Ekennis Software Service coming with an IPO to raise upto Rs 2.88 crore

Ekennis Software Service

• Ekennis Software Service is coming out with an initial public offering (IPO) of 400000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 72 per equity share.
  
• The issue will open on February 21, 2022 and will close on February 24, 2022.
  
• The shares will be listed on SME Platform of BSE.
  
• The share is priced 7.20 times higher to its face value of Rs 10.
  
• Book running lead manager to the issue is Shreni Shares.
  
• Compliance Officer for the issue is Sonali.
  

Profile of the company

The company is in the business of Software IT Solution and Consulting Services, IT Product / Software Development and Software Training, Enterprise Resource Planning Solution, Learning Management Solution, 3D Printing, Digital Printing and Packaging Design Management consultancy. It has leveraged its domain expertise, processes and infrastructure to diversify its offering of services to cater to a variety of business sectors.

The company consults, develop solutions around ERP systems that optimize business processes and leverage corporate knowledge leading to competitive advantage. It also provides business process analysis and system design, technical expertise, implementation, training and support services. It has expertise in SAP ERP (Technical & Functional). Its major focus areas for implementation are discrete Manufacturing, Automotive, Food Processing, Chemicals, Telecom sectors. It has a team of SAP Professionals who have the credentials and capabilities to support service and consult its customers. Its consultants are trained and qualified on SAP, Microsoft and Oracle.

The company has been incorporated by combining the expertise & resources with 4.5 years of service experience in delivering Training, fill-stack web development, project handling, outsourcing & recruitment. It has a successful track record of outsourcing manpower with multiple clients across India, delivering ERP Support services with its clients, having built-in software application packages to support various operations.

Proceed is being used for:

• Purchase of plant and machinery.
  
• Funding working capital requirements.
  
• General corporate purposes.
  

Industry overview

The global sourcing market in India continues to grow at a higher pace compared to the IT-BPM industry. India is the leading sourcing destination across the world, accounting for approximately 55% market share of the $200-250 billion global services sourcing business in 2019-20. The IT industry accounted for 8% of India’s GDP in 2020. According to STPI (Software Technology Park of India), software exports by the IT companies connected to it, stood at Rs. 1.20 lakh crore ($16.29 billion) in the first quarter of FY22. The IT & business service industry’s revenue was estimated at $6.96 billion in the first half of 2021, an increase of 6.4% YoY. The export revenue of the IT industry is estimated at $150 billion in FY21. Indian software product industry is expected to reach $100 billion by 2025. Indian IT's core competencies and strengths have attracted significant investment from major countries. The computer software and hardware sector in India attracted cumulative foreign direct investment (FDI) inflows worth $74.12 billion between April 2000 and June 2021. The sector ranked 2nd in FDI inflows as per the data released by Department for Promotion of Industry and Internal Trade (DPIIT).

Print and packaging is the first thing that attracts consumers. These two play an important role especially in the consumer goods industry. In 2009, an American multinational company producing fruit-based beverages learnt a hard lesson when its consumers discarded its products due to new packaging. The company replaced its best-selling orange juice packaging for the North American market, but the new packaging failed miserably. A few days later, sales dropped by 20 per cent as consumers started to criticise the new design on social media. Consumers mostly translate an attractive packaging for high quality, thus premium products are often seen in more consumer-friendly and attractive packaging. A study states that 60 per cent of consumers use social media sites to talk about products and recommend them, which can impact the sales drastically. The print industry constitutes around four per cent of the global market, while per capita packaging consumption in India is quite low at 8.7 kilograms as compared to countries like Germany and Taiwan where it is 42 kilograms and 19 kilograms, respectively. But the study suggests, and experts too claim that the growth in the packaging industry in India is mainly driven by the food and pharmaceutical packaging sectors. The large and growing Indian middle class along with the growth in organised retailing in the country are fuelling the growth in the packaging industry.

Pros and strengths

E-Learning & Mobile Learning Solutions: The company’s innovative, interactive, immersive learning content combined with effective pedagogy is a powerful tool for knowledge and skill enhancement. Its e-learning & mobile learning solutions are aimed at helping organizations ensure that their people deliver sustained business benefits and return on investment. Its web-based learning management system helps in making learning easier by offering a large number of collaboration features such as messaging, groups, forums, blogs, discussions, tagging, rating, comments, etc. It also enhances peer to peer learning experience along with actively engaging people on an individual level. Progress is tracked and analyzed accurately using graphs, pie charts, histograms, spider charts, etc. Its SaaS-based platform eliminates costly installations and investments in hardware as it is web based. It also provide end-to-end solutions starting from hosting, content management, updates to support.

One stop packaging provider: The company’s digital printing under ‘myperfectpack’ brand, supplies a range of innovative packaging products for the Food, Baby Care, Personal & Hygiene, Industrial & Agriculture industries. myperfectpack’s wide range of products meet international quality standards and are produced to satisfy customers’ requirements in the ever-changing food and packaging industry. The business leaders have trusted the company to solve their strategic and creative challenges: from branding, business design, UI/UX design, product design, packaging design to communication design, across industries and regions. Guided by its systematic approach and methodologies such as Design Thinking, it helps SMEs build brands that matter. Its team is committed to continuously improve and excel in its capabilities to make the world a more creative place and empower each entrepreneur. This is one kind of unique printing capability which gives customer flexibility to choose design, quantity, and quality of printing products under one roof.

