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Richa Info Systems

• Richa Info Systems has come out with an initial public offering (IPO) of 8,00,000 Equity Shares of face value of Rs 10 each for cash at a fixed price of Rs 125 per equity share.

• The issue will open for subscription on February 09, 2022 and will close on February 11, 2022.

• The shares will be listed on NSE Emerge Platform.

• The share is priced 12.50 times higher to its face value of Rs 10.

• Book running lead manager to the issue is Swastika Investmart.

• Compliance Officer for the issue is Rachanaben Sharadkumar Jore.

Profile of the company

The company started its business from the office Automation products and at present it is engaged in assembling of innovative products and systems Integrator of multifaceted solutions of leading quality products like Interactive Flat Panel, Interactive Board, Digital Podium, Digital Kiosk, CCTV Cameras to esteemed customers in sectors like Government, PSUs, Education, Defense. It provides wide choice of Innovative Solutions, providing service to Government organizations across India through Government e Marketplace (GeM).

The company is engaged in assembling of innovative products and systems Integrator of multifaceted solutions of leading quality products like Interactive Flat Panel, Interactive Board, Digital Podium, Digital Kiosk and CCTV Cameras. It procures semi-finished goods locally and to some extent import it from China. Such semi-finished good are then assembled at its godown located in Gujarat. However in order to fulfill the demand of its customers on time, it sometime outsource such assembling work to third party. Such outsourcing is only to cater high demand and on time supply. Total ratio of Outsourcing assembling and in-house assembling is 20:80.

The company imports its raw material from China and assembles the semi finished products and installs the requisite software as per the customers requirement. Customer Satisfaction is the company’s top most priority, In-House Knowledge Center for Technical Supremacy, Education technology solutions Like, Interactive Board, Projector, Interactive Projector, HD Visualizer, Digital Podium (Electronic Lectern), Interactive Pad, Digital signage and display solutions with Products like Professional Large Format Display, LED Video Walls, Information Kiosk, Board Room Solutions, Security & surveillance solutions, IT technology solutions, Office Automation Solutions Like Multi-function Machines, EPABX, Healthcare vertical solutions etc. The company has added e-learning school content in its product portfolio from FY 2021-22. The company has developed content for classes from Standard 1 to Standard 12 (for science stream) for CBSE Board from outside agency. Entire work of school content development is outsourced to outside agency. The company has earned revenue of Rs 10.36 lakh upto November 30, 2021 towards school content e-learning.

Proceed is being used for

• Meeting incremental working capital requirements.

• General corporate purpose.

• Meeting public issue expenses.

Industry overview

The IT industry accounted for 8% of India’s GDP in 2020. Exports from the Indian IT industry are expected to increase by 1.9% to reach $150 billion in FY21. In 2020, the IT industry recorded 138,000 new hires. According to STPI (Software Technology Park of India), the software exports by its registered units increased by 7% YoY to reach Rs 5 lakh crore ($67.40 billion) in FY21 from Rs. 4.66 lakh crore ($62.82 billion) in FY20, driven by rapid digitization and the IT industry's timely transition to remote working environments that helped to keep up the industry’s growth amid coronavirus pandemic.

The IT & BPM industry’s revenue is estimated at $194 billion in FY21, an increase of 2.3% YoY. The domestic revenue of the IT industry is estimated at $45 billion and export revenue is estimated at $150 billion in FY21. According to Gartner estimates, IT spending in India is estimated to reach US$ 93 billion in 2021 (7.3% YoY growth) and further increase to $98.5 billion in 2022. The BPM sector in India currently employs >1.4 million people, while IT and BPM together have >4.5 million workers, as of FY21.

Indian software product industry is expected to reach $100 billion by 2025. Indian companies are focusing to invest internationally to expand global footprint and enhance their global delivery centres. In line with this, in February 2021, Tata Consultancy Services announced to recruit 1,500 technology employees across the UK over the next year. The development would build capabilities for TCS to deliver efficiently to the UK customers. The data annotation market in India stood at $250 million in FY20, of which the US market contributed 60% to the overall value. The market is expected to reach $7 billion by 2030 due to accelerated domestic demand for AI.

Pros and strengths

Infrastructure and integrated capabilities to deliver quality products: The company is registered its aim is to continuously earn customer's trust and confidence through personal attention, and hence the output of the product as per customer requirement is the foremost thing which shall be considered and attended through technology mode. The quality checks ensure that no defective products reached the customer and ensure reduced process rejection. Its quality products have earned goodwill from its customers, which has resulted in customer retention and order repetition also new addition to the customer base. Further, the company is ISO 9001:2015 certified company and also holding certificate under the Quality System of BIC Limited (UK). It provides products with competitive rates. It has developed internal procedure of checking the products at each stage of production right from receipt of raw material to dispatch of its products. The company focuses on consistently delivering qualitative products, thereby building customer loyalty for its product.

