Logica Infoway Ltd Management Discussions

1. INDUSTRY STRUCTURE AND DEVELOPMENT

India has emerged as the fastest-growing major economy in the world and is expected to be one of the top three economic powers in the world over the next 10-15 years, backed by its robust democracy and strong partnerships.

India, considered a popular manufacturing hub, has grown its domestic electronics production. The electronics sector of India contributes around 3.4% of the countrys Gross Domestic Product (GDP). The government has committed nearly US$ 17 billion over the next six years across four PLI Schemes: semiconductor and design, smartphones, IT hardware, and components.

Recently, the Ministry of Electronics & Information Technology released the second volume of the Vision document on Electronics Manufacturing in India, which stated that the electronics manufacturing industry will grow to US$ 300 billion by 2025-26. The major products that are expected to drive growth in Indias electronics manufacturing are mobile phones, IT hardware (laptops, tablets), consumer electronics (TV and audio), industrial electronics, auto electronics, electronic components, LED lighting, strategic electronics, Printed Circuit Board Assembly (PCBA), wearables and hearables, and telecom equipment. Mobile manufacturing is expected to cross US$ 100 billion in annual production growth by accounting for nearly 40% of the industry growth.

The IT sector in India is one of the largest contributors with a 9% contribution to GDP. The industry is around US$ 194 billion and is expected to surpass US$ 300-350 billion by 2025. Indias IT industries and companies are majorly located in the southern regions such as Bangalore, Hyderabad, Chennai, Visakhapatnam, Trivandrum, Mysore, Mangalore, Kochi, etc. The countrys major information technology hubs are Mumbai, Pune, Delhi, etc.

RECENT ECONOMIC DEVELOPMENTS IN INDIA ARE AS FOLLOWS:

AMPLIFYING GROWTH

• India is expected to have a digital economy of $ 1 Tn by 2025

• One of the largest electronic devices industries in the world anticipated reaching $ 300 Bn by FY 2025-26

• In March 2024, India saw significant performance in its IT hardware export sector. The country achieved a notable increase in exports of electronic goods, which include IT hardware. Overall, electronic goods exports grew by 23.64% in the fiscal year 2023-24 compared to the previous fiscal year. Specifically, the export value of electronic goods, which encompasses IT hardware, rose from USD 23.55 billion to USD 29.12 billion.

In March 2024 alone, Indias merchandise exports reached a record USD 41.68 billion, with electronic goods being a significant contributor to this achievement. This growth is part of a broader trend where India has been expanding its export footprint in various high-value sectors, including IT hardware. Indias exports are set to increase rapidly to $ 120 Bn in FY26.

• Production of mobile handsets is further slated to increase in value $ 126 Mn in FY 26.

• India produces roughly 10 mobile phones per second which amounts to ~$ 930 worth of production every second.

• Indias semiconductor market is expected to increase by $ 110 Bn in FY30, growing at a CAGR of 22%

• 100% FDI is allowed under the automatic route. In the case of electronics items for defence, FDI up to 49% is allowed under automatic route and beyond 49% through the government approval.

Electronic goods have emerged as a major component in Indias merchandise imports and have been driven by telecom instruments. Within telecom instruments, the imports of mobile phone parts have been the major contributor from 2015-16 onwards and coincidentally mobile phone imports have trended down. This is corroborated by a close examination of component wise imports and domestic production of telecom instruments which point towards an increasingly higher domestic value addition in recent years. This move from essentially consumption driven imports to production induced imports has largely been conditioned by the policy impulses to increase domestic production which is a desirable outcome against the backdrop of high domestic demand.

2. OVERVIEW

Our Company is engaged in multi-brand retail and retail selling as well as distribution of branded smart phones, IT hardware, software and allied accessories and services. Our Company also provides networking and security solution to our consumers.

We are a premier Retail and Distribution company of IT products, Mobile Phones and related Accessories, having Head Quarter in Kolkata, West Bengal. We are one of the largest companies in these product lines in India with revenue in excess of Rs. 1,064 Crores in financial year 2023- 24.

Our offices and distribution networks at Delhi, Gurugram, Hyderabad, Bengaluru and Mumbai give us pan India presence. We have 19 retail showrooms in West Bengal, 2 retail stores in UP, 8 at New Delhi and 1 in Hariyana.

The Company is very actively participating in booming E-commerce Industry as well and is enlisted on major E-commerce websites such as Amazon, Flipkart etc.

We hold distribution rights of Lenovo, Dell, Asus, Samsung laptops; HP notebooks; AIO; Desktops; HP Printers; Nokia and Itel mobiles.

3. OPPORTUNITIES

Experienced management team with a proven track record

Our business is consumer-driven. Our strong Promoter background and an experienced senior management team have helped us to offer high standards of customer service and a pleasant shopping experience at our stores. Our senior management brings their vision and leadership which we believe has been instrumental in our success. Our experienced management team and trained employees have enabled us to successfully establish a

customer-oriented corporate culture, providing a foundation to maintain and enhance our long-term competitiveness.

