Electronics Mart India Ltd

Dear Members,

Your Directors are pleased to present the 06th Annual Report on the Company's business, operations, and financial performance along with the Audited Financial Statements for the year ended 31st March 2024.

1. FINANCIAL INFORMATION

The Company's financial performance for the period ended 31st March 2024 is summarised below:

(? in Million)

Note:

1. No material changes and commitments affecting the financial position of your Company have occurred between the end of the financial year and the date of this report.

2. Further, the nature of business of your Company has remained the same.

Consolidated Financial Statements:

The Audited Consolidated Financial Statements of your Company as of 31st March 2024, prepared as per the relevant applicable Ind AS and Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (to be referred as "SEBI Listing Regulations") and provisions of the Companies Act, 2013 ("the Act"), form part of this Annual Report.

• Consolidated Total Comprehensive Income increased to Rs 1,853.49 Million in 2023-24 from Rs 1,231.97 Million in 2022- 23.

• Consolidated PBT increased to Rs 2,461.64 Million in 2023- 24 from Rs 1,631.92 Million in 2022-23.

• Consolidated PAT increased to Rs 1,839.47 Million in 2023-24 from Rs 1,228.00 Million in 2022-23.

Standalone Financial Results:

On a standalone basis, your Company had:

• Standalone Total Comprehensive Income increased to Rs 1,853.85 Million in 2023-24 from Rs 1,232.10 Million in 2022-23.

• Standalone PBT increased to Rs 2,462.00 Million in 2023-24 from Rs 1,632.05 Million in 2022-23.

• Standalone PAT increased to Rs 1,839.83 Million in 2023-24 from Rs 1,228.13 Million in 2022-23.

Your Company's operational performance has been comprehensively discussed in the Management Discussion and Analysis Report, which forms part of this Report.

2. STATE OF COMPANY'S AFFAIRS

During 2023-24, EMIL has continued to grow sustainably in consumer electronics and durables and has become the largest electronics retailer in South India in terms of revenue. With growing disposable income, increased internet penetration, and technology upgradations, the Company will further continue to achieve its vision and mission.

The Company has crossed a milestone of Rs 6,000 Crores in revenue and opened 33 new stores during 2023-24. Currently, the Company operates under 6 brand names namely, Bajaj Electronics in South India, Electronics Mart in North India, IQ, Kitchen Stories, Easy Kitchens, and Audio & Beyond.

The Company operates in three segments namely, retailing, wholesaling and e-commerce with a sales mix of mobile, large electronics appliances and small appliances, IT & others. As on 31st March 2024, EMIL has a total 160 retail stores with a total area of 1.47 Million sq ft across various regions in Andhra Pradesh, Telangana, NCR region and Kerala.

The Company has a diversified product portfolio of 100+ brands comprising more than 8,000 stock keeping units (SKUs).

Large Appliances (TV, Washing Machine, AC, Refrigerators) is the highest contributing segment in terms of revenue and comprises of 45% of the total revenue in 2023-24 recording a growth of 8.3% from 2022-23.

Mobiles (phones, fitness trackers & tablets) is the fastest growing segment with the rising contribution in the overall revenue of 42% in 2023-24 and has recorded a growth of 33% from 2022-23.

Small Appliances, IT & Others (Laptop, Printer, Geyser & others) contributed 13% of the total revenue of 2023-24.

The Company has recorded significant growth in 2023-24 and with the increase of business in North Cluster and consumer durables penetration in organised segment, the Company will continue to expand its operations with its key growth strategies.

3. DIVIDEND

With a view to conserving resources for the expansion of business, your Directors have thought it prudent not to recommend any dividend for the financial year under review. The Dividend Distribution Policy, in terms of Regulation 43A of the SEBI Listing Regulations, is available on the Company's website at https://investors.electronicsmartiudia.com/.

4. CREDIT RATING

India Ratings and Research, a credit rating agency, has affirmed your Company's Long-Term Issuer Rating at ‘IND A-'. The Outlook is Positive.

The instrument-wise rating actions are as follows:

5. CHANGES IN PAID-UP SHARE CAPITAL

There was no change in the Company's Authorised and Paid- up Share Capital during the 2023-24. The paid-up share capital as on 31st March 2024 was Rs 3,84,74,87,620 (Rupees Three Hundred Eighty Four Crore Seventy-Four Lakh Eighty-Seven Thousand Six Hundred and Twenty).

6. TRANSFER TO RESERVES

There is no amount proposed to be transferred to the Reserves. The closing balance of Standalone and Consolidated retained earnings of your Company for 2023-24, after appropriations and adjustments, were Rs 6,028.15 Million and Rs 6,027.25 Million, respectively.

