Newjaisa Technologies Limited ($NEWJAISA)

A very warm welcome to the H2 FY '26 earnings call of Newjaisa Technologies Limited. My name is Ashish Nirmal, and I'll be moderating this call today. Before we proceed, I'd just like to draw your attention to safe harbor statement included in our investor presentation, which is available on the NSE and company website. Certain criteria -- certain statements made during the call may be forward-looking in nature. These are based on management's current expectations and are subject to risks, uncertainties and assumptions. Actual results may differ materially. Today's agenda is structured as follows. We will begin with the opening remarks and the strategic overview from our Founder and CEO, Mr. Vishesh Handa, followed by a financial performance review for H2 FY '26 and the full year. A business update over the general strategic B2B pipeline and our [indiscernible] and we will open the floor for question. [Operator Instructions] It is now my privilege to hand over the call to Mr. Vishesh Handa, [indiscernible] and Chief Executive Officer of Newjaisa Technologies Limited for his opening remarks.

Good morning, everyone. Thanks for joining on the call. I think most of us are aware of -- we are into a refurbished electronics business. I take the first 15 continue so to directly deep dive into our financial results and the key drivers of the [indiscernible]. As already highlighted by Ashish, some of the statements are forward-look statements. I would like to spend a few minutes talking about our results for the last financial year. For the few folks [indiscernible], I would just like to remind that in February 2025 last year, we went to a [indiscernible] event wherein 65% of the sales were coming Amazon and Amazon stopped selling goods and it had a major impact on the company as such in terms of over 65% of our revenues [indiscernible]. In terms of this year was largely [indiscernible] on our own channels that our website and our efforts towards enterprise sales, including SMEs large corp and education as a sector. In terms of year-on-year, we saw a drop in our pipeline so [indiscernible]. However, we were able to maintain similar gross margins in spite of radical change in the overall business model that we have implement last year. We had -- last year -- so this year, we have booked an overall write-off of onetime write-off of approximately INR 13.85 crores We will look deeper into what are the [indiscernible]. In terms of overall unit sales, our average selling price has actually improved on a year-on-year basis as we migrate from focusing only on the retail customers to enterprise sales as such, which we strongly believe in the long term will help us to improve our margins. I want to call out as you can see on the screen [indiscernible] for Fy '26, largely [indiscernible] [ INR 3.35 crores ] for the last [indiscernible] of approximately an ESOP outflow INR 1.85 crores, which has been already allocated to the is included in the overall losses or extraordinary items and [ INR 4.2 ] on the fixed assets that we have is included in the same. So key point we want to highlight here is in terms of cash flow, yes, we were at a negative 6% as such [indiscernible]. In gross margins is [indiscernible] of the overall, I would say, P&L. That would continue to reduce [indiscernible]. This slide gives you insight into the inventory write-off that we have taken and the factors and the key I would say the categorization of the key aspect. So the first one, it was an [indiscernible] I would say, switching off of Amazon, like channel, right? And also migration to windows now stopping Windows 10 and have the support for Windows 10 and [indiscernible] been on the Windows 11 [indiscernible] that inventory older in a way, we saw a demand because of 2 factors. One, Microsoft pulling back on the support for Windows 10 and earlier versions. And also because of the Amazon channel, we were able to liquidate these low-end inventories and definitely through our channel where the client profile seems to be much more Tier 1 and Tier 2 centric [indiscernible] inventory, right? So as you see on the right table is there, right, this constituted approximately 21% of the write-off that the older inventor which there to the fact that we were almost at INR kind of a rate reduced to INR 1.8 crores that's 40% of the number, right? So definitely, we had a good inventory to support that kind of growth at that time. And of course, we have a buildup of slightly older dilution is also [indiscernible] to take all kind [indiscernible] at a lower price point to ensure that we have sufficient liquidity in the system and our cash is not starting the inventory as well. Second, as I've already covered, I get in the media market is in the diet Amazon. And third key factories on [indiscernible] and the components side, for example, DRC, RAM, hard disk, and also the stars, which are associated with these older nations, right? We did complete locate inventory so that, a, we created a lot of those were pretty much at a cap or 10% of the value and also return down the sales, the 10% in the space that we continue to hold. But we have returned on the values as unique because we are daily for. So even 3 key factors because of which we did a comprehensive to audit and to the onetime write-off [indiscernible] in 2 positions as such. Moving on. This is just to like share with you in terms of revenue growth, right, and also to highlight it on in terms of what are the P&L contribution factors. On the left-hand side of the screen, you will see our H2 FY '25 overall revenue, right? And the data of the field, the orange big bar that we see was [indiscernible] Amazon revenue, which, as we just discussed, was [indiscernible] down in seen, if you look at other point existing tenants, which includes our own website business and education vertical as such, right? So on comparing it from a month-on-month starting of FY '25-'26 to the end of '25-'26, Overall, we have seen a 25% growth on our own channel. So in a way that's we have been able to reorient ourselves and rebuild very -- in pretty dynamic fashion, our business and education channels and also double down on our own website as such and have been pretty much been delivered a 200% growth on a year-on-year basis as such. And we are very confident that now it really puts us in a position where it's kind of like the worst is over and we will be -- we are well positioned in terms of building upwards from here and coming into positive territories as such as well. So the metrics which you see on your right-hand side gives you a flavor of how the last 3 months, right, or 4, 5 months have been trending for us. You can see on the top the sales numbers, right? So they have been steadily in the growth path, right? Of course, in February, March, you see a steep jump from 2.8% to 3.7%, 3.9%. That was also attributed to the 2 large enterprise orders. However, you can see there is a very democratic like a trend that we continue to see with the revenue run rate increasing from 2.8% to