Newjaisa Technologies Limited (NEWJAISA) Earnings Call Transcript & Summary

Ladies and gentlemen, I welcome you all to the H1 FY '25 Post Earnings Conference Call of Newjaisa Technologies Limited. Today on the call from the management we have with us, Mr. Vishesh Handa, CEO and Co-Founder; and Mr. Ashish Nirmal, CFO. As a disclaimer, I would like to inform all of you that this call may contain forward-looking statements, which may involve risks and uncertainties. Also a reminder that this call is being recorded. I would now request the management to brief us about the business and performance highlights for the half year that went by, with the plan and vision for the coming year, post which we will open the floor for Q&A. Over to you, Vishesh.

Thanks, Vinay. Am I audible?

Yes, you are, you are.

Thanks so much, Vinay. So I'm Vishesh Handa. I'm CEO and Co-Founder for Newjaisa Technologies. Thank you all for joining for the H1 results and the discussions. So without further ado, I'd like to get started. I do understand there might be like a few folks who might be new to our business. So what I'll do, I'll quickly give a primer, but we'll try to spend more time in terms of like how H1 went for us. So moving on. Right, so largely, we are into electronics refurbishing. We are an electronics refurbishing company, focusing on the personal computer category. We have been in this business for the last 4 years, right? So this is fourth year running for us. Our business model is largely we take these assets from corporates. We have our own in-house manufacturing or refurbishing facility in Bangalore, right? So we run the refurbishing here. And then we directly sell it to the end customers. Largely our end customers, so we are an online-first company, largely through online channel. So we have been selling these personal computers and focusing on India as a market. So that's what like our business model is. So moving on. So as you can see on the screen, so one of our goals is to operate in the recycling or the reverse supply chain end to end. That is directly buying from the corporates, doing the refurbishing and directly providing those to end customers. The traditional structure has been, there has been a lot of players in the overall -- like the supply chain. One of our visions is how to make the supply chain much more agile and do away with the other players who are involved as such. In terms of product lines, we deal with -- we deal in laptop, desktop and also on like personal computer AiO products. Just give me one minute, for some reason, my screen seems to be jumping. One minute. I think this is much better. Okay. Sure. In terms of customer categories, I think we cover corporate, students and other professionals. We have various tie-ups with the various -- on the various segments as such. We talked about the products. So yes, I mean, just for the folks who are joining it for the first time, I mean, just from the perspective of the market, it's a very large market. In India, PC penetration is only 13%. It's growing very rapidly, right? So that's a market that we are like trying to cater to as such. Overall, I mean, through like various estimates, it's like a pretty large $2.5 billion of a market which is available in India for us to cater to. So now coming to H1 highlights. So before we look at the numbers, I would like to talk about the various initiatives the team has been doing in the various departments and the progress that we have made. Starting with the sales department, we saw -- as per the expected lines, we saw a reasonable growth on our top line. On an H1 to H1 basis, we grew by almost 20% to 30%. We ended the top line at around INR 32 crores for H1 this year as compared to INR 27 crores last year. Other developments on the sales side, I think we have been very clear in terms of our sales strategy that we want to continue to diversify our sales channel. As we initiated the business, we were heavily online or e-commerce platform focused company if you, for example, look at our numbers in terms of channel breakup, right? So we continue to -- yes. So I mean in the first year of operation, almost 91%. Among the online also, right, 91% of the sales were coming through the e-commerce platform. So we have been very focused in terms of building diversified sales channel. We have been marketing our own website. We have been developing off-line sales channel and that pattern of being able to diversify the channels continues. So in H1, we drove almost 31% through our off-line and like out of 69% also, some part of that sales comes from our owned assets as such, right? So other key aspect is, like as we all know, H2 remains a significant half for us because the Diwali sales and all the festivities in India comes in H2, right? Having said that, like the actual Diwali sales did start in the last 4 to 5 days of September. I'm very happy to update that these were on the expected lines. The first 5 days of the sales that actually even in the end of the September, these were on the expected line. On a per day basis, we were clocking INR 1 crores plus, which was on the expected lines as such. In terms of marketing, as we just discussed, I think key focus of the company is to, a, diversify; b, continue to invest in building our brand. As a company, we continue to be online first, right? So most of our marketing efforts went on our website development improvement and also in building our other like online social media presence, performance marketing. We are very keenly investing on these efforts. At the same time, we are like tracking in terms of how each of these investments are providing us ROI. And I think the results are -- we are like particularly satisfied the kind of the growth and the kind of the returns that we are seeing through these channels. I mean if I have to talk about just our own website, on a 6-monthly basis, it has grown 100% plus, right? So that's a significant contribution on the marketing front. In terms of operations, key focus on the operations has been, a, to build more efficiency, right? And at the same time, continue to add to scale. Three significant contributions that I would like to share with the our investors is, a, we have added one more facility, which is of 8,000 SFT. This facility will be largely -- so we are now separating our facility. We have now the current facility, which is more than 45,000 SFT is now dedicated just for the laptop production. The new facility will be focusing on the desktop production as such. Additionally, we have added like basic recycling ability in the new facility. We will -- we have already got a CFE certification. These are some of the certifications that are required for us to qualify not only as a refurbisher, but also as a recycler. We are waiting for our CFO certification, which is provided by the central government, and we are expecting to receive that in the next 1 to 2 months as such. So yes, I mean, on the operations, to focus, one was capacity expansion and much more focus, that's where we segregated the facility by product line so that we can like be able to manage our profitability by product line and have a better focus on that, right? Second key focus on the operations side is that we continue -- the theme is how do we make it much more efficient. For us, both the human contribution and the overall cycle time are the two significant factors on which we are working. As we will look at the various numbers, you will see that our head count, for example, let me just cover that, right? So though from H1, H2 of last year to this year, right, we have -- pretty much on the head count basis, we have tried to be flat, right? So if you look at our head count from 400, we have been flat at 400, though we have been able to produce more units largely driven through the efficiency efforts that we are driving right now. So that's on the operations front. Talking on the HR, two significant like the milestones that I want to share with the group. As you can see from this picture that one of the goals of the company is to be an end-to-end player in the supply chain. And in that part, as you can see, as of now, almost