Newjaisa Technologies Ltd Management Discussions

Company Overview:

Founded in 2020, Newjaisa Technologies is a technology- driven, direct-to-consumer company specializing in refurbished ITelectronics.Weofferhigh-quality refurbished electronics, including laptops, desktops, and peripherals, at significant discounts compared to new products. Our comprehensive business model encompasses an end-to- end reverse supply chain for IT assets. This process involves procuring used IT assets, meticulously refurbishing them to near-new condition, and selling them directly to end-use customers, both businesses and individual consumers.

Operating exclusively in the Indian market, we cater to a Pan-India customer base through our e-commerce platforms. Our business not only addresses the growing e-waste problem but also serves a large, underserved segment of the Indian population with low personal computing ownership. By delivering high-quality products at affordable prices, backed by service guarantees and warranties, we are committed to making technology accessible to all while contributing to environmental sustainability.

(a) Industry structure and developments:

Refurbished Laptops and Desktops Market in India: A Growing Opportunity

The refurbished laptops and desktops market in India is witnessing significant growth, driven by increasing demand for affordable electronics, growing awareness of refurbished products, and environmental concerns.

Here is a breakdown of the current industry structure and developments in the market:

Market Metrics	Refurbished Laptops Market	Refurbished Desktops Market
Market Size	*ln 2020, the market for refurbished laptops was valued atRs.2,500 crores (approximately $350 million USD). Projections indicate that it will grow to f 6,000 crores (about $850 million USD) by 2025.	*The refurbished desktop market was valued atRs. 1,200 crores (about $170 million USD) in 2020, with expectations to increase to Rs.2,500 crores (around $350 million USD) by 2025.
Growth Rate	*The sector is experiencing a robust growth rate, with a CAGR (Compound Annual Growth Rate) estimated between 15-20% from 2020 to 2025.	*This market segment is projected to grow at a CAGR of 12-15% from 2020 to 2025.
Units Sold	#The number of refurbished laptops sold was around 0.5 million units in 2020. This figure is expected to rise to approximately 1.2 million units by 2025.	#Refurbished desktops saw sales of approximately 0.2 million units in 2020, with projections indicating an increase to 0.5 million units by 2025.

* (Source: TechSci Research)

# (Source: Counterpoint Research)

Key Drivers of Growth

1. Affordable Electronics: The rising demand for cost- effective computing solutions is a major driver. Refurbished devices offer a budget-friendly alternative to new products, appealing to both individual consumers and businesses.

2. Awareness and Acceptance: Increased awareness about the quality and reliability of refurbished products has contributed to market growth. Many consumers and organizations are now more open to purchasing refurbished electronics.

3. Environmental Concerns: Growing environmental consciousness has led to increased acceptance of refurbished products as a sustainable choice. This trend aligns with the broader global movement towards reducing electronic waste.

Challenges:

1. Quality Perception: Despite growing acceptance, some consumers still have concerns about the quality and longevity of refurbished products compared to new ones.

2. Supply Chain and Inventory Management: Ensuring a consistent supply of high-quality refurbished products can be challenging. Effective management of inventory and sourcing are crucial for maintaining market growth.

3. Regulatory Compliance: Adhering to regulations and standards for refurbished products can be complex and requires robust processes to ensure compliance.

Market Players:

Key players in the Indian refurbished electronics market include companies specializing in refurbishing and reselling devices, as well as e-commerce platforms that facilitate the sale of these products.

As the market continues to evolve, the growth in refurbished laptops and desktops reflects broader trends in consumer behavior, technological advancements, and environmental sustainability.

(b) Opportunities and Threats.

SWOT Analysis Strengths

• Our unique and scalable refurbishment process ensures high-quality outputs, distinguishing us in a competitive market.

• Collaborations with industry leaders enhance our resource availability and strengthen our market position.

• A highly qualified and experienced team drives our operations, ensuring efficiency, innovation, and a commitment to excellence.

• The increasing demand for cost-effective technology solutions, driven by rising disposable income and digitalization, positions us strongly in the market.

Weaknesses

• Ensuring a consistent supply of skilled engineers and technicians is a challenge that could impact our ability to scale operations.