Strong brand image: The company is dealing in the Interactive Flat Panel, Interactive Board, Digital Podium, Digital Kiosk, CCTV Cameras assembled by the Company under the brand name of image of in India which enables it to expand its business from existing customers, as well as address a larger base of potential new customers. Over the years, it has successfully developed a strong and reliable brand image for its company, which provides it a competitive edge over other competitor and 'Techno' brand is well known among its customers.

Experienced promoters management team: The company’s promoters have been actively involved in the business from continues personal attention. The combined experience of its promoters is of more than 20 years. Further, its management has adequate and rich experience in its line of business. Experience and their understanding of its industry will enable it to continue to take advantage of both current and future market opportunities. The company is having a number of experienced staffs. There is a good communication system between all the levels of management level i.e. from top level management to bottom level. Its Management’s experience and knowledge enables it to identify new opportunities, rapid respond to market conditions, and enhances the growth in the business.

Risks and concerns

Rely on third parties for assembling of products: The company is engaged in assembling of innovative products and systems Integrator of multifaceted solutions of leading quality products like Interactive Flat Panel, Interactive Board, Digital Podium, Digital Kiosk and CCTV Cameras. It procures semi-finished goods locally and to some extent it imports it from China. Such semi-finished good are then assembled at its godown located in Gujarat. However in order to fulfill the demand of its customers on time, it sometime outsource such assembling work to third party. Such outsourcing is only to cater high demand and on time supply. Total ratio of Outsourcing and in-house assembling is 20:80. Any decline in the quality of product assembled or delay in delivery of products by such third parties, or rise in outsourcing charges may adversely affect its operations.

Products depend on recent inventions and developments: The company’s products depend on recent inventions and developments as it market the products as per the market trends. Any failure to maintain the quality standards may affect its business. Although it has put in place strict quality control procedures, it cannot assure that its products will always be able to satisfy its customer’s quality standards. Any negative publicity regarding the Company, or products, including those arising from any deterioration in quality of its products from its vendors, or any other unforeseen events could adversely affect its reputation, its operations and its results from operations. Also, rapid change in its customer’s expectation on account of changes in technology or introduction of new products or for any other reason and failure on its part to meet their expectation could adversely affect its business, result of operations and financial condition.

Insurance coverage may not be adequate: While the company maintains insurance coverage in amounts consistent with industry norms. If any or all of its facilities are damaged in whole or in part and its operations are interrupted for a sustained period, there can be no assurance that its insurance policies will be adequate to cover the losses that may be incurred as a result of such interruption or the cost of repairing or replacing the damaged facilities. If the company suffers a large uninsured loss or any insured loss suffered by it significantly exceeds its insurance coverage, its business, financial condition and result of operations may be materially and adversely affected.

Outlook

Richa Info Systems is engaged in the business of assembling innovative products and systems. The company acts as an integrator of multifaceted solutions of leading quality products like Interactive Flat Panel, Interactive Board, Digital Podium, Digital Kiosk, and CCTV Cameras. The total ratio of the company's outsourcing and in-house assembling is 20:80. The company imports raw material from China, after which it assembles the semi-finished products and installs the requisite software as per the client's requirement. The company operates manually in assembling of products and service industry and don't have any plant & machinery of its own. On the concern side, the company’s business operations require it to obtain and renew from time to time, certain approvals, licenses, registration and permits, some of which may expire and for which it may have to make an application for obtaining the approval or its renewal. The company’s business is working capital intensive primarily on account of credit period given to customers, amount blocked in, inventory, advance payment to suppliers.

The company is coming out with a maiden IPO of 8,00,000 equity shares of Rs 10 each at a fixed price of Rs 125 per equity share to mobilize Rs 10 crore. On the performance front, the total revenue from operations for the year ended on FY 2020-21 was Rs 2011.22 lakh as compared to Rs 1755.55 lakh during the FY 2019-20 showing an increase of 14.56%. Income from Operations increased mainly on account of increase in sale of Goods and Services of the company. Profit after Tax (PAT) increased from Rs 33.41 lakh in the FY 2019-20 to Rs 72.25 lakh in FY 2020-21 showing increase of 116.26%. The company constantly endeavours to improve its production process, skill up gradation of employees, to optimize the utilization of resources. It regularly analyze its material procurement policy and assembling process to de‐bottle neck the grey areas and take corrective measures for smooth and efficient working thereby putting resources to optimal use. The company is dedicated towards quality of its products which has helped it to maintain long term relations with its customers and has also facilitated it to entrench with new customers.