actions are as follows:

Instrument Type	Date of Issuance	Coupon Rate	Maturity Date	Size of Issue (Million)	Rating	Rating Action
Fund-based working capital limits				Rs 4,500 (reduced from Rs 5,000)	IND A-/Stable/ IND A2+	Affirmed
Term loans	-	-	2035-36	500	IND A-/Stable	Affirmed

4. CHANGES IN PAID-UP SHARE CAPITAL

There was no change in the Companys Authorised Share Capital during the 2022-23. During the year, 84,745,762 Equity Shares of Rs 10 each at a premium of Rs 49 per Equity Share were allotted to various applicants as a part of the Initial Public Offering process. The paid-up share capital as on 31st March 2023 was Rs 3,847,487,620.

5. TRANSFER TO RESERVES

There is no amount proposed to be transferred to the Reserves. The closing balance of Standalone and Consolidated retained earnings of your Company for 2022-23, after appropriations and adjustments, were Rs 4,188.32 Million and Rs 4,187.78 Million, respectively.

6. INITIAL PUBLIC OFFERING (IPO) OF EQUITY SHARES

During the 2022-23, your Company allotted 84,745,762 equity shares of Rs 10 each at a premium of Rs 49 to various applicants as a part of its initial public offering process. The issue was open for subscription from Tuesday, 04th October 2022, to Friday, 07 th October 2022. The Audit Committee reviews the utilisation of proceeds periodically

7. SUBSIDIARIES/ ASSOCIATES OR JOINT VENTURES AND LLPS ETC.

During the year under review, the Company has two subsidiaries. As required under the provisions of Section 129 of the Companies Act, 2013, read with Companies (Accounts) Rule, 2013, a statement containing salient features of the financial statements of the subsidiaries is provided in the prescribed format AOC-1 as Annexure - 1 of the Board Report.

In accordance with Regulation 16 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015 (Listing Regulations), Cloudnine Retail Private Limited and EMIL CSR Foundation are non-material, unlisted subsidiaries. The Company has formulated a policy for determining material subsidiaries. The policy is available on the website of the Company at www. electronicsmartiudia.com.

8. PARTICULARS OF LOANS, GUARANTEES, OR INVESTMENTS

Details of Loans, Guarantees, and Investments covered under the provisions of Section 186 of the Companies Act, 2013 form part of the Financial Statements.

9. MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report for the year under review, as stipulated under the SEBI Listing Regulations, is presented in a section forming part of this Annual Report.

10. DIRECTORS AND KEY MANAGERIAL PERSONNEL

As of 31st March 2023, your Companys Board of Directors ("Board") had six members comprising three Executive Directors and three Non-Executive Independent Directors. The Board has one Women Independent Director. The details of Board and Committees composition, tenure of Directors, areas of expertise, and other details are available in the Corporate Governance Report, which forms part of this Annual Report.

Changes in Director:

Mrs Suman Kumar (DIN:00580302) resigned from the Board effective 06th May 2022 due to personal reasons. The same was accepted, and the Board recorded its deep appreciation and profound gratitude for the invaluable services rendered by Mrs Suman Kumar to the Company from its inception.

Mrs Jyotsna Angara (DIN:07224004) was appointed as an Independent Director for a term of 5 years with effect from 14th May 2022.

Re-appointment of Directors

In accordance with the provisions of Section 152 of the Act, read with rules made thereunder and Articles of Association of the Company, Mrs Astha Bajaj (DIN: 07899784) is liable to retire by rotation at the ensuing Annual General Meeting (AGM) and being eligible, offers herself for re-appointment.

Continuation of Directorships

Mr Mirza Ghulam Muhammad Baig was appointed as an Independent Director of the Company for a term of 5 years at the Adjourned Second EGM held on 10th December 2018, and he holds office as an Independent Director of the

Company up to 02nd December 2023 ("Current Term"). In compliance with Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, approval of the Members is hereby sought for the continuation of office by Mr Baig as an Independent Director of the Company. The notice convening the AGM includes the proposals for continuing directorships held by Mr Baig as an Independent director of the Company.

Declaration from Independent Directors

Your Company has received declarations from all the Independent Directors of your Company confirming that they meet the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Act and Regulation 16(1)

(b) of the SEBI Listing Regulations and there has been no change in the circumstances which may affect their status as an Independent Director.

11. COMMITTEES OF BOARD

Details of various committees constituted by the Board, including the committees mandated pursuant to the applicable provisions of the Act and SEBI Listing Regulations, are given in the Corporate Governance Report, which forms part of this Annual Report.

12. NUMBER OF MEETINGS OF THE BOARD

The Board of Directors met 07 times during the year under review. The details of board meetings and the attendance of the Directors are provided in the Corporate Governance Report, which forms part of this Annual Report.