• The intricate nature of our supply chain requires efficient management to optimize sourcing, logistics, and inventory.

Opportunities

• The growing demand for affordable electronics in India, fuelled by rising disposable income and digitalization, presents significant growth opportunities.

• Consumers are increasingly recognizing the benefits of refurbished products, including cost savings and environmental sustainability, which enhances market potential.

• The growth of e-commerce platforms in India provides a convenient and efficient channel to reach a wider audience, expanding our market reach.

• Supportive policies and initiatives by the Indian government, particularly in promoting digitalization and e-waste management, create a favourable environment for the growth of the refurbished electronics market.

• Opportunities for partnerships and collaborations with manufacturers, distributors, and recyclers can enhance our supply chain, improve product quality, and drive growth.

Threat

• Potential issues with the quality and reliability of refurbished products can affect customer trust and loyalty, posing a significant threat to business growth.

• The market for new laptops and desktops is highly competitive, with constant innovation and price reductions posing a threat to the demand for refurbished products.

• The availability of refurbished laptops and desktops may be limited, which could impact market growth and our ability to meet customer demand.

• Changes in regulations and laws related to e-waste management and refurbished electronics can have a significant impact on our operations and market dynamics.

• Negative consumer perceptions of refurbished products can hinder demand and limit market

expansion, particularly in a market driven by brandconscious consumers.

• The refurbished electronics market in India may rely on imported products, exposing the business to fluctuations in global markets, including price volatility and supply chain disruptions.

• Limited warranty and support options for refurbished products can affect customer satisfaction, retention, and long-term business success.

(c) Segment-wise and product wise performance.

Product wise performance:

Units Sold/ Processed (YOY-Financial year)

Description	2020-21	2021-22	2022-23	2023-24
Units Sold	8,928	24,959	42,043	58,322
YOY Growth %	-	180%	68%	39%
Product Description	Product Wise Sales Y-O-Y (in Lakhs)
	2020-21	2021-22	2022-23	2023-24
Laptops/ Chromebooks	296.7	838.6	2,309.8	3,643.5
Desktops/ Chromebox/	657.7	1,873.1	1,996.3	2,327.7
Monitors
Accessories	10.2	80.2	147.0	152.0
	964.7	2,791.9	4,453.0	6,123.2

Drivers and Challenges

Drivers:

• Increasing demand for affordable electronics

• Growing awareness of refurbished products

• Environmental concerns

Challenges:

• Quality and reliability concerns

• Limited availability of refurbished products

• Competition from new products

Sources:

*TechSci Research: “India Refurbished Electronics Market by Type, By Product, By Distribution Channel, By Region, Competition Forecast & Opportunities, 2025"

*Counterpoint Research: "Refurbished Smartphone and Laptop Market in India, 2020"

Please note that the data and sources may vary depending on the methodology and scope of the research.

Regulatory Environment

The Indian governments policies and initiatives on electronics recycling and e-waste management are expected to significantly bolster the growth of the refurbished electronics sector. The emphasis on sustainability and responsible disposal of electronic waste aligns with the broader objectives of promoting environmental stewardship and resource efficiency.

According to a report by the Ministry of Electronics and Information Technology (MEITY), submitted to NITI Aayog in 2021:

"India faces considerable challenges in managing e-waste. However, the potential of secondary materials from end-of- life electrical and electronic products presents significant opportunities. Precious metals, steel, aluminum, copper, and plastics embedded in e-waste hold substantial value. Transitioning from a linear to a circular economy is crucial for harnessing these resources effectively. Indias extensive labor force can play a key role in manual disassembly of e-waste, complemented by investments in advanced recycling technologies that align with circular economy principles. This approach will enhance resource efficiency and promote sustainability. A successful shift to circular principles in the electronics sector will generate positive societal and environmental outcomes. By addressing systemic challenges, integrating circularity across product life cycles, and investing in both advanced recycling technology and labor force development, India can achieve circular growth in the electronics sector. This transition promises enriched livelihoods, improved quality of life, and sustainable resource access."