7. SUBSIDIARIES/ ASSOCIATES OR JOINT VENTURES AND LLPS ETC.

During the year under review, the Company has two subsidiaries. As required under the provisions of Section 129 of the Companies Act, 2013, read with Companies (Accounts) Rules 2014, a statement containing salient features of the Financial Statements of the subsidiaries is provided in the prescribed format AOC-1 as Annexure - 1 of the Board Report.

In accordance with Regulation 16 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015, Cloudnine Retail Private Limited and EMIL CSR Foundation are non-material, unlisted subsidiaries. The Company has formulated a policy for determining material subsidiaries. The policy is available on the website of the Company at https://investors.electronicsma.rtindia.com/.

8. PARTICULARS OF LOANS, GUARANTEES, OR INVESTMENTS

The Company has not undertaken any transaction under Section 186 of the Act during 2023-24.

9. MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report for the year under review, as stipulated under the SEBI Listing Regulations, is presented in a section forming part of this Annual Report.

10. DIRECTORS AND KEY MANAGERIAL PERSONNEL

As of 31st March 2024, your Company's Board of Directors ("Board") had six members comprising three Executive Directors and three Non-Executive Independent Directors. The Board has one Women Independent Director. The details of Board and Committees composition, tenure of Directors, areas of expertise, and other details are available in the Corporate Governance Report, which forms part of this Annual Report.

Changes in Director:

Mr Anil Rajendra Nath (DIN: 07261148), upon successfully completion of his tenure of first term of 5 years as an Independent Director on the Board of the Company, did not opt to be reappointed for a second term. Therefore, he ceased to be an Independent Director of the Company with effect from 02nd December 2023. The Board recorded its deep appreciation and profound gratitude for the invaluable services rendered by him to the Company from its inception.

Mr Gurdeep Singh (DIN: 07499896) was appointed as an Independent Director for a term of 5 years with effect from 26th July 2023.

Re-appointment of Directors

Mr Mirza Ghulam Muhammed Baig (DIN: 08281763) was re- appointed as an Independent Director of the Company for a second consecutive term of 5 years based on performance evaluation and recommendation of Nomination & Remuneration Committee.

In accordance with the provisions of Section 152 of the Act, read with rules made thereunder and Articles of Association of the Company, Mr Karan Bajaj (DIN: 07899639) is liable to retire by rotation at the ensuing Annual General Meeting (AGM) and being eligible, offers himself for re-appointment.

Declaration from Independent Directors

Your Company has received declarations from all the Independent Directors of your Company confirming that they meet the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Act and Regulation 16(1) (b) of the SEBI Listing Regulations and there has been no change in the circumstances which may affect their status as an Independent Director.

11. COMMITTEES OF BOARD

The Board has constituted 7 Committees, out of which 5 are statutory Committees and 2 are non-statutory functional Committees. Details of various Committees constituted by the Board pursuant to the applicable provisions of the Act and SEBI Listing Regulations, are given in the Corporate Governance Report, which forms part of this Annual Report.

12. NUMBER OF MEETINGS OF THE BOARD

The Board of Directors met 05 times during the year under review. The details of board meetings and the attendance of the Directors are provided in the Corporate Governance Report, which forms part of this Annual Report.

13. INDEPENDENT DIRECTORS' MEETING

The Independent Directors met on 27th May 2023 without the attendance of Non-Independent Directors and members of the management. The Independent Directors reviewed the performance of Non-Independent Directors, the Committees, and the Board as a whole along with the performance of the Chairman of your Company, taking into account the views of Executive Directors and Non-Executive Directors and assessed the quality, quantity, and timeliness of the flow of information between the management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

14. BOARD EVALUATION

The Board adopted a formal mechanism for evaluating its performance and that of its Committees and individual Directors, including the Chairman of the Board. The exercise was carried out through a structured evaluation process covering various aspects of the Board's functioning, such as the composition of the Board and Committees, experience and competencies, performance of specific duties and obligations, contribution at the meetings and otherwise, independent judgment, governance issues, etc. The performance of each Director including Independent Directors were being evaluated by the Nomination and Remuneration Committee in pursuance of the Board Evaluation policy of the Company. The policy on Board Evaluation is available on the website of the Company at https://investors.electronicsmartiudia.com/.

15. POLICY ON DIRECTORS' APPOINTMENT & REMUNERATION

Your Company's policy on Directors' appointment and remuneration and other matters ("Nomination and Remuneration Policy") pursuant to Section 178(3) of the Act is available on the website of your Company at https://investors.electronicsmartindia.com/. The Remuneration Policy for the selection of Directors and determining Directors' independence sets out the guiding principles for the Nomination and Remuneration Committee for identifying the persons who are qualified to become Directors. Your Company's Remuneration Policy is directed towards rewarding performance based on the review of achievements. The Remuneration Policy is in consonance with existing industry practice. We affirm that the remuneration paid to the Directors is as per the Company's Remuneration Policy terms.

16. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(3)(c) of the Companies Act, 2013 with respect to the Directors' Responsibility Statement, the Board of Directors of the Company hereby state and confirm that:

a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for the year under review;

c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the directors have prepared the annual accounts on a going concern basis;

e) the directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

f) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

17. INTERNAL FINANCIAL CONTROLS SYSTEM AND THEIR ADEQUACY

The details regarding the Internal Financial Controls System and their adequacy are included in the Management Discussion and Analysis, which forms part of this Annual Report.

18. RISK MANAGEMENT

The Board has formed a Risk Management Committee (RMC) to frame, implement and monitor the risk management plan for the Company. The RMC is responsible for reviewing the risk management plan and ensuring its effectiveness. The major risks identified by the businesses are systematically addressed through mitigation actions on a continual basis. The identified risks are categorized and documented in the Risk Register of the Company and is constantly reviewed to update the status of mitigated plans and deregister the mitigated risks.

19. BOARD POLICIES

The Corporate Governance report details various policies approved and adopted by the Board as required under the Act and, SEBI Listing Regulations.

The duly approved Board Policies are available on the website of the Company at https://investors.electronicsmartindia.. com/.

20. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The brief details of the CSR Committee are provided, which form part of this Annual Report. The CSR policy is available on the website of your Company at https://investors. e1ectronicsma.rtiudia.com/. The Annual Report on CSR activities as per Rule 8 of the Companies (Corporate Social Responsibility Policy) Rule, 2014 is annexed to this report as Annexure-2.

Further, the Chief Financial Officer of your Company has certified that the CSR spending of your Company for 2023-24 has been utilised for the purpose and in the manner approved by the Company's Board of Directors.

21. CORPORATE GOVERNANCE REPORT

The Corporate Governance Report, as prescribed by SEBI Listing Regulations, forms part of this Board's Report and is given in Annexure — 3, along with the required certificate from a Practicing Company Secretary, regarding compliance with the conditions of Corporate Governance. In compliance with Corporate Governance requirements as per the SEBI Listing Regulations, your Company has formulated and implemented a Code of Conduct for all Board members and senior management personnel of your Company ("Code of Conduct") who have affirmed the compliance thereto. The Code of Conduct is available on your Company's website at https://investors.electronicsmartindia.com/.

22. BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

In accordance with the Listing Regulations, the Business Responsibility & Sustainability Report is annexed as Annexure - 4.

23. STATUTORY AUDITORS & AUDITORS' REPORT

Walker Chandiok & Co. LLP, Chartered Accountants (Firm's Registration Number 001076N / N500013), was appointed as Statutory Auditors of your Company at the Adjourned First Annual General Meeting held on 07th December 2019 for a term of five consecutive years and continue to hold the office for five years as originally appointed. The Statutory Auditors Report on standalone and consolidated financial statements along with Notes to schedule for the Financial Year ended 31st March 2024 are enclosed in this Annual Report.

Further, the Board proposed the appointment of Walker Chandiok & Co. LLP as the Statutory Auditors of the Company for their second term by the members in the ensuing 6th Annual General Meeting.

Walker Chandiok & Co. LLP, Chartered Accountants, has provided their confirmation regarding compliance with conditions prescribed under Sections 139 and 141 of the Act in regard to the continuation of their term.

Explanation of the qualification in the Auditors' Report: Auditors' Remark - The Statutory Auditors reported that the Company's accounting software (FOCUS), billing software (T-POS) and SAP do not have an audit trail at the database level. Hence, there is a modified opinion in the audit report, which will not have any impact on the financial statements.

Management's Explanation - As the accounting software being used during the FY 2023-24 does not have the audit trail feature at the database level, Management decided to migrate to SAP S4 HANA and the migration was completed by 31st March 2024. The new system is live from 01st April 2024.

24. CONSOLIDATED FEES PAID TO STATUTORY AUDITORS

Detail of total fees for all services paid by the listed entity and its subsidiaries, on a consolidated basis, to the statutory auditor as mentioned in Note 26 of Consolidated Financial Statement which forms part of this Annual Report, are as below:

Rs in Millions

*excluding audit and certification fees amounting to Rs 5.40 Million pertaining to the Company's IPO which have been adjusted against Securities Premium for the year ended 31st March 2023.

25. SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Act, read with the rules made thereunder, the Board has appointed M/s VSSK & Associates, Company Secretaries, Hyderabad to undertake the Secretarial Audit of your Company from 2023-24 to 2027-28. The Secretarial Audit Report for the year under review is provided as Annexure - 5 of this report. There are no qualifications, reservations, adverse remarks, or disclaimers in the Secretarial Audit Report.

26. SECRETARIAL STANDARDS

During the year under review, your Company has complied with all the applicable provisions of Secretarial Standard-1 and Secretarial Standard-2 issued by the Institute of Company

Secretaries of India.