like 25% of our buybacks were directly from the corporate, 75% were being driven through recyclers. One significant role that we wanted to close was a head of [ IT ]. So we are closed on that role. The expectation is to build that as a new vertical so that we continue to buy directly from the corporate and take that ratio direct purchase from corporate from current 25% to, hopefully, the year-end goal is up to 40%, right? So we have closed on that particular senior position. We have -- in terms of like sales channel diversification, as during IPO also and other subsequent meetings as we have been sharing with the group that we want to get direct off-line sales channels with college, with SMEs, college and schools. So we closed on that particular position. We have a person dedicated to our direct engagements with colleges now, and that has already started giving us some great results in terms of top line contribution as such. Moving on the finance side. As many of you would be aware, we closed a preferential round. And that was closed on September. So this will hit like -- so in H2 is -- so just before the end of H1, we closed on the preferential round. It was a INR 30 crores of like raise that we have done. Largely this raise, we have done to support our like scaling of the manufacturing, IT investments and also the brand building exercise that we want to continue with. So on the finance side, we just closed on an IPO round. In terms of channel diversification, as we talked about school colleges, also the SME as a channel. One of the key requirements in that particular channel is for having a financial options available, which can make the options of leasing to SMEs at the same time, making it available for that matter lower EMI. We have closed a very strategic partnership with one of the largest NBFCs player in this particular domain, which -- so it will also help us in terms of managing our like credit line as and when required, to give these assets to SMEs on either lease or EMI. So -- and I think we have been able to get pretty favorable terms, which we are happy that we'll be able to pass on to our respective SME customers. So these were like two or three key significant milestones on the finance side of the things. Coming to the numbers. So yes, so I talked about the top line, so we did INR 34 crores. I look at the financials. Before that, in terms of unit sales, we have done 25,350 units, right? And for like the folks who are joining us for the first time, just want to call out, if you look at on a year-on-year basis also, typically, H2 is always like 60% of the overall growth for us, 60% to 65% depending on year-on-year basis, right? Because all the festive seasons right from Diwali to New Year to Republic sales, so all -- we are a consumer-focused company, and that's how it pretty much stands out. This is like one slider just to give you guys a bit of a deep dive on what -- because there were a couple of question -- queries last time also on our marketing strategy. So as you can see, just from April to October, we have 3x growth in terms of active users and the new user acquisition on our own platform. We are very categorical that we want the growth to be driven by brand recognition. That's where, I think, for us, the organic growth, like looking at that parameter through, organic lens is equally important, right, which you can see in the chart too, that it is almost like a 8 to 10x recognition, which we are giving. So that indirectly means that people are able to associate now though at a very minute scale. I do understand with the brand as such. Additionally, because of these kind of an association of brand recognition, we are seeing a significant, almost double the increase in terms of non-assisted sales. So these are the sales where the customer has that brand reliability and directly purchases from our website and no telecaller or telesale person is available for their sales. That definitely helps in our overall bottom line as such, right? In terms of competitive positioning, I do agree that we were a late starter in terms of building our brand recognition, right? You can already see early like results of that and pretty much in terms of organic search, we are already ahead of any other major players in India as such. Now coming to -- this I covered. As you can see, the channel split continues towards the channel diversification and more towards our own channel, which we strongly believe in long term is going to be much more beneficial for us. In terms of product mix, yes, we saw a slightly uptick in terms of more desktops as compared to the laptops. That's kind of a buckling of the trend that we have been seeing for the last 4 years. One of the reasons for that is -- it's twofold. One is definitely on the retail side, also, we pushed more of desktops, right? Secondly, some of our large off-line orders as we talked about college, schools and universities were more desktop focused, right? So that's the reason you see some slight deviation over there. Coming to the half yearly income statement, so as you can see, on an H1 to H1 basis, we saw a 29% to 30% of growth in terms of top line margin. Our gross margins, we are able to sustain at the levels that we are required, right? As you can see, I mean, though the employee cost looks like significantly higher. But if you compare it from H2 of last year, right, it's -- in that sense, we have actually reduced some of our employee costs. We are also pivoting on more of intern hiring strategy, right? So for example, if you look at last year, H2, our employee cost was around 650 plus, right, or others, it was touching 700. Some of the savings there largely is in terms of the reorganization of the kind of the employees, right? They're getting more on the -- like this and driving more of ERP and IT integration, so on and so forth. One -- like in terms of business update, just one more aspect that I wanted to cover was our investment on the IT infrastructure continues. And we have been continuously rolling out new features, which are -- these are the reasons you are seeing some of these efficiency improvements that are showcasing. So that's in terms of -- so the margins pretty much remains on the similar lines. I would also like to take this opportunity to just talk about the opportunities and equally the challenges that we foresee in the medium term. In terms of opportunity, definitely, I think channel diversification, it's a very exciting space. We are very excited about it. We do hope to like make our engagement with college universities much more meaningful, deeper and a lot of growth to be coming from these particular segments as such. At the same time, in terms of challenges, one of the things or the patterns that we are seeing subsequently basis our last 4 years of experience is, on one hand, as there is a much more recognition of refurbished products by mainstream customer, that does also mean that a lot of like small scale players will continue to come, especially on e-commerce platforms, right? So we definitely do see an increase in competition that is coming on the e-commerce platforms from smaller players. The way we look at it is definitely, a, it's a validation of the changing patterns, right, in terms of consumption patterns in India. But at the same time, what we have seen is in these pattern -- platforms, largely the -- it's a quality that makes a long-term play, right? So definitely, I think we will continue to see a lot of like competition coming in. Our focus continues in delivering quality products which will help us to differentiate in the long term. So moving on, right? So these are like FY '20 -- right? So these are like the numbers which I'm assuming most of us would be aware, but I can reinforce those. Like on an average, we have been able to see on a year-on-year significant like reasonable growth on the top line and also on our like PAT assets, right? And we do foresee -- like we expect to maintain a similar kind of momentum for the future. With that, I would -- so once again, thanks so much for joining this call and really appreciate our investors, and I'd like to open the floor for Q&A.