Quality policy: The company is constantly focused on building quality into the culture of the organization. It continuously assess and improve its operations, methods and dealings with people, both inside and outside the organization, while deploying effective tools and techniques of quality management. It has established, documented, implemented and is maintaining a Quality Management System and continually improving the effectiveness of its services. Its QMS scope covers provision of software solutions encompassing project management, consultancy, analysis, design, development, testing and validation, installation, maintenance, technical support and re-engineering services in the areas of systems and applications software as applicable to client-server computing, internet-based applications, object-oriented technology, multimedia and embedded systems. Moreover, its products under Digital Printing Segment, are approved by GS1 India. GS1 standards facilitate unique and universal identification, capture and share of information on products and services, from point-of-origin to point-of-sale or dispensation. Most commonly, their standards are used in barcoding of consumer items and they enable important applications such as product authentication, track & trace, product recall, real-time stocks monitoring, online selling and more. When the industries use GS1 standards, consumers benefit from enhanced product availability, safety & security and making better purchasing decisions whether shopping online or offline.

Risks and concerns

Length of sales cycle may fluctuate significantly: A customer's decision to purchase its services or products often involves a comprehensive implementation process across the customer’s network(s) which includes customer education, evaluation by a number of employees in its customers’ organization and, often, a significant strategic or operational decision by its customers. Its sales efforts involve educating its customers about the use and benefits of its products and solutions, including any potential cost savings achievable by organization that partner with it. Customers typically undertake a significantly long evaluation process which also involves evaluation of its competitors’ services and can result in a lengthy sales cycle. Moreover, a purchase decision by a potential customer typically requires extended evaluation, testing and the approval of senior decision makers, including the boards of directors of its customers. It spends substantial time, effort and money on its sales efforts without any assurance that its efforts will produce any sales. Additionally, implementing its products and any related services may entail a significant commitment of resources by prospective customers, accompanied by the risks and delays frequently associated with significant technology implementation projects.

Face competition: Growing competition may result in a decline in its market share and may affect its margins which may adversely affect its business operations and its financial condition. The company operates in an industry, which faces intense competition from established as well as unorganized players. Its competition depends on several factors, which include quality, price and its pace in keeping up with the changing trends. Competition emerges from both organized as well as unorganized sector. If the company is unable to effectively compete its revenues and reputation may be adversely affected and it not be able to achieve its long-term strategies.

Require working capital: The company’s business demands working capital requirements. In case there are insufficient cash flows to meet its working capital requirement or it is unable to arrange the same from other sources or there are delays in disbursement of arranged funds, or it is unable to procure funds on favourable terms, it may result into its inability to finance its working capital needs on a timely basis which may have an adverse effect on its operations, profitability and growth prospects.

Outlook

Ekennis Software Service is engaged in the business of software IT solution and consulting services, IT product/ software development, and software training, ERP solution, Learning Management Solution, 3D printing, Digital printing and packaging design consultancy. It also provides business process analysis, system design, technical expertise, implementation, training, and support services, and has expertise in SAP ERP. Ekennis has a talented team of 100+ SAP Professionals who have the credentials and capabilities to support service and consult its customers. Its consultants are extensively trained and certified on SAP, Microsoft and Oracle, B2B has a proven Implementation methodology and track records for delivering successful technology solutions for its customers. Its ability to map its process to client’s needs ensures that it not only provide superior implementations, but also enable swift knowledge transfer to their staff. On the concern side, the competition the company face in the sales of its products and services and general economic and business conditions as well as changes in the IT industry standards and landscape, can put pressure on it to change its pricing models. The company’s industry being labour intensive is dependent on labour force for carrying out its manufacturing operations and software development and staffing services.

The company is coming out with a maiden IPO of 400000 equity shares of Rs 10 each at a fixed price of Rs 72 per equity share to mobilize Rs 2.88 crore. On the performance front, the company’s total revenue decreased by 3.52% to Rs 468.67 lakh for the FY 2021 from Rs 485.78 lakh for the FY 2020. Profit after Tax increased by 320.07% to Rs 94.92 lakh in FY 2021 from Rs 22.60 lakh in FY 2020. The company is intends to focus on use of targeted marketing initiatives such as digital and print advertisements, as well as marketing through traditional channels such as outdoor advertising. Its marketing and advertising initiatives shall be directed to increase brand awareness, acquire new customers, drive customer traffic across its retail channels and strengthen its brand recall value. The company is in the process of implementing several initiatives, including structuring its organization by way of industry verticals to accumulate relevant industry experience. It plans to increase the breadth of its software services by offering additional services through software maintenance and staffing facilities for the new product range, as this will expand its scope of its business and further enhance the reputation of its brand.