Strategically located business outlets and offices

Since the commencement of our business, we have been steadily increasing our market reach to cover 11 cities across the country by setting up retail stores, distribution centres, virtual offices by venturing into ecommerce.

Our scale of operations along with our long-standing relationship with leading brands and consumers enables us to earn better margins

We have long a standing relationship with reputed electronic brands that have helped us expand our service offerings. Our Company has a long-standing relationship with number of brands dealing in mobiles, IT hardware and others. We believe that we enjoy a position of holding trust and reliability with these brands and work closely with them. On account of the dynamic shared by our Company with them, we have been able to immensely grow in the domestic market and consistently expand our product portfolio. We believe that our brand presence and widespread customer outreach coupled with a reduced cost of business operations enables us to achieve a diverse as well as stable customer base. Along with this, we also earn better margins to achieve cost competitiveness in the consumer durable market.

Our Company also offers consumer financing options via credit and debit card, EMI, and has also collaborated with a few fintech companies.

Robust customer service support, timely delivery & installation support

We have well-managed sales teams assigned to always cater to the needs of our customers. They are also fluent in the regional languages where they are stationed, which contributes to the ease in establishing a strong connection with our customers. We also strive to achieve customer satisfaction by providing a reliable after-sales support with the help of our dedicated store-wise customer support equipped with trained, skilled, and experienced team members. Further, we have also set up smooth distribution networks and effective tracking systems, to ensure timely delivery of our products with limited procurement costs.

4. THREATS

Global economic, political and social conditions may harm our ability to do business, increase our costs and negatively affect our stock price.

Global economic and political factors that are beyond our control, influence forecasts and directly affect performance. These factors include interest rates, rates of economic growth, fiscal and monetary policies of governments, change in regulatory framework, inflation, deflation, foreign exchange fluctuations, consumer credit availability, consumer debt levels, unemployment trends, terrorist threats and activities, worldwide military and domestic disturbances and conflicts, and other matters that influence consumer confidence, spending and tourism.

Civil disturbances, extremities of weather, regional conflicts and other political instability may have adverse effects on our operations and financial performance.

Certain events that are beyond our control such as earthquake, fire, floods and similar natural calamities may cause interruption in the business undertaken by us. Our operations and financial results and the market price and liquidity of our equity shares may be affected

by changes in Indian Government policy or taxation or social, ethnic, political, economic or other adverse developments in or affecting India.

Natural calamities could have a negative impact on the Indian economy and cause our Companys business to suffer.

The Covid-19 pandemic had brought the world to a standstill affecting all sectors and the livelihood of many are at stake including the Indian economy. However, our Country is achieving normalcy by various measures taken by the Government. The pandemic is still to be controlled and any major outbreak will seriously impact our business. Further, our Country in the past has experienced natural calamities such as earthquakes, tsunami, floods etc. The extent and severity of these natural disasters determine their impact on the Indian economy. Prolonged spells of abnormal rainfall or other natural calamities could have a negative impact on the Indian economy, which could adversely affect our business, prospects, financial condition and results of operations as well as the price of the Equity Shares.

Terrorist attacks, civil unrests and other acts of violence or war involving India or other countries could adversely affect the financial markets, our business, financial condition and the price of our Equity Shares.

Any major hostilities involving India or other acts of violence, including civil unrest or similar events that are beyond our control, could have a material adverse effect on Indias economy and our business. Incidents such as the terrorist attacks in India, other incidents such as those in US, Indonesia and London, and other acts of violence may adversely affect the Indian stock markets where our Equity Shares will trade. Such acts could negatively impact business sentiment as well as trade between countries, which could adversely affect our Companys business and profitability. Additionally, such events could have a material adverse effect on the market for securities of Indian companies, including the Equity Shares.

5. THE FUTURE OUTLOOK

In keeping with the challenges of change, our Company was looking at ways to take advantage of the emerging situation. In this context, the Company had already started the Export. This will not only ensure that your company is on a fast-track growth path, but also add tremendous value to your investment in the Company.

6. RISKS AND CONCERNS

The Risk factors have been determined on the basis of their materiality. The following factors have been considered for determining the materiality:

1. Some risks may not be material individually but may be material when considered collectively.

2. Some risks may have material impact qualitatively instead of quantitatively.

3. Some risks may not be material at present but may have a material impact in the future.

Our stores and distribution centres are concentrated mainly in West Bengal, UP, Hariyana and New Delhi, and we generate majority of our revenue from our stores in these states. Any adverse developments affecting our operations in these states could have an adverse impact on our revenue and results of operations.

