Pace E-Commerce Ventures coming with an IPO to raise upto Rs 66.53 crore

Pace E-Commerce Ventures

• Pace E-Commerce Ventures is coming out with an initial public offering (IPO) of 6459600 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 103 per equity share.
  
• The issue will open on September 29, 2022 and will close on October 04, 2022.
  
• The shares will be listed on SME Platform of BSE.
  
• The share is priced 10.30 times higher to its face value of Rs 10.
  
• Book running lead manager to the issue is Interactive Financial Services.
  
• Compliance Officer for the issue is Nikita Pediwal.
  

Profile of the company

The company started in August 2015 as a business that would give the kids/young consumers and sports enthusiasts in India access to International Football Clubs Merchandise and International Sports Brands apparels and Sports Goods. It started with imports and distribution of branded international sports apparels and extended to various branded merchandise and accessories. Thereafter it acquired manufacturing and distribution licenses of some of the popular and biggest brands in the Kids Entertainment Industry. This helped it in reaching a larger distribution area and a wider population. This wider assortment of products and customer base helped it gain valuable insights and obtain information and data as to what today‘s customer really want. It has spent time for developing on these valuable information and data points from its customers including but not limited to, Kids, Teenagers, Young Adults and Young Parents. It arrived at a clear conclusion - The demand is very swiftly moving to customized, personalized products.

Thereafter, the company established its own e-commerce portal, www.cotandcandy.com offering a large range of products across different categories. It also started catering to number of request for on demand printing and manufacturing of products for both B2C and B2B Customers. Later, the portal expanded product categories to kids sports, kids fashion, kids furniture and home textiles. It currently have exclusive manufacturing and distribution rights for world renowned kids character entertainment brands and products in its portfolio including Licenses of Internationally reputed Kids brand. Besides these it has also developed good collection of Home Textiles and gifting products under its own private labels. In this journey, it has gradually transformed from an importer, licensee and distributor to an online digital retail and providing an online platform to manufacturing Company for unique and personalized products. At present company operates across all cities in India through the online channels and most major cities through offline distribution of products.

Proceed is being used for:

• Acquisition of plant and machineries.
  
• Working capital requirement.
  
• General corporate purpose.
  
• Meeting public issue expenses.
  

Industry overview

In 2022, the Indian e-commerce market is predicted to increase by 21.5%, reaching $74.8 billion. E-commerce has transformed the way business is done in India. The Indian E-commerce market is expected to grow to $188 billion by 2025 from $46.2 billion as of 2020. By 2030, it is expected to reach $350 billion. India‘s e-commerce market is expected to reach $111 billion by 2024 and $200 billion by 2026. Much of the growth for the industry has been triggered by an increase in internet and smart phone penetration. The number of internet connections in 2021 increased significantly to 830 million, driven by the Digital India programme. Out of the total internet connections, 55% of connections were in urban areas, of which 97% of connections were wireless. India e-commerce will reach $99 billion by 2024, growing at a 27% CAGR over 2019-24, with grocery and fashion/apparel likely to be the key drivers of incremental growth. In 2022, the Indian ecommerce market is predicted to increase by 21.5%, reaching $74.8 billion. For the 2021 festive season, Indian e-commerce platforms generated sales worth $9.2 billion gross GMV (Gross Merchandise Value). India‘s e-commerce market is expected to reach $350 billion by 2030, with grocery and fashion/apparel likely to be its key growth drivers.

E-commerce sales is expected to increase at a CAGR of 18.2% between 2021 and 2025 to reach Rs 8.8 trillion ($120.1 billion).Online penetration of retail is expected to reach 10.7% by 2024, versus 4.7% in 2019. India had the third-largest online shopper base of 150 million in FY21, which is expected to be 350 million in FY26. India‘s digital sector is expected to increase multi-fold and reach $1 trillion by 2030. Through its Digital India campaign, the Government of India is aiming to create a trillion-dollar online economy by 2025. The Indian online grocery market is estimated to reach $26.93 billion in 2027 from $3.95 billion in FY21, expanding at a CAGR of 33%. With a turnover of $50 billion in 2020, India became the eighth largest market for e-commerce, trailing France and a position ahead of Canada. The Indian e-commerce industry has been on an upward growth trajectory. After a surge in digital adoption during COVID-19, the Indian e-commerce market is estimated to be worth over $55 Bn in Gross Merchandise Value in 2021. By 2030, it is expected to have an annual gross merchandise value of $350 bn. Further, as of 2021, more than 348 million users were conducting online transactions, and nearly 140 million were shopping online.