We'll take the first question from the line of [ Vijal Shah ].

Yes, I have a few questions. Number one, can you just give us some idea with respect to the finance deal, which you talked about you have entered into with an NBFC? Can you give some more color on that?

Yes. So actually it is about -- so we were looking at having a product option were to the SMEs, right, we can give these assets either on lease or on a long-term EMI basis, right? So this is like an NBFC who is willing to finance those invoices, so to speak, right, at a reasonable discounted rate, right? So the whole idea is with this kind of an offering in place for the SMEs, we want to convert this from a capital expenditure like one time, right, to more of an operating expenditure. And it's a -- so it's a zero recourse, right? So it's not like the liability will be on us, right?

Okay. So liability, I mean, even, let's say, EMI is not paid, you will not be impacted in that case?

No, no. We are more of a facilitator as such. But I guess to help them convert the CapEx into an OpEx, right? So a lot of like SMEs have this issue of onetime spend, right? So if we can convert that, right? And we -- like on the business side, we back it up with like a buyback guarantee and stuff like that basis to the appreciation, so that it's a peace of mind for them, right? So if they have to be scale at any point of time, they can.

Got it. So that's one. Secondly, in terms of the recycling license. And can you just give us some idea why it is taking so long? I mean, still you are saying it will take 2 months. Ideally, we would have expected, I mean, this should have happened much earlier. So what is holding it back? And how confident are we in this 2 months timeline?

Sure. So yes, again, I think, unfortunately, in this like seen, there's like only so much in our hand, it's just that the process is long. Having said that, let me just like share more things. So it's a two-stage process. The first stage is controlled by the state government and they provide a CFE. We have already received a CFE. It's been more than a month for us. Second step is to get a CFO, which comes from the central government. And as I said, I'm giving a stretched timeline, but we are very hopeful. I mean it's as per like all the documentations, which were required have been already submitted. It's like basis -- it's waiting for the next meeting that is going to happen. I would also like to share like a few things that I didn't share. We have -- in the meanwhile, we have also got our ISO 9001, ISO 14000 certification and like done, right? So along with CFO and ISO certification, next certification which is kind of not mandatory to operate in India, but will be helpful for our deal from the global MNC perspective is the R2 certification, right? So yes, so in the last 6 months, we have been able to get CFE. We have got ISO 9001 certified. We've got ISO 14001 certified. And yes, we are waiting for CFO, which has to come from central government. It does unfortunately have a 45 to 60 days of SLA, already some -- like more than 30 days have passed, right? So we are hoping to close that -- on that like pretty fast.

Yes. And since you alluded on R2 certificates, or how far we are from that?

So as I said, so I think that another maybe 3 months, right? So because that certificate, CFO, is required and ISO are mandatory. ISO is already in place. CFO will come. Post that, to get R2 certificate, there needs to be process sustainability. So we need to showcase that for 2 months, like a sustainable process is running, right? So we are looking at a 3 months kind of timeline. The process is already on. The various required audit stages, it's a 3-stage process. Already first stage has been completed for the same.

Okay. And lastly, in terms of your direct procurement from the corporates, so you said that the talent has been already recruited. Is that correct? Or...

Yes, yes.

And so you are moving -- trying to move to around 40% this year. But in the medium term, what would be the target? And how does it help us? Does it help us in terms of working capital management? Or does it help us in terms of...

Yes, I would assume, Vijal, like I think the expectation is it should help us in terms of better margin management, right? Because it's like -- because you are directly procuring -- you are doing away with one of the -- the supply chain optimization as such, right? In terms of working capital management, I do not foresee it doing a direct contribution because typically, these will be like larger deals, right, as such, right? But yes, I mean, the first focus is it should give us a better visibility in terms of the inventory that we'll be receiving and should do some like margin contribution as such, right? But in terms of working capital management, I think like there are certain other business models that we are looking at. As and when we finalize and we feel like we are comfortable to share those in public forum, we will definitely share those.

We'll take the next question from [ Ashwin Krithik ].

Am I audible?

Yes.

So I just had a question regarding our e-commerce channel. So from what I understand, it's basically wherein on the same [ ASIN ] that you're selling, you have multiple sellers selling the same product, right? And what I'm seeing is that even on your top-selling ASINs in refurbished category, I'm seeing a certain sellers will say poorer capabilities or poorer like sort of capacities, sort of selling the same product that you are also selling and it's affecting in terms of the ratings reviews, it's also affecting in terms of what pricing that they're selling at and like bringing it down drastically. I just want to understand how are you approaching this issue? In terms of either say, restricting sellers or having exclusive ASINs or exclusive products that only you are able to sell from the OEM itself. Just want your thought process on how you're going about this?