13. INDEPENDENT DIRECTORS MEETING

The Independent Directors met on 04th July 2022 without the attendance of Non-Independent Directors and members of the management. The Independent Directors reviewed the performance of Non-Independent Directors, the Committees, and the Board as a whole along with the performance of the Chairman of your Company, taking into account the views of Executive Directors and Non-Executive Directors and assessed the quality, quantity, and timeliness of the flow of information between the management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

14. BOARD EVALUATION

The Board adopted a formal mechanism for evaluating its performance and that of its committees and individual Directors, including the Chairman of the Board. The exercise was carried out through a structured evaluation process covering various aspects of the Boards functioning, such as the composition of the Board and committees, experience and competencies, performance of specific duties and obligations,

contribution at the meetings and otherwise, independent judgment, governance issues, etc. At the Board meeting that followed the abovementioned meeting of the Independent Directors, the performance of the Board, its committees, and individual directors was also discussed. The entire Board did a performance evaluation of independent directors, excluding the independent director being evaluated.

15. POLICY ON DIRECTORS APPOINTMENT & REMUNERATION

Your Companys policy on Directors appointment and remuneration and other matters ("Nomination and Remuneration Policy") pursuant to Section 178(3) of the Act is available on the website of your Company at https:// www.electronicsma.rtindia.com. The Remuneration Policy for the selection of Directors and determining Directors independence sets out the guiding principles for the Nomination and Remuneration Committee for identifying the persons who are qualified to become Directors. Your Companys Remuneration Policy is directed towards rewarding performance based on the review of achievements. The Remuneration Policy is in consonance with existing industry practice. We affirm that the remuneration paid to the Directors as per the Companys Remuneration Policy terms.

16. DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(3)(c) of the Companies Act, 2013 with respect to the Directors Responsibility Statement, the Board of Directors of the Company hereby state and confirm that:

a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for the year under review;

c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the directors have prepared the annual accounts on a going concern basis.

e) the directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

f) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

17. INTERNAL FINANCIAL CONTROLS SYSTEM AND THEIR ADEQUACY

The details regarding the internal financial controls system and their adequacy are included in the Management Discussion and Analysis, which forms part of this Annual Report.

18. RISK MANAGEMENT

The Board has formed a Risk Management Committee (RMC) to frame, implement and monitor the risk management plan for the Company. The RMC is responsible for reviewing the risk management plan and ensuring its effectiveness. The major risks identified by the businesses are systematically addressed through mitigation actions on a continual basis.

19. BOARD POLICIES

The Corporate Governance report details various policies approved and adopted by the Board as required under the Act, SEBI Listing Regulations, and policies are available on your Companys website at https://www.e1ectronicsma.rtindia.com.

20. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The brief details of the CSR Committee are provided, which form part of this Annual Report. The CSR policy is available on the website of your Company at https://www. electronicsmartindia.com. The Annual Report on CSR activities is annexed to this report. The disclosure per Rule 9 of the Companies (Corporate Social Responsibility Policy) Rule, 2014, is attached as Annexure-2.

Further, the Chief Financial Officer of your Company has certified that the CSR spending of your Company for the 2022-23 has been utilised for the purpose and in the manner approved by the Companys Board of Directors.

21. CORPORATE GOVERNANCE REPORT

The Corporate Governance Report, as stipulated by SEBI Listing Regulations, forms part of this Boards Report and is given in Annexure — 3, along with the required certificate from a Practicing Company Secretary, regarding compliance with the conditions of Corporate Governance, as stipulated. In compliance with Corporate Governance requirements as per the SEBI Listing Regulations, your Company has formulated and implemented a Code of Conduct for all Board members and senior management personnel of your Company ("Code of Conduct") who have affirmed the compliance thereto. The Code of Conduct is available on your Companys website at https://www.electronicsma.rtindia.com.

22. BUSINESS RESPONSIBILITY AND

SUSTAINABILITY REPORT

In accordance with the Listing Regulations, the Business Responsibility & Sustainability Report is annexed as Annexure - 4.

23. STATUTORY AUDITORS & AUDITORS REPORT

Walker Chandiok & Co. LLP, Chartered Accountants (Firms Registration Number 001076N / N500013), was appointed as Statutory Auditors of your Company at the Adjourned First Annual General Meeting held on 07th December 2019 for a term of five consecutive years and continue to hold the office for five years as originally appointed.

Walker Chandiok & Co. LLP, Chartered Accountants, have also given their confirmation regarding compliance with conditions prescribed under Sections 139 and 141 of the Act in regard to the continuation of their term. The Statutory Auditors report and notes to Schedules are enclosed.

Explanation of the qualification in the Auditors Report:

The Statutory Auditors report does not contain any qualifications, reservations, adverse remarks or disclaimers.

24. CONSOLIDATED FEES PAID TO STATUTORY AUDITORS

Detail of total fees for all services paid by the listed entity and its subsidiaries, on a consolidated basis, to the statutory auditor and all entities in the network firm/ network entity of which the statutory auditor is a part, as mentioned in Note 26 of Consolidated Financial Statement published through annual reports for the 2022-23, are as below:

		Rs in Million
Payments to the auditor	2022-23	2021-22
As auditor	5.05	3.65
For other services	0.10	-
Out-of-pocket expenses	0.12	-
Total	5.27	3.65

25. SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Act, read with the rules made thereunder, the Board has appointed M/s VSSK & Associates, Company Secretaries, to undertake the Secretarial Audit of your Company for 2022-23. The Secretarial Audit Report for the year under review is provided as Annexure - 5 of this report. There are no qualifications, reservations, adverse remarks, or disclaimers in the Secretarial Audit Report.