These regulatory frameworks and strategic initiatives are anticipated to create a favourable environment for the refurbished electronics market, driving growth and contributing to sustainable development goals.

(d) Outlook:

As we are currently in the growth phase, it is important to recognize that our financial outlays at this stage are primarily investments aimed at scaling our operations and establishing a strong market presence. We are confident that, once we transition to a steady state, we will achieve and sustain a Gross Margin (GM) level of 40% and a Profit After Tax (PAT) margin of 12%.

To support this trajectory, we are strategically managing our working capital cycle, which is projected to be 80 days. This cycle is crucial for maintaining liquidity and operational efficiency as we expand.

Our planned investment in increasing capacity and enhancing our human capital will play a pivotal role in achieving these financial targets. Over the next 3-4 years.

as we complete our capacity build-up and fully develop our team, we anticipate reaching the desired financial metrics and operational stability. These investments are essential to drive long-term profitability and ensure a robust foundation for sustained growth.

(e) Risks and concerns.

INTERNAL RISK FACTORS

1. Market Adaptation and Product Development Risks

Our commercial success is largely contingent upon our ability to accurately anticipate market needs and effectively manage resources to upgrade existing products and introduce new ones that meet end-user requirements in a timely manner. Failure to do so could impact our competitive edge, potentially rendering our products obsolete and adversely affecting our revenue, reputation, financial condition, and cash flow.

The market is characterized by rapid technological advancements, evolving industry standards, and shifting regulations, as well as changing customer preferences. Our business success depends on our capacity to anticipate and adapt to these changes efficiently and cost-effectively. Key challenges include:

- Ensuring timely release and availability of new products.

- Addressing defects, errors, or failures in products.

- Maintaining a seamless supply chain for logistics and

delivery.

While we have not faced significant issues in the past with market adaptation or product competitiveness, any failure in managing these risks could negatively impact our business performance.

2. Inventory and Input Costs Management Risks

Effective inventory management and the cost of inputs are critical to our profitability. Fluctuations in input prices and inaccuracies in demand forecasting could raise our costs and adversely affect our net sales, profitability, cash flow, and liquidity. Key risks include:

• The need to accurately estimate customer demand and manage supply chain procurement.

• Risks associated with over-stocking or understocking inventory, potentially leading to excess inventory or stock shortages.

• Uncontrolled fluctuations in input component prices (e.g., RAM, hard disks), which could impact our ability to maintain margins and profitability.

If we fail to manage inventory effectively or if input prices increase, it may necessitate inventory write-downs or affect our ability to pass on cost increases to customers, thereby impacting our financial results.

3. Labour-Intensive Operations Risks

Our industry is labour-intensive, and our operations are dependent on a skilled workforce. Potential risks include:

• Disruptions from strikes, work stoppages, or increased wage demands.

• Shortages of skilled or unskilled personnel.

• The impact of stringent labor legislation, including unionization efforts.

Although we have not encountered major disruptions in the past, future labor disputes or increased regulatory requirements could adversely affect our operations, divert management attention, and increase costs.

EXTERNAL RISK FACTORS

Industry Malpractices

The industry faces risks from unethical practices, such as misleading advertising, dishonest pricing, and inaccurate safety claims. These practices contribute to a general mistrust among consumers and prompt stricter regulatory oversight. As an emerging company, we are affected by industry-wide norms and regulations, and unethical conduct by industry players could negatively impact our business and operational results.

Ensuring adherence to ethical standards and maintaining transparency is crucial to mitigate the risks associated with industry malpractices and to foster a positive reputation within the market.

(f) Internal control systems and their adequacy

Newjaisa Technologies Limited maintains robust internal control systems tailored to its operational scale and business nature. Our well-documented policies and procedures ensure effective monitoring of business performance, supported by integrated IT systems for daily operations.

An independent audit firm periodically reviews these controls, ensuring their adequacy and adherence to company policies and regulatory compliance. The firm focuses on accounting and operational efficiency, with internal auditors reporting their observations and recommendations to the Audit Committee.

The Audit Committee regularly reviews these reports and evaluates the effectiveness of our internal control systems, providing necessary recommendations to enhance them.