Sure. So good question. I mean, you understand the e-commerce like pretty detailed as such, right? So yes, I think our fundamental strategy remains the same, that we'll continue to focus on quality, right? Yes, there are certain handicaps in terms of like the current e-commerce platform set up that it is a bit challenging to differentiate, right, the way they have like set up these platforms, right? But as you -- so I will not be able to go in too much of like details, right? But largely, what we know is that most of the channels, right, they are very quality sensitive, right? So they may not like react on a small-term basis, right? But they do have those filtering mechanisms, right? And I think the idea is to, a, focus on quality, and definitely, I think one of the things, for example, I mean, differentiation is also on a marketplace, right, versus your own branded website, right? So I think we are any which way like focusing on inculcating that brand as such, right, and focusing on delivering the quality and collaborating. We don't necessarily believe in restrictive like policies as such, right? And neither we want to influence those, right? But we know for sure that all the platforms have certain criteria, and they focus on both from the customer success perspective, not only the price point, but also the quality. Beyond that, I unfortunately will not be able to discuss more on that.

Sure. So just a couple more questions. One aspect of it, the way I look at it is also that you are in the nascent stages of building up this category by itself, right? And from what I understand, a lot of the category creation for this also needs to be happening on the back of the marketplaces, investing in creating this category. So from what I look at it, Amazon is probably a little ahead of the curve in it, In terms of the search volume I see on refurbished basis compared to normal laptops. And comparatively, Flipkart is way behind in that curve. So from what I understood, in your earlier call, you had mentioned you're somewhere in talks with Flipkart also to launch the refurbish category. If you could just talk about primarily, where are you in that -- in with Flipkart, where are we in that discussion? And also, how do you -- in your discussions with the category managers, with the category heads, what are you seeing in terms of how they're approaching building up this category?

Sure. So again, Ashwin, a good question. So yes, definitely, we are in talk. Yes, there has been, I would rather say without like taking names of specific platforms, right? So we are definitely in talks with a major e-commerce platforms beyond Amazon, right? As a policy, what we have -- like we will be disclosing as and when we have a concrete like agreements in place, but we are in discussion with more than one. As such, some soft launches has been done with among these top 2 or 3 players, which you are aware beyond Amazon to test the market, right? These engagements would be of various nature as such, right? Secondly, I think your question on how like marketplaces or in general, like other players are looking on this as a category given that it's a very niche category. And I think, I mean, those are like some of the changes that I have been seeing for the last 4 years. So a, I think forget about the marketplace, I think this is now a category even the OEMs don't want to ignore, right? So it's like becoming a kind of a mainstream. So everyone wants to understand and ensure that they are able to provide these kind of an offering, right? The biggest question everyone has, right, is quality, right? Because I think that's what -- I think most of the players who want to be in this from the long-term perspective want to make sure that the customer experience is in place, right? And it does not lead to a substandard experience, which might give you a short-term sales, but in the long term, will not help the category to grow as such, right? So that's the kind of the feedback where I feel like pretty much most of the consumer focused, be it the OEMs or like the marketplaces are aligned that yes, I mean, this is -- like, for example, if you go to like even U.S. marketplace, it's very mainstream now, right? So it is mainstream, it's tough to ignore. But you just cannot go and open the flood gates and let the customer experience like suffer. So that's the large canvas that I can share with you without going into specifics as such.

Sure. Just one more question, if I can take that as well. So I just want to understand, one, if I look at just your online sales, right, as a percentage of your online sales, what is the amount that we are spending on marketing, like performance marketing or directly on the platform itself? And where that number is and correspondingly, where do you want to take it? Because considering the ASP that you're operating at and the competition that you have, I'm assuming your ROACE and everything should be considerably good, where incremental spend on marketing is continually going to not sort of taper off and give you a negative incremental return. So just want to understand like where you are and how you are approaching that, particularly for performance marketing.

Sure. Yes. So yes, I mean, as you said, so usually, even as of now, right, I mean, though we do spend on like other marketing, but we look at it as on a basis of ROACE only, right? I mean it's not like we have put in like budget for brand, which we are like just ignoring, right? I think the rule of thumb, which I mean like we have been using as a company is that in terms of marketing or sales spend, right, we are going to be channel agnostic. So whatever is our net returns, let's say, on the existing platforms, be it Amazon or others, right, we have to operate within the similar margins, right? So beyond that, I would not like to share like the exact. But I think, I mean, if like probably you understand the market, so you know like where those numbers are, right? And that's very significant. If you would like -- given that we are like unknown -- like relatively unknown brand, right? So that's very like promising ROACE for us, right? As you rightly mentioned, I think as like the more brand recognition happens, right, more of organic like sales happen, right? So as you saw like -- we have a telesales team, who assist or handholds you in case once you are like in interested in the product, right? But that support is not required in now 50% of the cases. It was only -- earlier, it was not required in 25% of the cases, right? So yes, as we continue to like grow, I think our return on investment will continue to be positively influenced. Larger theme, which we have is that I think we -- as of now, we are just not splurging money in terms of brand building as such, and we are very cognizant in terms of like what are the returns that we get against it. In terms of marketing team, the budget and the mandate is very clear that like we are a supply constrained company still, right? So you have to operate within what like the budget we are spending on other e-commerce platform. It cannot be over and above that, right? Will it, in future, help us to be below the same? I think that's what the goal is eventually, right?

We'll take the next question from the line of [ Vijay Kumar ].

I'll go on next.

Okay. Who else is there?

Sure. We'll take the next question from the chat line from [ Raghav Agarwal ].

