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EMA Partners India

• EMA Partners India is coming out with an initial public offering (IPO) of 61,30,000 equity shares in a price band Rs 117-124 per equity share.
• The issue will open on January 17, 2025 and will close on January 21, 2025.
• The shares will be listed on SME Platform of NSE.
• The face value of the share is Rs 5 and is priced 23.40 times of its face value on the lower side and 24.80 times on the higher side.
• Book running lead manager to the issue is Indorient Financial Services.
• Compliance Officer for the issue is Smita Shivdhari Singh.

Profile of the company

EMA Partners India is one of the leading executive search firms delivering customized leadership hiring solutions to a wide range of clients across diverse sectors. The company has recruited several business and functional leaders for domestic and international clients. The company was incorporated on September 9, 2003 as Executive Management Associates India by Krishnan Sudarshan (Chairman and Managing Director) and Subramanian Krishnaprakash (Whole Time Director). Executive Management Associates India was renamed as “EMA Partners India Private Limited” on February 4, 2004. The company entered into a membership agreement on September 25, 2003 and became a member firm of “EMA Partners International Limited” domiciled in London.

The company, headquartered in Mumbai, has offices in Chennai, Gurgaon and Bengaluru. With a view to tap into the global talent and client pool, the company expanded its operations in South East Asia by setting up a subsidiary EMA Partners Singapore Pte Ltd in Singapore in September 2010. Later, the company saw growth opportunities in Middle East and set up 2 subsidiaries - EMA Partners Executive Search Limited (Dubai) in March 2017 and James Douglas Professional Search Limited (Dubai) in July 2022.

The company houses the leadership which oversees the overall business of the company, and all its subsidiaries and step-down subsidiaries in India, Singapore and Dubai. EMA Partners Executive Search Private Limited houses leadership that is responsible for executive search business in India, and to invest in other related businesses in India including investment in technology-based recruitment platform company “Reccloud Technologies Private Limited” Over the past 2 decades, the company has serviced a wide range of clients across Industries and business functions.

Proceed is being used for:

• Augmenting Leadership Team for (a) the company and (b) its subsidiaries
• Capital expenditure towards upgrading the existing IT infrastructure for (a) the company and (b) its subsidiaries
• Repayment and/or pre-payment, in full, of the borrowing availed by the company with respect to purchase of office premises
• General corporate purposes and unidentified inorganic acquisitions

Industry Overview

The recruitment and staffing industry posted revenues of Rs 9,890 crore in FY 2018-19, which has reached Rs 12,430 crore in FY 2023-24, at a CAGR of 5.9%. This represents the addressable market opportunity for all the recruitment and HR outsourcing players inclusive of Leadership hiring/ executive search, Professional hiring and general recruitment. Rising demand for skilled labor across various industries, technological advancements in recruitment processes such as AI and automation, and the expansion of sectors like IT and healthcare are driving significant hiring needs. 88% of professionals aged 18-24 are contemplating a career change, compared to 64% of those aged 45-54 in next 1 year. Young Professionals are considering to switch jobs this year for higher wage and work-life balance and flexibility. The Indian Staffing & Recruitment Industry in India is expected to grow at a CAGR of 4.9% from FY’2023-24 to FY’2028-29. The market is expected to reach Rs 15,770 crore by FY’2028-29.

India boasts a young & rapidly growing workforce, providing a substantial demographic dividend. This youthful population is a valuable asset, offering large pool of potential employees for various sectors, from tech startups to traditional manufacturing. Indian staffing and recruitment firms are uniquely positioned to capitalize on the burgeoning opportunities in the EMEA, USA, and Southeast Asian markets. These regions offer lucrative growth prospects for Indian firms due to the high demand for skilled talent across critical sectors such as IT, healthcare, engineering, and finance. With their unparalleled expertise in sourcing top-tier professionals, Indian firms are well-equipped to address these needs. Leveraging robust talent pools and a keen understanding of global workforce dynamics, these firms offer cost-effective, efficient solutions that can drive significant value for international businesses.

The market size for EMEA in 2024 is projected to be $265.9 billion, with an impressive CAGR of 12%, reaching $468.5 billion by 2029. With recruitment firm penetration in EMEA at just 1.5%, Indian firms have substantial opportunities to expand into this market, capitalizing on the untapped potential and growing demand for efficient talent solutions. The USA market is posed to grow from $47.7 billion in 2024 to $83 billion by 2029 with an 11.8% CAGR, is also fueled by advancements in AI and automation. This is driven by the high demand for Indian talent in tech hubs like Silicon Valley and New York City. This growth is supported by a 10-15% annual increase in recruitment activity among Indian diaspora professionals in these regions. These figures underscore the vast opportunities available for Indian recruitment firms to enter and flourish in these regions.

Pros and strengths

Long standing and deep relationships with client leading to recurring business: With an extensive industry experience of 20+ years, the company has built strong, long-term relationships with its clients, resulting in repeat business. Its repeat client business highlights its ability to handle complex business requirements across industries, demonstrates its value-added services and solutions, and its focus on delivering high levels of client service. The company aims to develop a consultative, long-term partnership model of service delivery, rather than merely transactional relationships. These enduring client relationships have allowed it to effectively meet its clients' growing staffing needs, increase its market share, and reduce the revenue and earnings uncertainty typically associated with short-term contracts.

