12/20

DS Equilibrium

Typically, wholesale traders are conversant about the market conditions and align their business strategy according to demand/supply. However, Covid-19 pandemic had severely disrupted the demand-supply dynamics. In FY22, especially in the second half, on unlocking of the economy and relaxation in lockdown restrictions the industry reported y-o-y 74.9% increase to Rs.109.4 billion for March 2022 quarter as compared to Rs.62.5 billion for March 2021 quarter. The outlook for this sector is expected to be healthy.

Extent of Competition

12/20

Neutral

This is a slightly fragmented industry but segregated mostly on a geographical basis with clearly defined areas particularly if it relates to distribution of consumer products.

Regulatory Risk

12/20

Predictable Regulatory environment

The policies governing wholesale trading remain largely predictable. FDI is allowed in wholesale trading under cash and carry in India.

Input Related Risk

12/20

Largely predictable supply of inputs from diversified sources or Raw Materials with rare, occasional disruptions / fairly predictable price band

Usually, the wholesalers are able to pass on any increases in input costs to the customers. However, in case of a sudden and unexpected change in market scenario, there are risks of inventory losses and/or higher carrying costs, impacting margins.