Am I audible?

Yes.

[Technical Difficulty].

Raghav, your voice is breaking a bit.

Let me actually get back in the queue.

Sure, sure. So we'll take the next question from [ Amit Agicha ].

Am I audible?

Yes, Amit. Go ahead.

Could you provide the updates on any corporate partnerships and new product categories under consideration? And like I also like to know like what is the present market share and what are the company trying to do to improve the market share in the refurbished electronics?

Sure. Right. So yes, in terms of partnership, as I just talked about like on the finance side of the things we've just done a partnership with one of the NBFCs, right? Another major partnership, which we are like right now -- like one of the major -- like things that we are doing in a partnership is within kind of an NGO who are focused on education for school students, right? So we have just closed a large deal. I think maybe we'll be able to tell about that more in the next earnings, right, because that's not included in this, right? So that partnership looks like very promising because it's like -- so they have the content, we have the hardware, right? So we will be executing on such large project in Himachal Pradesh for them in excess of 3,000 units as such. So that's another partnership that we have closed. We have closed a couple of like franchisee deals, again, with school and colleges as such, right? And at the same time, on the purchase side, there are three or four agreements or partnerships, as we said, we have just started like a month back on the same which are on and on, the discussions are going on. So hopefully, by the next like H2 discussion, you should be able to hear about that, right? Your second question was in terms of product line expansion, right? So H1 itself, we started dealing with MacBooks, right? So we have started selling MacBooks. In terms of margins, they are much better. In terms of scale, of course, they are not as big as Windows, right? So we'll continue to invest, like get more deeper into MacBook and bring it much more mainstream on our platform as such. And definitely, in H2, the focus is just to like be there. And like -- and maybe next year than we are looking at other product lines. That includes your tablets and other more like -- we'll start with tablets and then we look at other like product lines, right? In terms of like market share, I think one of the challenges, right now, is it's like a very highly unorganized sector, right? So even my sense is that given our scale of the overall refurbished PC category, right, I mean we might not be even more than like 5% to 10%, if you include unorganized sector also. Okay? If you look at the online like channels as such or online-centric organized player, I would assume that we are like -- we are among the top 2 as such, right? But yes, market share of -- like that way if you look at refurbished personal computing devices, right, I mean we won't be more than 5% to 10% as of now. I think that answers, Amit, all your questions.

We'll take the next question from the line of [ Anupama Pillai ].

Yes. Am I audible?

Yes.

Yes. Just wanted few bookkeeping questions, actually. Could you give us the split for desktops and laptops unit sales?

So total 26,000, right? Just a second.

Anupama, there is a lot of disturbance in your background. Stay on mute.

Yes.

Yes. So almost 50-50 it was, I'm just checking right now, right? So desktop was 49%. And yes, you can take it 50%, right? Yes. So half and half.

Even the unit sales, you're saying that is.

No. This is -- yes, this is unit sales only, not the GMV.

Okay. Okay. So how much will be the ASP, what will be it?

Yes. So ASP typically for a desktop is like 9, right? And for this is around 13.5, right?

Right. Okay. 13.5. Okay, okay. Because in your like the market sizing slide, you have taken 20,000, right, for each unit. So are we like hoping that this will consolidate over the next 5 years to that range, 20,000, 25,000?

Yes, I think -- so my expectation is we want to operate around 15,000 even in the long term. right? So yes, unfortunately, like that market, so I think we -- like it was like -- that's a third-party data, right? So it's not like...

Okay, okay. So -- but we will be in a 15,000 range you want...

Yes. So the laptops, we want to operate like around 15,000 or like there, right? And for the desktops, usually, what we are doing is we are like doing a lot of bundled product like AiOs and stuff, right? So that -- but the baseline remains there, so like blended may come to around 10, 10.5. Overall, I think the blended will be around 12, 12.5 is what we are looking at.

Okay, okay. And you also mentioned the units per day as 400. So that is the capacity right now, right? So what will be the like capacity utilization, like around 200, 150 units per day?

Yes. Right now, around 250-ish, right? So again, so there's a difference been gross production and net, right, because of customer returns and stuff like that, right? Yes. So the gross production will be in the range of 250 right now. And 400 -- so yes, I mean, in terms of fixed asset capacity, we have 400, right? But definitely, I mean, we have to add on employee costs, which we'll eventually do.

Yes. So how do you see this number evolving to 400 over the next 5 years?

Yes. I mean, I think like -- so as a company, I think we are -- that's like the kind of the mandate that we are working with, right? I mean continue to layer on the kind of the growth that you have seen for the past 4 years, right? So hopefully, we should be able to maintain a similar momentum for the next 3 to 4 years, right? So approximately like 30% to 40% of a year-on-year growth is what we are -- have been able to deliver.

Right, right. Okay. And what will be your like employee -- what is your guidance on employee growth? Like if you were expecting 30% on top line and employees?

Yes. So as I was mentioning, if you compare it from H2 to H1 itself for a similar top line, right? I mean like we are better top line, our employee growth remained like same. Rather the employee costs came down because of the employee mix that we changed, right? So we will, I think, like per person product efficiency improvement is one of the focus. And definitely in the next 3 years, every year, we want to see a progressive 10% to 15% kind of an improvement in that. In terms of employee cost, not necessarily overall this, right? So I mean -- yes. And there are sufficient opportunities that's where we continue to like implement on the IT side of the things, right? So we do expect year-on-year, we should continue to see this improvement. We have already seen this year, if you compare overall employee headcount cost. That was a mix of efficiency improvements and also the restructuring of the head count, using more of -- yes.

So this 400 employees does not include the interns, the part-time employees, right?