We derive majority of our revenue from sale of our product in West Bengal and Delhi. Existing and potential competitors to our businesses in these states may increase their focus on these states, which could reduce our market share. For example, our competitors may intensify their efforts in these states to capture a larger market share by launching aggressive promotional campaigns. The concentration of our operations heightens our exposure to adverse developments related to competition, as well as economic, political, demographic and other changes, which may adversely affect our business prospects, financial conditions and results of operations. Any adverse development that affects the performance of the stores located in this state could have a material adverse effect on our business, financial conditions, and results of operations.

Our inability to promptly identify and respond to changing customer preferences or evolving trends may decrease the demand for our merchandise among our customers, which may adversely affect our business.

Our Company is primarily engaged in multi-brand retail selling as well as distribution of branded smart phones, IT hardware, software and allied accessories and services. Our success depends upon our ability to forecast, anticipate and respond to the changing customer preferences and trends in a timely manner. Though we do not design or manufacture the products that we sell in our store and only procure the same through vendors and third-party manufacturers, any failure by us to understand prevailing trends or to forecast changes could result in merchandise obsolescence, thereby increasing the dead stock and loss of our brand image amongst our customers, which could have a material adverse effect on our business and results of operations. Any inability to respond to changes in consumer demands and market trends in a timely manner could have material adverse effect on our business, financial conditions, and results of operations.

We operate in a competitive industry and our market share may be adversely impacted in case we do not keep ourselves appraised of the latest consumer trends and technology and if we fail to compete effectively in the markets in which we operate.

We operate in a competitive industry which is characterized by rapid shifts in consumer trends and technology and our market share may be adversely impacted at any time by the significant number of competitors in our industry that may compete more effectively than us. These frequent changes and their impact on consumer demand may result into both price and demand volatility, leading to change in the competitive scenario. Due to the expansive nature of our business, we face competition from various kinds of players including, players operating in retail, wholesale and e-commerce space. We compete with national and local department stores, independent retail stores and internet businesses that market similar lines of merchandise as us. Many of our competitors are, and many of our potential competitors may be, larger, and may have substantially greater financial, marketing and other resources and, therefore, may be able to adapt to changes in customer requirements more quickly and devote greater resources in marketing and sale of their products or adopt more aggressive pricing policies than we can. We face a variety of competitive challenges, including pricing our products to remain competitive while achieving a customer perception of comparatively higher value, anticipating and quickly responding to changing consumer demands. Similarly, some of our organized competitors may also have advantages over us on account of, more prominent locations of their stores, more efficient distribution networks, better trained employees, greater geographic reach, broader product ranges or access to a large pool of financial resources. As a result, we will need to put in efforts to create brands and propositions that will provide access to high value products and also create a customer connect to our brand identity.

Our business is subject to cyclical volatility due to which there may be fluctuation in the sales of products which could lead to higher closing inventory position, which may adversely affect our business.

We offer products at our stores that our consumers require, and our success is dependent on our ability to meet our consumers requirements. The retail consumer spending is heavily dependent on the economy. Our revenue and profits may vary during different quarters of the financial year and certain periods may not be indicative of our financial position for a full financial year or future quarters or periods and may be below market expectations. Further, any unanticipated decrease in demand for our products during our peak selling period could result into higher closing inventory position, which may lead to sale and liquidation of inventory getting delayed against the trajectory under normal course of business, which could adversely affect our financial position and business operations. Fluctuations in the electronic retail market affect the inventory owned by electronic retailers, since merchandise usually must be manufactured in advance of the season and frequently before the trends are evidenced by customer purchases. In addition, the cyclical nature of the retail electronics business requires us to carry a significant amount of inventory, especially prior to peak selling periods when we build up our inventory levels.

Our Companys business relies on the reliable performance of its information technology systems and any interruption or abnormality in the same may have an adverse impact on our business operations and profitability.

Our Company utilises its information technology systems to monitor all aspects of its businesses and relies to a significant extent on such systems for the efficient operation of its business, including, the monitoring of inventory levels, the allocation of products to our stores and budget planning. Our Company also relies on third party providers for providing internet services. A downtime in services of any of these providers or if any of the softwares, hardware or applications become unavailable due to extended outages, interruptions or because they are no longer available on commercially reasonable terms, it could result in delays. Delays in order processing are reduced as our Company utilizes the physical billing procedure in case there is a downtime in the information technology systems. The physical billing procedure is subject to human errors and frauds, which may affect our reputation and profitability. Our Companys information technology systems may not always operate without interruption and may encounter temporary abnormality or become obsolete, which may affect its ability to maintain connectivity with our Stores and Distribution Centres. We cannot assure that we will be successful in developing, installing, running and migrating to new software systems or systems as required for its overall operations. Also, our Company cannot guarantee that the level of security it presently maintains is adequate or that its systems can withstand intrusions from or prevent improper usage by third parties.