now approximately 3.7 to 3.6 in just a span of 5 to 6 months. Key things I want to highlight with the growth is if you look at variable component of the cost structure and the fixed component of the cost structure, right? So it's the fixed component of the cost structure largely driven by 2 aspects. One is our fixed investment, right? For example, the facility that we have can support on a monthly basis, 15,000 units production. Currently, when the Amazon drop happened, we dropped to approximately 1,500 units. Now we have been able to bring it back to 3,000, 3,500 units, right? So there are 2 parts to this fixed component, the capital expenditure and the facility that we have. The second is, of course, the employee the leadership and the fixed component of the employee. So these 2 put together that as the overall number of units and the sales continue to grow, their contributions, right? So in a steady state, our assumption is that this particular component, right, which includes the management overhead and that capital expenditure should stabilize around 7% to 8%. The fact that it remained approximately 15% for the last full year, it was approximately 20% is the reason for a negative EBITDA. And we are very -- we are already in positive territory for the last 2 to 3 months as such. And as the volumes continue to grow, we are pretty confident that we will be back in track like as the things were before the last year as such as well. So this is just like a very high-level snapshot. Two, three things I want to share with the group before getting right? So in terms of demand, right, for all our 3 channels, we continue to see strong demand building up, be it our own website and also the demand from the enterprise segment. I attribute this to 2 to 3 levers. First, largely being that the RAM SSD. So in general, the hardware costs have increased by 30% to 40%. So in general, overall market is extremely receptive right now to refurbish product, both from the price point perspective. And that's the reason -- that's the reason. Second, as we said, right, so I think last year, we pivoted on sales to the enterprise segment. And definitely, we have built a very strong team. Our conversion ratios continue to be very, very strong in terms of discussions to closure and the interest being generated. Our customer retention when it comes to enterprise customers is at almost 80% right now, right? So the fact that it took us time because we have to build this channel ground up and it does take team. But -- so the overall pipeline, the robust pipeline and the demand that we see can be attributed to these 2 significant levers. One are the macroeconomic in nature being driven by the market. Second being the reorientation of the team and us building an enterprise team internally and reaching out to the customer. What you can see on the screen is a snapshot of a strong pipeline, which is already building with us. We have got even among the Fortune -- like I would say, the top 100 companies in India, we have at least 15 of them transacting with us now. So that's a good validation of the product quality that we are able to deliver. And we are very sure that this kind of a retail business will help us to build on this the kind of pipeline. So I mean you can see it on the screen pretty good pipeline that we have built as such. These are a couple of the other initiatives and the focus for this year, right? So of course, we doubled down our D2C digital -- our marketing spends increased initially because we have to build that visibility with the end customers, right? We have already surpassed monthly visits. Our conversion rates and the ROS, which is like the amount like COA, right, cost of acquisition, I personally believe they continue to be like industry leading as such, right? So we have seen very good returns on the investments that we continue to make on our own digital channel, both in terms of acquiring the traffic, right, and being able to convert that in terms of sales. Of course, we continue to add more value-added services for our end customers starting from buyback of the end of the life devices to providing refurbishing as a service and other aspects. We completed there were 2 formalities remaining with respect to R23 certification, which is an internal certification -- sorry, international certification. We completed that in the last year. That definitely gives us a lot of leverage in terms of being able to work with OEMs directly because that's one of the preconditions to work with OEMs directly. I discussed about B2B channels, which is on the right top side, right? So yes, I mean we are seeing some good traction coming from the various large corporates in the various verticals where they can see the value proposition and are willing to sign up long-term contracts also with us. We are also working on distribution partnerships and continue to focus on the cost and the operations optimizations as such, right? So we almost did a 46% of head count rationalization at the start of the last financial year. Of course, it took us a quarter to be able to implement that because of the various regulations, right? And for the last quarter, we are again back on a hiring track and building back the team as the volumes continue to grow for us. Yes. So this is just to call out the key challenges that we face and our responses for the same. So as we discussed, the first big challenge was Amazon getting out of the refurbished business. And as we looked at it as an opportunity in terms of building an alternative platform. And if I look at it in terms of growth, I think we have been able to -- I would say that at least being able to get 50% to 60% of our retail sales, which we are getting from Amazon from our website itself, right? So that channel continues to bear fruits and position us as an alternative platform when it comes to this. And of course, enterprise solutions, we have been able to build basis the specific requirement for each and every enterprise, be it in terms of warranty conditions, be it in terms of financing, be it in terms of the configuration modification, so on and so forth. And of course, we had a huge cost overhead because we have projected our financial growth and build the CapEx as per the same, right? And we took the required requisite actions appropriately on time to reduce our variable costs at the start of the year to be able to conserve the cash and rebuild the new sales channel, right? And so that we have the cash in place at the time of. This is how the balance sheet position looks like as of now. Key thing I want to call out is that as a company, I think like last year, our key focus was as we reorient and redesign our sales channel to conserve cash so that we have sufficient when the growth, right? So we have a reasonably okay cash position of INR 15 crores as of now, so which we feel puts us in a good position now in terms of spending on the growth as we continue to grow in these channels. So with this, I think the update from my end comes to a closure, and we'll open the forum for Q&A.