That's all inclusive, right?

All inclusive. Okay.

All inclusive, yes. But you have blended cost structure changes, right, because of internship, yes.

Right, right. Okay. And so do you see the metric of unit per employee, if you want to see their efficiency? So I think currently, they're doing 3 units per day type?

No. That's...

Sorry, per week type, I think. Or how do you see it?

Yes, I mean, so we are at around 0.5 to 0.75, right? So see, I mean, we compare that by the -- like that's a per day basis. And we look at an operational employee base. Because I think otherwise, it becomes very ambiguous, because you have sales, you have like indirect overheads as well, right? So for operations, we are targeting 0.75 to kind of a productivity on a per day basis.

Right. Right. Okay.

I would like to address a few questions from the chat. There's a question from [ P. Krishnan ]. One of his questions is -- just a second, when the capacity has expanded in H2 FY '24, there does not seem to be a corresponding increase in revenue. What is the reason behind that?

Okay. So I think on the year-on-year, I think as a quarter always like H2 to H1. If you -- as a thumb rule, we take it if H1 is as good as H2, we are pretty much on track, because you will see the jump coming in the H2, right? So yes, I mean, the investments were made in last year H2 in terms of getting to the new facility, adding up the headcount as such, right? So -- but if you compare, for example, on a H1 to H1 basis, it's a 30% growth, right? So usually, H1 will continue to be slightly a lower quarter as like -- or a half as compared to an H2, right? So for us, yes, it's a 30% growth, any which way. On an H2 to H1 basis, it might not be like the right metric to look because of Diwali and all the bumper sales actually come in H2 as such, right?

His other question is that last year the company reported record Diwali sales. This year, something similar wasn't done. Any thoughts on that?

No, so I just shared like the numbers. So they were on the similar lines, right? So I think like the first 3 days, every day, we were clocking in INR 1 crore of outcome, right, which was an unexpected line. For us, the more heartening part was like our own channel was contributing very, very significantly in that, right? So yes, it's all aligned as per the last year, okay?

Sure. His other question is...

And as -- yes, continue.

Yes. Sorry. His other question is, the management has been guiding for 30% to 40% annual incremental revenue, whereas H2 has been flat -- H1 has been flat versus H2. What is the confidence that you have in achieving the growth potential, which can reflect 30%?

You're right, yes. So I think, as I mentioned, I think H2 though, our plans are on a similar line, right? Having said that, we do foresee some immediate-term challenges, be it in terms of e-commerce platforms and so on and so forth. So yes, I mean, immediate term, we do foresee some competitive pressures because one of our like the prime channels is competitive as such. In terms of plan, I think so far, it looks aligned to the same.

Okay. There's another question in the chat from [ Amit Choudry ]. What is the timeline for entering international markets, and which regions are being prioritized?

So it's like 2 years, at least, right? So we'll be getting the alliances, but we do not foresee us getting into international market at least for the like coming -- at least 1.5 years, 2 years there, because there's sufficiently more opportunities right now in India.

I would like to invite [ Vijay Kumar Buddha ] from the chat.

Yes, thanks for giving me this opportunity. So somewhere in your website, I read that you are also planning to have some, I mean, franchise kind of model where you allow people to, I mean, set up the NewJaisa stores. So I mean, can you provide some updates on that? I mean...

Yes. So I think that, as we are currently running it more on a pilot basis, we have already done 2 to 3 franchisee, we are very selective in that sense because it's also we are looking at the profitability, what does it really mean for our partners, so on and so forth, right? So yes, I mean, we are looking at that as a channel. But it will be -- I think for at least for the coming 6 months also, it is going to be on a pilot basis and invite-only basis. Depending on what kind of a 1-year returns our partners are able to see, then we will be able to scale it at a larger scale if it is required.

Okay. And one more question. In terms of the number of units, what is the contribution in first half and second half? Because we are -- revenue, we understand. I mean you mentioned though H2 is heavy in terms of volumes. So last year, you did 54,000 full year -- 54,000 change, now you have done 25,000. So what is the incremental amount of units which we can expect in, I mean, H2?

Yes. So I think it's like usually, even the units follow a similar pattern, right, because of ASP. At the same time, yes, I mean, there has been an impact on the ASP on a year-on-year basis. That's your average selling price per unit, right, so that's where if you like look at though we have already done. If you look at it on a per unit basis, we have like more than 50% growth on a -- if you compare H1 units to our H1 units this year, right? But there was like as such -- because I mean, as you see, that the mix of desktops also increased from last year to this year, which is a lower ASP. And that's also one of the reasons saw an impact on the top line assets, right? But in terms of overall units, I think we usually see a similar pattern. I mean, H2 should be around like 55% to 60% of H1 overall.

And what is the blended average sales price? I mean mix of laptops, desktops and accessories, blended average sales price?

Monthly.

Monthly, okay.

INR 13,000 [indiscernible] ASP is there for H1.

As of H1. H1 ASP is around INR 13,000, right?

INR 13,000. Okay. And then somewhere in the old presentation, you also mentioned that you want to get into some other product lines maybe refurbished ACs and few other electronic goods. So any thoughts on that?

I think, probably, we are like at least like 2 years away. I think the first focus will be on product line, but on electronics only, right? So I think we already started MacBooks, we'll be looking at tablets and then, eventually, look at mobility. So that way, right? And these will probably come 2 to 3 years down the line, right? And someone talked about international. So I think in terms of prioritization, that's what it is. Like scale or diversified in terms of electronics product lines, then diversify like first in India sales channels, then diversify into international markets in electronics. And then you look at like other product lines like AC and so on and so forth.