26. SECRETARIAL STANDARDS

During the year under review, your Company has complied with all the applicable provisions of Secretarial Standard-1 and Secretarial Standard-2 issued by the Institute of Company Secretaries of India.

27. REPORTING OF FRAUDS BY AUDITORS

The Statutory Auditors and Secretarial Auditor have not reported any instances of fraud committed against your Company by its officers or employees to the Audit Committee or the Board under section 143(12) of the Act.

28. ANNUAL RETURN

Pursuant to Section 134(3)(a) of the Act, the annual return as of 31st March 2023 prepared in accordance with Section 92(3) of the Act is made available on the website of your Company at https://wwwelectronicsmartindia.com.

29. TRANSACTIONS WITH RELATED PARTY

All transactions with related parties are placed before the Audit Committee for approval.

All related party transactions entered into during the financial year were on an arms length basis and were in the ordinary course of business. Your Company had not entered any transactions with related parties that could be considered material in Section 188 of the Act.

Accordingly, the disclosure of related party transactions, as required under Section 134(3)(h) of the Act, in Form AOC — 2, is not applicable. The Policy on Related Party Transactions is available on your Companys website at https://www. electronicsmartindia.com.

30. GENERAL DISCLOSURES

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions/ events on these items during the year under review:

1. Issue of equity shares with differential rights as to dividend, voting, or otherwise.

2. Issue of Shares (including Sweat Equity Shares) to employees of the Company under any scheme.

3. Significant or material orders passed by the Regulators or Courts or Tribunals that impact the going concern status and your Companys operation in the future.

4. Voting rights that are not directly exercised by the employees in respect of shares for the subscription/ purchase of which loan was given by the Company (as there is no scheme pursuant to which such persons can beneficially hold shares as envisaged under section 67(3)

(c) of the Act).

5. The Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013, and the Companies (Acceptance of Deposits) Rules, 2014.

6. No Application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016.

7. No amounts were required to be transferred to the Investor Education and Protection Fund by the Holding Company and its subsidiary companies incorporated in India.

8. No One-time settlement of loans obtained from the Banks or Financial Institutions.

31. ADDITIONAL DISCLOSURES UNDER LISTING REGULATIONS

Statement of deviation or variation.

Your Company utilised an amount of Rs 550 Million earmarked for the repayment of certain borrowings availed by the Company and Rs 816.59 Million towards General Corporate Purposes. Also, the Company utilised Rs 1,000 Million earmarked to fund incremental working capital requirements for 2022-23.

The Company was supposed to utilise Rs 234.55 Million to fund capital expenditure to expand and open stores and warehouse in 2022-23. However, your Company utilised Rs 149.18 Million in 2022-23. The unutilised amount of Rs 85.37 Million will be utilised in 2023-24 and 2024-25 in accordance with the objects set out in the ‘objects of the issue section of the prospectus dated 10th October 2022.

Post inclusion of the unutilised amounts from 2022-23 proposed to be deployed across 2023-24 and 2024-25.

To vary the objects of the Initial Public Offer. Your Company obtained prior approval of the Companys members by way of a special resolution dated 27th April 2023 by postal ballot procedure (e-voting).

32. INSURANCE

Your Company has taken appropriate insurance for assets against foreseeable perils.

33. PARTICULAR OF EMPLOYEES

The information as required under Section 197 of the Companies Act 2013, read with Rules 5(1) & 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in Annexure - 6 to the Boards Report.

34. PREVENTION OF SEXUAL HARASSMENT AT THE WORKPLACE

The Company has in place an Anti-Sexual Harassment policy in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition, and Redressal) Act 2013. The Internal system has been set up to redress complaints received regarding sexual harassment.

During the year under review, your Company has received three complaints pertaining to sexual Harassment, which has been resolved.

35. VIGIL MECHANISM

The Company has established a vigil mechanism through a Whistle Blower Policy The Company can oversee the genuine concerns expressed by the employees and other Directors. The Company has also provided adequate safeguards against the victimization of employees and Directors who may express their concerns pursuant to this policy The policy is uploaded on the website of the Company at https://www. electronicsmartindia.com.

36. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS, AND OUTGO

The information on conservation of energy, technology absorption, and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014, as amended, is provided as Annexure - 7 of this report.

ACKNOWLEDGMENT

The Board of Directors wish to place on record their thanks for the committed services by all the employees of the Company. The Board of Directors would also like to express their sincere appreciation for the assistance and co-operation received from the financial institutions, banks, government and regulatory authorities, stock exchanges, customers, vendors, and members during the year under review.

	For and on behalf of the Board
	Pavan Kumar Bajaj
	Chairman and Managing Director
	DIN: 07899635
Date: 26th July 2023
Place: Hyderabad