[Operator Instructions] So first question, Vishesh is coming from Sachin.

Can you hear me sir?

Yes, I can hear you.

Sir, in your last con call in November '25, we said that we are seeing an uptick in the monthly sales run rate. And also, we are increasing our employees to scale up the production. And we were planning that within a year, we will reach at our peak levels of sale run rate. So now with half of the year ending, we can see the industry of refurbished laptops and desktop is growing at 50% year-on-year, like G&G Electronics and EPW India, these are the listed companies. So my question to you is, what went wrong with Newjaisa that we are degrowing with respect to the last 6 months instead of at least following the industry standard?

So last 6 months, largely, our online channel grew at almost approximately like pretty much remained -- so H1 to H2 comparison, right? So our retail channel pretty much or the online channel remained flat, right? And there was -- so just to add, like in the H1, we had a onetime transaction because we did a mobile transaction, right, in H1, that was approximately of INR 2 crores, okay? So I mean, if I take that out, we approximately -- yes, I mean, as you said, we didn't double definitely, right? We saw an approximately like a 10% kind of a growth on a H1 to H2 basis. In terms of -- yes, I mean, it was definitely not like doubling of on H1 to H2 basis, but it has been on a positive trend as such, right? So yes, that onetime transaction of like INR 2 crores with mobile, it does look like kind of a degrowth. But in our core business as a PC, we have grown by approximately 10%. And for us, I think, yes, I mean, because we are rebuilding these channels, right? So we were online only earlier. So it definitely took us a while to streamline our online enterprise businesses. But now we are definitely like seeing a reasonable growth coming in these particular channels.