One final question. So just before the IPO, you were clocking like around 86% CAGR or something. So can we expect to see that kind of run rate going ahead? Is that possible? Or like will it take some time again to maybe get to that?

Yes. I think -- I mean, I think in terms of growth, currently, we are like -- so I mean, we typically don't want to give guidance on the overall growth rates as such, right? I mean like on a year-on-year basis, we are looking at a 20% to 30% kind of a growth.

Okay. And this is one thing, again, from a purely investment perspective. See, I mean, we have invested in this company and that's the reason we are here as it is there. But then, see, if when you declare the results once in 6 months and you don't publish any information in between, whenever there is a price correction just like what happened recently, it will become very difficult for us to assess where we are as a company. So it doesn't give us enough information to put in more money if we want to. So if you can provide some sort of updates frequently, maybe some sort of unit numbers or at least a quarterly number, right, so it will help us to make a choice decision to whether to invest or not incremental in this company.

Absolutely. I think that's very fair. And we have received like a similar feedback from other investors, right? So a, I mean, definitely we are looking forward to that, like how you can -- we can share more information more frequently, especially quarterly, right? So it's just that -- so hopefully, within by the next financial year, we should have systems introductory in place, that we should be -- even we want to do that and it's a very fair expectation as such. It's just that in terms of prioritization anything in terms of IT system infrastructure, whatever is required in-house, that is getting priority first, right? But point well taken. We will -- we also want to align to that as soon as possible. Any other like one last question if you want to take, Vinay or it's...

Let's just take 2 more people, right? Those who haven't had a chance to ask a question. We'll take the next question from [ Jatin Chawla ].

My first question is we've seen desktop mix increasing significantly. It is very counterintuitive to what we see around us. So is that, that there is a refurbished market is shifting towards desktops? Or because of higher competition in laptops, we as a company have moved more towards desktops?

I think, yes. I mean, let's say, a, first, it's like a valid point. B, I think -- see, even I feel it's like more of an interim pattern that we have seen, as we are discussing about there were like some onetime orders and also we are going to school, colleges. So the requirements do differ from channel to channel, right? So that is the more -- I think at a macro level, we will continue to see that the adoption rate of laptops is much higher as compared to desktops, right? But for example, if you go to school, colleges, desktops, because of the inherent usage, will be higher, right? So this is -- like yes. Then I would rather say that the current deviation that you saw should be kind of an aberration in the overall usage pattern, right? And it's more of a manifestation of current diversification of the sales channel and some sales channel having a preference towards desktops as such. So retail customers prefer laptops more. But sometimes in SMEs and school colleges, the preference for desktops are more.

Got it. So one more deduction from the same data is that our laptops growth Y-o-Y is not that great. And given the size of the company and the size of the opportunity, so what is really that is constraining our growth at this stage?

Right. So yes, so I think on the laptop front, yes, I mean, if you compare on a desktop basis, the growth has been -- so one of the key reasons was that -- so to be honest, on the operational front we had -- not I would say a complete outage, but lack of productivity for 10 to 15 days because of ERP upgrades and other operational changes that we are bringing in when we are even shifting to the new premises, right? So that did reflect upon the output that we were able to generate. So that definitely impacted the laptop production assets. But during the Diwali time, I think we were able to see the similar numbers as they were earlier.

Got it. Got it. One more thing was on the working capital side. So that's, again, one area where investors are keenly looking for what sort of improvement are we able to deliver on that on a full year basis. So what is it that you are targeting in terms of net working capital or debtors for the full year in terms of the number of days, yes?

Right. So I think on a year-on-year basis though -- I mean, I'd very honest. I think that, right now, the focus is more on definitely building the efficiency in the operations, right? So there are positive levers that will help us in the working capital, which is like the efficiency in the operation. But in the short term, there will be other like contracted levers also. Because the moment we start going to the contract like corporates, we'll have to pick up larger deals, right? What does that mean is our inventory holding -- so if a production time for the inventory will reduce, maybe in the interim basis, our holding time for the inventory might increase, but that should have positive influence on the margins as such, right? So I mean that's the way we are looking at that. We know where we want to be in terms of overall supply chain. We know how much our production cycle should be. Will it have a direct -- so I mean to be very candid with the investors, maybe in the next 5 to 6 months, you might not directly see those impact on the rounded numbers because of all the positive influence might get covered by the -- because we are going deeper in the supply chain. But in the longer term, I think we do foresee improvements coming in that and overall cash cycle, because when we directly procure or we sell through our channels, then our account receivables should reduce, right? I mean the significantly spiked account receivable that you see for H1 is largely because of the 4 to 5 days of sales that happened for the Diwali season in the end of the month. So 26th September is when it started, right? So I mean that's like the long answer. So effectively, immediate term, by end of the year, you might see similar lines because we improved the efficiencies on one hand, but we go deeper in the supply chain making like -- putting pressure on our pockets a little bit, right?

Got it. Got it. You spoke about employee costs being flat from second half to first half after the efforts that you have taken. It's not visible on the margins because first half is leaner on top line. So in the second half, should we expect that once your volumes come back, we should see a positive impact of all the employee cost reduction that you have done on the margins?

I mean, yes. So I mean we are working towards those efficiencies. Right now, I will not like to comment on exact numbers as such.

No, but -- so your second half employee cost, will it go up again or will it remain flat compared to first half? That's the question because of...

I mean there will be -- like marginally, we are definitely looking at incrementally increasing it. But at the same time, we are looking at per person efficiency to continuously improve by at least 8% to 10%. So yes, I mean you might see it go up, but -- right, yes.