Also, our computer networks may be vulnerable to unauthorised access, computer hackers, computer viruses, worms, malicious applications and other security problems caused by unauthorised access to, or improper use of, systems by third parties or employees. Although we have not experienced such attacks in the past, we cannot assure you that our security systems in place can prevent any such attacks in the future or that we will be able to handle such attacks effectively. Our Companys failure to continue its operations without interruption due to any of these reasons may adversely affect our Companys results of operations.

7. DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS ALONGWITH EXPLANATION

In compliance with the requirement of the Listing Regulations, the key financial ratios of the Company alongwith explanation for significant changes are mentioned below (ie., for change of 25% or more as compared to the immediately previous financial year will be termed as significant changes].

Ratios	Numerator	Denominator	Current Period	Previous Period	% Variance	Reason for Variance
Current Ratio (in times)	Current Assets	Current Liabilities	1.25	1.45	-13.72%	N.A.
Debt- Equity Ratio (in times)	Total Debt	Shareholders Equity	1.76	1.20	46.56%	See Note 7.1
Debt Service Coverage Ratio (in times)	Earning for Debt Service	Debt Service	0.17	0.16	9.62%	N.A.
Return on Equity ratio (%)	Profit after Tax	Average Shareholders Equity	13.21%	6.61%	100.02%	See Note 7.2
Inventory Turnover Ratio (in times)	Sales (Revenue from Operations)	Average Inventory	14.35	12.64	13.56%	N.A.
Trade Receivables Turnover Ratio (in times)	Sales (Revenue from Operations)	Average Trade Receivable	14.28	12.44	14.74%	N.A.
Trade Payables Turnover Ratio (in times)	Net Credit Purchases	Average Trade Payables	29.26	23.56	24.19%	N.A.
Net Capital Turnover Ratio (in times)	Sales (Revenue from Operations)	Working Capital	27.69	16.33	69.62%	N.A.
Net Profit Ratio (%)	Profit after Tax	Total Income	0.76%	0.50%	52.60%	See Note 7.3
Return on Capital Employed (%)	Earning before Interest and Tax	Capital Employed	31.41%	18.72%	67.85%	See Note 7.4
Return on Investment (%)	Profit after Tax	Cost of Investment	N.A.	N.A.	N.A.	N.A.

7.1 Debt- Equity Ratio: Debt Equity Ratio: The company has availed a new Cash Credit Facility from ICICI Bank Limited during the year along with additional channel financing facilities from the same bank for the purchase of Inventory from various parties and because of this reason there is a variance in Debt Equity Ratio.

7.2 Return on Equity Ratio: The growth in supplier incentives has demonstrably improved the companys financial performance by boosting net profit and consequently, the Return on Equity ratio. This positive variance indicates a potentially successful strategy in supplier negotiations and cost management.

7.3 Net Profit Ratio: The growth in supplier incentives has demonstrably improved the companys financial performance by boosting net profit and consequently, the Net Profit Ratio. This positive variance indicates a potentially successful strategy in supplier negotiations and cost management.

7.4 Return on Capital Employed: The growth in supplier incentives has demonstrably improved the companys financial performance by boosting net profit and consequently, the Return on Capital Employed. This positive variance indicates a potentially successful strategy in supplier negotiations and cost management.

8. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Companys internal control systems are commensurate with the nature and size of its business. These systems ensure that all assets of the Company are safeguarded and protected against any loss or damage and that all transactions are properly authorized, recorded and accounted for.

9. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT- INCLUDING NUMBER OF PEOPLE EMPLOYED

It is the Companys firm belief that its people constitute the primary source of its sustainable competitive advantage. Our success in the future will depend on our ability to continue to maintain a pool of experienced personnel. We aim at identifying fresh talent, training, grooming them and providing opportunities for growth. We have been successful in building a team of talented professionals and intend to continue placing special emphasis on managing attrition and attracting and retaining our employees. We also provide technical and functional training to our employees. We intend to further improve our training programmes to ensure that our employees have the skills to meet our customers demands and provide quality customer service. We intend to continue to encourage our employees to be enterprising and help them to learn on the job and grow within our organisation.

10. CAUTIONARY STATEMENT

Statement in this Management Discussion and Analysis describing the Companys objective, projects, estimates and expectations may be forward-looking statement within the meaning of applicable laws and regulations.

Actual results may vary significantly from the forward-looking statements contained in this document due to various risks and uncertainties. Several factors could make a significant difference to the Companys operations.

These include economic conditions, government regulations and tax laws, political situation, natural calamities, among others, over which the Company does not have any direct control.

By the Order of the Board For EASTERN LOGICA INFOWAY LIMITED
(gaurav goel)	(shweta goel)
din- 00432340	din- 00434584
Managing Director	Whole Time Director
Place: Kolkata Date:30/05/2024