Okay, sir. My second question is, sir, after INR 12.5 crores of inventory write-off, can we expect the balance sheet to be cleaner now? And are there such more debt inventory in the stock to be written off at present?

So yes, good question. I think so besides the inventory write-off, we have definitely strengthened or like put more checks and balances in place, right, to make sure like -- so for example, we are now getting like every quarterly an external inventory valuation done, right, so that we have the right valuations in place. So in terms of what inventory we are holding right now, we feel like the past is done in that regard, right? And we have now the proper aging and budgeting being put in place, right, to make sure that the right control measures are in place and are evaluated every quarterly. And in case there's any major aging happening, so we appropriately devalue like that. So most of the inventories, we took this in a way like a year where we like critically look at the aging ones and if because the revenues have dropped, we took the right hit in terms of inventory. So I do not envisage that to any more of the aging inventory to be.

Sir, my last question. Sir, with the company running in losses, may I know what is the plan for top management remuneration compensation for the next year? Are we planning to increase or decrease the compensation part of top management?

So as of now, like our top management remuneration, right, has been like pretty modest. I think the key personnel remuneration is published, if I'm not wrong, right? So that continues to be modest, and we are not looking at a significant increase in the same. Having said that, I think 3 or 4 key positions as we have to like build on the new channels, right? Of course, those remain flat, right? So we expect the leadership to continue to remain flat in that sense, but that was required to be in place to build these channels, right? So as I said, I think right now, if you look at not only like the leadership or like the key management compensation, but also the support function that includes your finance marketing, right? All of those cumulatively add up to approximately 7% of the top line, right, 7% to 8%. And now that the revenue has started like building up, so their overall contribution to P&L will continue. So we are not expecting any significant increase as such on the leadership. And we personally believe that we are not -- it's like they are on higher levels as such.

[Operator Instructions] So I don't see anyone has raised their hand.

I don't think there are more questions.

If we don't -- okay. So the next question is coming from Mr. Shah.

Can you give us some details of inventory of INR 26 crores? So how much is 10 generation and before? What is the value of that inventory in INR 26 crores?

So I think by generation, I will not be able to give you offhand, right? And Ashish, if you can -- I think we have done by aging, right? So Ashish, if you can like share by aging of the inventory and...

The generation part is very important because they are not supporting anything before 10 generation. So that is the most critical point. We need to understand...

Yes. So that bifurcation, I can share with, right? So...

Sorry, the eighth generation...

Yes. So 8th and beyond is supported, right? So largely right now, 85% of the inventory is 8th and above, okay? We still have around 10% to 15% like below, but this...

That does not tally with your -- I mean, whatever data you have given on the presentation. So there is a write-off of around INR 2 crores, which is -- I think you have written it is 20% on the machines, laptops and all, which was probably -- I mean, another column said it is 20%. I assume it is 20%. So then 80% of that is still in your inventory. So around INR 10 crore kind of amount, I mean, it looks like from the presentation which you have given, INR 10 crores is kind of before 8th generation. Can you put this number in black and white, not like what 85% and 10% and 15% exact number, if you can put, that will be really helpful. And as you said, that there is already somebody who's valuing, then of course, you would have valued every piece of the inventory, then that should be readily available.

Yes. I mean I don't have -- see -- so right now, 15% as per in terms of quantity, right, okay, is below 8th generation, right? In terms of value, of course, it's going to be way lower, right, because the value of that is very low. So I'm talking about in terms of quantity. In terms of value, so we have by...

Go back, 2, 3 slides and can you explain the inventory write-off a bit more in detail?

That 20% that you're talking about here is essentially the composition of the entire written-off of the.

You go back to that slide, so I can understand. Can you explain that slide, please? Because INR 26 crore inventory also, given the fact that you have reduced purchasing significantly last year, INR 26 crore inventory looks on much higher side. It's next slide, not this one, the next slide, previous slide, yes. I don't know what is this. So carrying value is now INR 2.5 crores. Can you just explain this slide?

Yes. So INR 2.5 crores of carrying value is like the write-off inventory.

Yes. And that is 20.56%, right? So 80% of that, so 4x of that value, which is around INR 10 crores is still sitting in the books, right?