Got it. And just one last quick bookkeeping question. When I look at the numbers, this year your depreciation cost seems very high compared to what we have seen in the past. Any particular reason for the same?

Yes. I mean that's on like all the capital investment, because post-IPO, I mean, we got a new facility. I mean got the equipment, right? So our assets, if you see, it has correspondingly increased to almost like INR 11 crores right now, some number around like that. So that was like the whole idea of the IPO, to build the capital infrastructure. So now, I mean, one of the points that I -- like as I said, I mean, we added another 8,000, but this whole 45,000 SFT space that we added, so we build a lot of infrastructure in that facility.

And that infrastructure should be reflective of you doing more refurbishment work, right? So it should reflect in slightly better margins than in that sense?

Absolutely. Yes, right. I mean, see, in terms of fixed cost, this is infrastructure that can support at least a subsequent 40%, 50% of growth, right? So yes. So it's a fixed cost. We have a -- sitting capacity we have is like higher than where we are right now. So as we continue to scale, it will spread out on a unit economics basis.

There was a question from [ Raghav ]. Since there was a network issue, he sent it on chat. What is the -- in terms of capacity utilization, what is the peak revenue we can achieve with this capacity?

Okay. So as I said, I think on a fixed cost basis, we are around 60%, right? That's all our fixed assets. In terms of employee utilization, we are almost there, like 80%, 90% of employee utilization. In terms of peak revenue, as I said, I think our current facility is capable enough to support like 2x of the numbers from where we like sit. That does not mean we are seeing in the next 6 months, that's what we are looking at. But that's the fixed capacity that we have, right? I will not be able to comment on specifics in terms of growth that we are looking at a year-on-year basis. I think for the last 3 to 4 years, we have been able to maintain a reasonable momentum in that particular range. And that's what the team is aspiring for.

Right. And his other question is, can you throw some light on the partnership with educational institutions?

Okay. So in the sense like how -- okay, right. So partnerships, I think there are a couple of -- or 3 education, they are different kind of partnerships we are looking at. Again, I would not like to divulge too much into the details given public forum, right? But largely, these are focused for direct sales for education institute and also focused on the students. This may vary as a transactional partnership to a franchisee to even a 2 to 3 years of longer gestation, right? So there are various flavors, so -- right. So depending on the institute and the kind of the requirements, we get into these partnerships.

Sure. We take the last question for the day from [ Ashwin Krithik ].

Just -- I know we're pressed for time, just a couple of questions. First is, I'm seeing that the channel mix of the last H1 being about 60 from marketplace, roughly about 10 from D2C and about 30 from your off-line. Just wanted to see, understand, considering D2C and offline, you have more control in the user experience and the onboarding and stuff like that, just want to see how do you view the mix changing a couple of years down the line? Or just in terms of how we are approaching, where you want the mix to be in terms of the efforts you're putting in?

Yes. I think down the line, like 2 to 3 years, definitely, we want to like reach that like 33-33-33 split, where e-commerce is contributing to 33% and our owned assets, like online is contributing 33%, and like offline of our owned asset is contributing 33%, right? So that's where we want to be in the long -- like the medium term, I would rather say, not long term, right? So definitely, I think the focus is continue to have more of owned direct-to-customer channels as such, right? And that's where most of the effort is going in terms of building off-line channels to online channels or our own website, right? So that's the goal.

Understood. So just last question. So you also mentioned about you want to make the sourcing mix changed about 80% from corporates. Just want to understand, in this scenario, what does the cycle look like? Is the bulk of the buying concentrated towards the end of the financial year or during very short periods of time? Then how does -- what does it happen to your working capital cycle in terms of does it get stretched, in the sense you have very high inventory that you buy at very specific points in time and then it gets liquidated over a longer period? What is steady-state working capital days look like once you're into that 40% -- or say, 60%, 70%, 80% sourcing from companies?

Right. So yes, good question. I think -- so it's not like it's very heavily biased. That's it's not -- there's a slight, I would say, a flavor of seasonality in it, right? And typically, March, for example, it's a financial year-end or December for the MNCs, where you see, for example, probably like an incremental 15% to 20%, incremental liquidation from corporates per se in these 2 months. But otherwise, it's like pretty fluid, right? So it's not like -- it's like heavily biased, like only 3 months you buy and then you make it for the remaining months, right? But you definitely see a sense of seasonality at the end of the financial year because they also want to meet their targets, so on and so forth. Having said that, if you -- can it be just in time? No. So when we buy, at least we want to hold on to 15 to 20 days of inventory because -- so that we can build the next supply chain, so on and so forth, right? So it's never going to be as nimble as a new supply chain. But it's likely -- but at the end of the day, we will have to hold in our hands before production, 15 to 20 days of inventory, right? So that by that time, we close on the other deals, so on and so forth. And there will be variations, right? So yes, I mean, to your question, it will put the pressure on the working capital, because you have to buy bulk and like hold for a longer duration, but it should help you in terms of margin play. And as your scale increases, your liquidation capability also increases. So that will negate in the long term. But it's not very skewed. It's not like you buy for 3 months and then make it for 9 months.

That brings us to the last part of today's call. Vishesh, would you like to give any closing comments before we end this call?

So thanks, everyone. Really appreciate your participation and your investment. As a company, we are very glad to have a very focused company here. We are focused both not in terms of monetary also, but at the same time, bringing sustainability into picture and bridging the digital divide. So I think beyond the numbers, that's also is what is driving us. So again, thanks so much for your investment and faith in us. Thank you so much.

Thank you, Vishesh. Thanks to the management team for giving us their valuable time, and thank you to all the participants who joined on this call. This brings us to the end of today's conference call. Thank you.