Extensive functional knowledge and expertise across industry sectors: The company has handled recruitment assignments across industry verticals such as Information Technology (IT), Healthcare, Education, Private Equity and Venture Capital (PE & VC), Banking and Financial Services (BSFI), Real Estate, Energy and others. The company’s teams are staffed with individuals having functional expertise across different Industries and business verticals which improves its ability to successfully execute assignments.

Robust technology tools, SaaS platform and process in place to create operational efficiency: The company has adopted technology tools in hiring process including building a SaaS platform for entry level hiring assignments. All such technologies and tools have improved its operational efficiency and functional performance, especially in candidate sourcing and closure of hiring positions within reasonable timelines. By leveraging technology, it has been able to standardize processes and gradually shift from manual operations which allows it to handle increasing volume of assignments.

Risks and concerns

Significant portion of business is attributable to certain large clients: The company has in the past derived, and it will continue to derive, a significant portion of its revenue from certain large clients. For the four months’ period ended July 31, 2024 and the year ended March 31, 2024, March 31, 2023 and March 31, 2022, it derived revenue from operations of Rs 1,077.96 lakh and Rs 2,319.79 lakh, Rs 2,022.22 lakh and Rs 2,378.09 lakh, respectively, from its top ten clients, representing around 41.65% and 34.47%, 40.33% and 41.75%, respectively, of its total revenue from operations. For the four months’ period ended July 31, 2024 and the year ended March 31, 2024, March 31, 2023 and March 31, 2022, the company derived revenue from operations of Rs 213.95 lakh and Rs 888.90 lakh, Rs 725.58 lakh and Rs 846.90 lakh, respectively, from its largest client, representing around 8.27% and 13.21%, 14.47%, and 14.87%, respectively, of its total revenue from operations. If the company fails to expand the size of its business with its existing clients or expand to new clients, or if it loses its large clients, its business, revenue, profitability and growth will be adversely affected.

Social media platforms present risks and challenges that can cause damage to its brand and reputation: The inappropriate and/or unauthorized use of social media platforms, including blogs, social media websites and other forms of Internet-based communications, which allow individuals access to a broad audience of consumers and other interested persons by its clients or employees could cause damage to its brand, lead to litigation or result in information leakage, including the improper collection and/or dissemination of personally identifiable information of candidates and clients. In addition, negative or inaccurate posts or comments about it on any social networking platforms could damage its reputation, brand image and goodwill. The company may have to incur significant cost to protect and defend its interest from any such social media related events.

Stiff competition from domestic and global firms: The human resource consulting market in India has traditionally been a fragmented industry with a number of large consulting firms, including the Indian affiliates or India-based operations of well-known global players having a presence in India with substantial marketing and financial resources at their disposal. The company’s global competitors might be able to realign their operations with change in global macro-economic environment more effectively than the company. The Industry consolidation may also affect competition by creating larger, more homogeneous and potentially stronger competitors in the markets. Its competitors may also affect its business by entering into exclusive arrangements with existing or potential clients. The company’s executive search services face competition from both traditional and non-traditional competitors that provide job placement services, including other large global executive search firms, smaller specialty firms and web-based firms. It also faces increased competition from sole proprietors and in-house human resource professionals whose ability to provide job placement services has been enhanced by professional profiles made available on the internet and enhanced social media based search tools. 

Outlook

EMA Partners India is an executive search firm offering specialized hiring solutions. The company provides various leadership hiring solutions to clients across various sectors, successfully recruiting business and functional leaders globally. The company has extensive functional knowledge and expertise across industry sectors. It also has robust technology tools, SaaS platform, and process in place to create operational efficiency. On the concern side, a significant portion of the company’s business is attributable to certain large clients. Any deterioration of their financial condition or prospects may have an adverse impact on its business. Further, if it fails to expand the size of its business with its existing clients or expand to new clients, or if it loses its large clients, its business, revenue, profitability and growth will be adversely affected. The company is limited in its ability to recruit candidates from certain of its clients due to off-limit agreements with those clients and for client relations and marketing purposes. Such limitations could impact its business and revenues.

The company is coming out with a maiden IPO of 61,30,000 equity shares of Rs 5 each. The issue has been offered in a price band of Rs 117-124 per equity share. The aggregate size of the offer is around Rs 71.72 crore to Rs 76.01 crore based on lower and upper price band respectively. On performance front, revenue from operations increased by 34.21% from Rs 5,014.28 lakh in the year 2022-23 to Rs 6,729.62 lakhs in the year 2023-24. Moreover, the company’s the Net Profit is Rs 1427.30 lakh in the year 2023-24 compared to Rs 307.07 lakh in the year 2022-23. The increase in the number of fees earning employees, better performance of overseas offices, etc. helped it to improve from previous year’s performance.

The company intends to expand its footprint through organic and inorganic strategies, enabling it to leverage its existing relationships with clients and the EMA Partners International Network. In addition to the expanding growth opportunities in India, it has identified key markets segments in US, UK and Saudi Arabia as the key markets for growth and expansion. The vast outbound opportunities for Indian executive search & recruiting staffing firms in international markets are driven by high demand for skilled talent and the appeal for cost-effective recruitment solutions. By combining these strategies, it aims to expand its global footprint, balancing the controlled growth of organic expansion with the accelerated reach offered by acquisitions.