27. COST RECORDS:

The provisions of Section 148 of the Act relating to maintenance of cost records and cost audit are not applicable to the Company.

28. INTERNAL AUDITORS

The Board has appointed Guru & Jana, Chartered Accountants, as the Internal Auditors of the Company for a period of 5 years from 2023-24 to 2027-28 under the provisions Section 138 of the Act.

29. REPORTING OF FRAUDS BY AUDITORS

The Statutory Auditors and Secretarial Auditor have not reported any instance of fraud committed against your Company by its officers or employees to the Audit Committee or the Board under section 143(12) of the Act.

30. ANNUAL RETURN

Pursuant to Section 134(3)(a) of the Act, the annual return as of 31st March 2024 prepared in accordance with Section 92 of the Act is made available on the website of the Company at https://investors.electronicsmartiudia.com/.

31. TRANSACTIONS WITH RELATED PARTY

All transactions with related parties are placed before the Audit Committee for approval. All related party transactions entered into during the financial year were on an arm's length basis and were in the ordinary course of business. Your Company had not entered any transactions with related parties that could be considered material under Section 188 of the Act.

Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Act in Form AOC — 2 is not applicable. The Policy on Related Party Transactions is available on your Company's website at https://investors. electronicsma.rtindia.com/.

32. INVESTOR EDUCATION AND PROTECTION FUND

The Company has transferred Rs 16,298/- (Rupees Sixteen Thousand Two Hundred and Ninety-Eight) to the Investor Education and Protection Fund being equivalent to the profit made by the immediate relative of Designated Person in violation of Insider Trading Code of the Company.

33. GENERAL DISCLOSURES

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions/ events on these items during the year under review:

1. Issue of equity shares with differential rights as to dividend, voting, or otherwise.

2. Issue of Shares (including Sweat Equity Shares) to employees of the Company under any scheme.

3. Significant or material orders passed by the Regulators or Courts or Tribunals that impact the going concern status and your Company's operation in the future.

4. Voting rights that are not directly exercised by the employees in respect of shares for the subscription/ purchase of which loan was given by the Company (as there is no scheme pursuant to which such persons can beneficially hold shares as envisaged under Section 67(3) (c) of the Act).

5. The Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013, and the Companies (Acceptance of Deposits) Rules, 2014.

6. No director of the Company is in receipt of any remuneration or commission from any of its subsidiary or holding company.

7. No Application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016.

8. No One-time settlement of loans obtained from the Banks or Financial Institutions.

34. ADDITIONAL DISCLOSURES UNDER LISTING REGULATIONS

Statement of Deviation or Variation.

The Company utilised Rs 1,200 Million earmarked to fund incremental working capital requirements during 2023-24. Further, the Company utilised Rs 514.53 Million earmarked for funding of capital expenditure for expansion and opening of new stores and warehouses during 2023-24.

The Company had fully utilised the amount raised through IPO for following objects:

a. funding incremental working capital requirements;

b. repayment/ pre-payment, in full or part of all or certain borrowings availed by the Company; and

c. General Corporate purposes.

As on 31st March 2024, there is an unutilised balance of Rs 450.70 Million earmarked for funding of capital expenditure for expansion and opening of new stores and warehouses, which will be utilised in 2024-25 in accordance with the objects set out in the ‘objects of the issue' section of the prospectus dated 10th October 2022.

35. INSURANCE

Your Company has taken appropriate insurance for assets against foreseeable perils.

36. PARTICULAR OF EMPLOYEES

The information as required under Section 197 of the Companies Act 2013, read with Rules 5(1) & 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in Annexure - 6 to the Board's Report.

37. PREVENTION OF SEXUAL HARASSMENT AT THE WORKPLACE

The Company has in place an Anti-Sexual Harassment policy in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition, and Redressal) Act 2013. The Internal system has been set up to redress complaints received regarding sexual harassment.

During the year under review, your Company has received two complaints pertaining to Sexual Harassment, which have been resolved and no complaint is pending at the end of FY 2023-24.

38. VIGIL MECHANISM

The Company has established a vigil mechanism through a Whistle Blower Policy. The Company can oversee the genuine concerns expressed by the employees and other Directors. The Company has also provided adequate safeguards against the victimisation of employees and Directors who may express their concerns under this policy. The policy is uploaded on the website of the Company at https://investors. electronicsmartindia.com/.

39. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS, AND OUTGO

The information on conservation of energy, technology absorption, and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014, as amended, is provided as Annexure - 7 of this report.

ACKNOWLEDGMENT

The Board of Directors wishes to place on record their thanks for the committed services of all the employees of the Company. The Board of Directors would also like to express their sincere appreciation for the assistance and co-operation received from the financial institutions, banks, government and regulatory authorities, stock exchanges, customers, vendors, and members during the year under review.