This comprehensive framework ensures the security of our assets, operational efficiency, and alignment with our strategic objectives.

(g) Discussion on financial performance with respect to operational performance

We are pleased to report a significant increase in topline revenue, with a year-on-year growth of nearly 40% for the financial year 2023-2024. This substantial growth reflects our ongoing commitment to expanding our market presence and enhancing our service offerings.

Our gross margins have improved by 3.2% over the past year. This enhancement is primarily attributed to our strategic investments in advancing our repair capabilities. These improvements are expected to contribute to long-term profitability and enable us to serve a broader customer base more effectively.

As a labour-intensive company, we have made considerable investments in human capital throughout the year. This investment aligns with our expansion plans and steady growth strategy. The proportion of employee costs relative to revenue has increased significantly, which is consistent with our capacity expansion efforts. Notably, our workforce has grown 2.5 times compared to the previous year, underscoring our dedication to building a robust team to support our growth objectives.

These highlights underscore our commitment to driving revenue growth, enhancing operational efficiency, and investing in our workforce to support our long-term strategic goals.

(h) Material developments in Human Resources / Industrial Relations front, including number of people employed.

At Newjaisa Technologies Limited, our employees are the cornerstone of our success. We are dedicated to cultivating a workplace culture that emphasizes innovation, collaboration, and professional growth. Our human resources strategy is meticulously designed to attract, develop, and retain exceptional talent, ensuring we have the expertise needed to drive our company to new heights.

We are committed to empowering our workforce through continuous development and training. We invest significantly in comprehensive learning programs that enhance skills and expand capabilities across all organizational levels. Regular training sessions and targeted leadership development initiatives provide our employees with opportunities to advance their careers and make meaningful contributions to our success.

Recognizing the importance of work-life balance, we prioritize employee well-being through robust health and wellness programs. This commitment helps create a supportive and nurturing work environment that fosters job satisfaction and loyalty.

Our performance management system is built on the principles of transparency and meritocracy, ensuring that achievements are recognized and rewarded. We are also committed to promoting diversity and inclusion, striving to create an equitable workplace where all employees can thrive and contribute to our shared goals.

As of March 31, 2024, Newjaisa Technologies Limited employs over 400 individuals across our corporate office. Through these efforts, we aim to build a dynamic, engaged, and high-performing team that drives our company forward.

(i) Details of significant changes in key financial ratios

Particulars	FY 2023-24	FY 2022-23	%of increase	Reason
Debtors Turnover Ratio	8.64	12.37	-30.15%	-
Creditor Turnover Ratio	45.54	27.68	64.52%	The company improved its cash flow management, allowing faster payments to suppliers or benefited from early payment discounts.
Inventory Turnover Ratio	2	5.47	-63.44%	-
Current ratio	6.04	1.7	255.29%	The company significantly increased its liquidity, possibly through higher cash reserves or reducing short-term liabilities.
Debt Equity	-	-	-	-
Gross Margin Ratio	47%	43%	9.30%	-
Net Profit Ratio	10.23%	15.1 3%	-32.39%	-

The analysis of these financial ratios highlights several key areas:

• Collection Efficiency: The decrease in the Debtors Turnover Ratio suggests the need for improved collection processes.

• Supplier Payments: The increase in the Creditor Turnover Ratio indicates quicker payments to suppliers, which can enhance relationships but may our affect cash flow.

• Inventory Management: We invested heavily in human capital and focusing more on quality which is making the inventory cycle arise, in a longer run we will see it to 60 days

• Liquidity: The significant increase in the Current Ratio demonstrates strong liquidity and financial stability.

• Profitability: The improved Gross Margin Ratio reflects better cost management, while the decrease in Net Profit Ratio indicates a need to address factors affecting overall profitability.

Cautionary statement

This document contains forward-looking statements about expected events and the Companys financial and operational results. By their nature, forward-looking statements require the Company to make assumptions and are subject to inherent risks and uncertainties. There is a significant chance that the assumptions, predictions, and other forward-looking statements may not be accurate. Readers are cautioned not to place undue reliance on forward-looking statements as several factors could cause assumptions and actual results and events to differ materially from those expressed here.