Pros and strengths

Agreements with widely known companies working for kids: The company has tied up various internationally renowned and popular companies working for kids for various products like furniture, toys, garments etc. It had tied up with internationally reputed brands for Infant Home Furnishings, etc. It is using the same from 2018 and every year the agreements are renewed with the brand/ companies. However due to Covid-19, the agreements are not renewed as on date. The term sheets from some of the internationally reputed brands are received. It is sure that the executions of Agreements are only routine formalities which will be completed soon.

Founder led management Team: The company has a Capable Management Team with significant industry experience. Its Management team is with founder promoter since the founder promoter have conceived the idea of developing the business in present format. Its Management experience, talent and vision helps it to obtain the goal of achieving new and innovative ideas to attract the more and more customers and enable to continue to take advantage of both current and future market opportunities. It has qualified in-house teams who are responsible for different aspects of its business including to make the online portal customer friendly, to invite new stores and new designers on very attractive terms etc. It is able to add significant number segments and products on its portal. Its integrated structure also allows it to control its budget and maximize returns from the portal, including designers returns and operation and maintenance margins.

The company’s insights of Indian Consumers and merchants:  The company has developed the insights into the way Indian customers spend and the way merchant operates the Business. Each transaction provides insights that help it improves personalisation for its consumers and merchants and create products addressing their needs.

Risks and concerns

Rely on third-party service providers: The company’s entire business is the online business, So first of all it has to rely on the services of Software developer, antivirus software supplier, internet service providers, server space providers etc. In addition to these most of its online products are being supplied by the third parties, even for the delivery arrangement it has to rely on the services of the third parties. If the third parties on which it depend are unable to continue to provide their services, experience difficulty meeting its requirements or standards, or revoke or fail to renew its service contracts or license agreements with them, it could have difficulty operating key aspects of its business, which could damage its business and reputation, loss of customers, revenue and profitability.

High working capital: Presently, the company is engaged in trading of wide and varied range of garments and home furnishing materials. As on March 31, 2022 the company‘s net working capital consisted of Rs 440.18 lakh and which is going to increase sizably on account of manufacturing activities will be undertaken as part of expansion of business activities. Its current year working capital requirement is estimated at Rs 1217.55 lakh. If it is not able to manage the working capital requirement properly then the growth, profitability and business will be adversely affected.

Does not have intellectual property: The company is having entire business through its e-portal where every details are by and large available on its website. It operates in an extremely competitive environment, where generating recognition is a significant element of its business strategy. Currently, it does not have any corporate logo. In absence of its Registered Logo or Trademark there are chances of getting damage to its brand name, business prospects, reputation and goodwill.

Outlook

Incorporated in 2015, Pace E-Commerce Ventures offers children's furniture, bedding, housewares and essentials. The company's product portfolio includes Beds and Cribs, Seating and Lounging, Storage & Organisers, Playroom Furniture, Bins and Baskets, Decor and Accessories, Kids Bedding, Baby Bedding, Baby & Kids Essentials, Dinning Essentials & Homeware, Sports Ride Ons & Outdoor, Art and Craft, Games and Puzzles, Scooters and Ride Ons, Dolls Action figures and soft toys. At present the company is offering offline development of products as per the requirement of stores. It is offering the available designs with it and develops the product and get it manufactured with its third party fulfillment partners. It has On-demand/made-to-order infrastructure with sustainable and scalable manufacturing processes & QC checks. It has through its third party fulfillment partners revolutionized print-on-demand processes for fabrics, garments, photo printing, gifting, home decor, and many others through digital printing technology. It has lined up State-of-the-art infrastructure equipped with Direct to Garment Printers (DTG), Direct to Fabric Printers (DTF), Flatbed UV Printers, Digital Print Press and other Finishing and Supporting Equipment and Highquality manufacturing and production at scale, for individuals and small businesses alike and it has its own Superior IT infrastructure to take care of its customers needs. 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 is coming out with a maiden IPO of 6459600 equity shares at a fixed price of Rs 103 per share to mobilize Rs 66.53 crore. On performance front, in the FY2021-22, the company's total revenue was Rs 1049.58 lakh, which is increased by 516.89% in compare to FY 2020-21 total Income of Rs 170.14 lakh. Profit after Tax (PAT) is Rs 54.12 lakh for the FY2021-22 as compare to Rs 7.18 lakh in FY 2020-21. Meanwhile, the company will continue to grow its consumer and merchant base, adhering to its mission to become India‘s leading on line platform for customization and personalization of products across categories, catering to diverse needs through value added products, and enabling individuals and businesses to optimally satiate their aesthetic need. It is going to offer a solution to the changing needs of the consumer - an online platform & marketplace for designers and artists to reach consumers across the world, share their creations and present them a unified platform offering endless possibilities with a vast array of products and ever-growing library of designs help for personalized and customized products.