IntraSoft Technologies Limited: Still Steam Left

IntraSoft Technologies Limited is in the business of providing back ended IT Enabled Services to its subsidiary companies. The E-commerce subsidiary www.123stores.com focuses on the US Online Retail market and was ranked as the 392nd largest Internet Retailer in USA as well as the 13th fastest growing Internet Retailer in the 2015 Top 500 Internet Retailer Guide. Company is planning to enter Indian market soon.


On 27th October India Infoline published an interview Excerpts of Arvind Kajaria, Managing Director and Co-founder of IntraSoft Technologies Limited. We are listing down the major discussion points here

About Opportunities in the Indian e-comm space vis-à-vis the overseas counterpart
E-commerce sector highly appeals to young minds. Given the Indian demographic growth patterns, almost 65 % of our population will be under 35 years of age in the coming years. Hence I think e-commerce is the only way to grab the attention of the increasing young population. The non-urban cities are also participating in the boom now that they have access to a diversified range of goods unlike prior years. Hence, I am quite optimistic about our growth story.

How to handle competitive scenario with Flipkart and Snapdeal

We are not only selling from our website 123stores.com, but also on Amazon, Ebay and 11 main. We sell anything and everything and hence are called mass merchants.  This determines our expertise of being able to sell not only from our own website but also from other websites. We are at advantage because we are selling on 10 marketplaces at same time. So whether you place the order at Amazon or Ebay, you end up buying from us and that’s what keeps us very excited and motivated apart from significantly boosting our sales volume.

Festival sales is not new to FMCG sector. Like how most of the brands have Diwali sales offline, online sales are yet another route of attracting visited traffic to the website and we would also participate in it. For this year, we have not planned any promotions as we mainly operate in US market. However as soon as we establish a base in India, we will definitely plan festive sales , which could be as early as next year.

About the partnership with Amazon and Ebay
Amazon and Ebay have opened up to allow third-party sellers to sell from their websites. For instance, if a housewife plans to make and sell terrariums, she can list her business on their websites and start selling without anybody’s help. She needs to register on the website and build up her customer ratings. As she sells more and more, the ratings will go up based on the quality of the product, the pricing and the in-time delivery. Our partnership with Amazon and Ebay is of a similar nature. We act as third party sellers and provide the online platform for vendors to sell their goods.

Role as a third-party seller
A lot of manufacturers are not technology savvy. They don’t have an idea of how to sell online. There are various aspects like coding, uploading images, pricing & inventory management and logistics that merit attention which could prove a huge pain for manufacturers. We act as mediators, between vendors and online marketplaces like Amazon and Ebay. We help vendors go online by managing their sales, pricing, customer support and logistics. As a result, they save both money and time. The advantage for us is that by employing around 10 customer support executives, we can manage 100 customers.
 
Performance for quarter ended September 30

We are very happy with the progress of the said quarter. Our results will be out next week.  We saw a number of operational changes, mainly related to our software in the last quarter. Earlier, the order which took us a few hours to execute is now processed in only 54 minutes. The reduction in time spent is the evidence that our software and business is getting more and more efficient which will allow us to scale. There is a lot of scalability in our business. The salient thing which we learnt in the last quarter is that the technology is finally working after years of hard work and efforts and we are now ready to ride the e-commerce boom.

Our consolidated revenue for the Q1 FY16 increased 97% to Rs. 118 crore from  Rs. 59.78 crore in Q1 FY15, driven by e-commerce growth and Profit after Tax (PAT) increased to Rs 1.22 crore, up by 47% from Rs 0.83 crore (Y-o-Y). Our e-commerce revenues increased from Rs 53.93 crore to Rs 113.36 crore resulting in 110 % increase Y-o-Y. The number of orders shipped grew tremendously over the quarter from 116,081 to 293,894, a growth of 153% Y-o-Y.

Outlook for the coming quarters
We are very optimistic. The team is in place, the software is in place. November, December are traditionally the highest buying months in the year in India because of the festivals and the holidays. So we look forward to a very stunning quarter. Supply chain mismatch is one key issue and GST, as and when it comes into play, might prove another challenge.

Investors with 1 year horizon can buy the stock with a target of 800 in mind. CPM@532

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