No, no, no. This is a breakup of -- let's say this is a breakup of complete INR 12 crores that has been write off written off, correct? Of that complete written off, right, almost 20% of the written-off value was the old generation laptops and right? And 60% was the spares, which were like 80% of these spares were related to this, right, the old generation laptops. So it's not like 20% of the overall inventory, okay? So in terms of value, I think right now, we have tend to -- I mean, you can share the sheet in terms of exact quantity, which we have. I mean it's just have to sum that and share.

Yes, sure. So I mean the larger point is that are you sure that there will -- I mean, definitely, there is no need. I mean, let's say, there is no change in Microsoft's policy, there will not be any further write-off which is required or still there may be some more write-off, which will be coming?

See Ashish, can you share the aging -- current aging? I mean, if you have off the hand or something?

So I'll just rather say it louder. So effectively, the current aging -- the current average aging of our inventory is somewhere around 190 to 105 days. So whichever the inventory we are holding are more of a higher generation and which also includes the spare parts, where the average aging comes at 90 to 105 days across all the inventory.

Okay. Okay. And in terms of -- so how do you see with respect to your sales projection, how do you see -- would you be needing more -- how much -- where the inventory level -- I mean, let me put it this way, where the inventory level would be stabilizing because your revenue has come down significantly. And probably what you were showing is like you are looking at similar run rate for this entire quarter also, April, May, June? So what is the optimum level of inventory you need? Do you even need INR 26 crores of inventory for that? Because that is -- this is looking like more than 1 year's inventory right now.

Right. So yes. So this inventory also includes the spares and the components, right? So right now, we feel we are -- in terms of inventory, right, I mean, we can further optimize by maybe another 10%, 15%, right? But besides that, because I mean, we are expecting that there is like a positive trend line in terms of revenue, okay? And at least like 65 days of like 65 to 90 days, right, is the turnaround just on the core inventory. And our spare inventory is approximately 25% to 30% of that, right? So I mean -- so I mean -- so I do not see us building more on the inventory as such, right? But I mean, we see that maybe there's an opportunity to optimize further by another 10%, 15% or not more than that as of now.

So this inventory INR 26 crores kind of inventory should we see that remaining stable through F '27 or it will increase from here because the sales have come down so significantly.

Yes. Yes. So that's what I'm saying that I do not, as of now, like see that it should increase significantly from here for sure.

Significantly, I mean...

Even increase. I think what we -- so it should not increase. In terms of can we further radically reduce it, I do not see an opportunity more than 10% because like whatever like we need to maintain the inventory for the order books as such, right? That's what I'm saying. I do not see like a further increase.

Okay. So INR 26 crores is the inventory, which we should see in 1H of F '27 and 2H of F '27 balance sheet also.

Yes.

There is no question. There is no -- no one has raised their hand as of now. [Operator Instructions] Okay. So the next question again is coming from Mr. Sachin again.

Sir, is there any e-mail ID from which we can communicate the management because I have been writing mails and I don't get a suitable reply even on basic questions on ideas, which I share with the management.

I'll just ping my e-mail, if you want.

You can write to

Please me as well. I'll just my e-mail Sachin in the chat box.

You can write your suggestions...

I had written on this mail only, sir.

Ashish, okay. I'll take a note of it and I'll get back to you.

No one is here to ask or raise any certain questions. So we'll proceed Yes. No one has raised their hands to raise any questions. Yes. So we'll just close down our meeting today's proceedings. And I'd just like to thank you, Vishesh, and all the analysts and investors who have joined us today for the quality of the questions raised -- to summarize the key takeaways from today's call, has navigated a significant challenge restructuring. The Amazon exit, while disruptive, has accelerated our own growth build. Our cost structure has inflected positively with EBITDA turning breakeven in F '26. So this is just for the record. It's a regulated disclaimer, as I stated in the initial -- in the starting -- beginning of the call. This earnings call and all materials shared in connection with it, including the investor presentation are governed by Regulation of SEBI LODR regulations read with SEBI circular. So this concludes the H2 FY '25-'26 earnings call of Newjaisa Technologies Limited. On behalf of Mr. Vishesh Handa and the Board of Directors and the entire Newjaisa team, thank you for your time, your continued confidence in the business and your support. Good day. Thank you, everyone.