Destiny Logistics & Infra
Destiny Logistics & Infra has come out with an initial public offering (IPO) of 26,94,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 20 per equity share.
The issue has opened on September 30, 2021 and will close on October 5, 2021.
The shares will be listed on NSE Emerge Platform.
The share is priced 2 times higher to its face value of Rs 10.
Book running lead manager to the issue is Finshore Management Services.
Compliance Officer for the issue is Mustafa Rangwala.
Profile of the company
Presently, the company’s services are mainly in the domestic market, more specifically in the state of West Bengal. It procures third party fleets both contractually and in the spot market. It offers its customers, transport management services and arrange for third party-operator to handle freight related services. It provides complete range of services like packaging, loading, transportation, unloading and unpacking of items to facilitate its customers with end-to-end solutions. This asset light business model allows for scalability of services as well as flexibility to develop and offer customized logistic solutions across diverse sectors. It provides end-to-end safe mobility and delivery of items. The company has also diversified into infrastructure development activity as a new addition in its line of business activity.
The company presently is in the business of Logistics involving land based transportation. The vehicles are mostly procured from third party service providers. The company acts as an aggregator for providing Logistics services which mainly includes transportation and other allied services to facilitate the client like providing loading, unloading, packing and unpacking of items. Its services are mainly in the domestic market, more specifically in the state of West Bengal. This asset light business model allows for scalability of services as well as flexibility to develop and offer customized logistic solution across diverse sectors. It provides end-to-end safe mobility and delivery of items.
Proceed is being used for:
Meeting the working capital requirements of the company.
Meeting the issue expenses.
General corporate purposes.
Industry overview
Infrastructure sector is a key driver for the Indian economy. The sector is highly responsible for propelling India’s overall development and enjoys intense focus from Government for initiating policies that would ensure time-bound creation of world class infrastructure in the country. Infrastructure sector includes power, bridges, dams, roads, and urban infrastructure development. According to the Department for Promotion of Industry and Internal Trade (DPIIT), FDIs in the construction development sector (townships, housing, built up infrastructure and construction development projects) and construction (infrastructure) activities stood at $26.08 billion and $24.72 billion, respectively, between April 2000 and March 2021. In FY21, infrastructure activities accounted for 13% share of the total FDI inflows of $81.72 billion.
The infrastructure sector encompasses roads, power, railways, urban infrastructure, and irrigation among others. The sheer size and magnitude of major infrastructure development projects dictate substantial capital investment. The government introduced significant policy reforms to augment foreign direct investment (FDI) inflows to further boost investment and enhance infrastructure in the country. The Indian government’s policy reforms resulted in total FDI inflows of USD16.3 billion in construction activities in infrastructure from fiscal 2001 to fiscal 2020, as per the Department of Industrial Policy & Promotion data. The Logistics Sector was granted Infrastructure status in the 14th Institutional Mechanism (IM) Meeting held on 10th November, 2017 to meet the need for integrated.
Logistics sector development in view of the fact that the logistics cost in India is very high compared to developed countries. The Indian logistic sector is primarily categorized into four segments comprising Transportation (rail, road, air, water-ways), warehousing (Container freight stations and Inland Container Depots), freight forwarding and value-added logistics. The transportation contributes maximum (60%) to the whole pie of logistic sector which comprises of various means such as road, rail, air and water.
Pros and strengths
Organizational stability along with management expertise: The company’s group has an established track record of over 10 years which puts it in a much stronger position to deal with any adverse situation both economic and business cycle. Its promoters are the guiding force behind the operational and financial decision of the company. Its promoters are responsible for the entire business operations of the company along with an experienced team of professionals who are part of the core team which makes things easier to handle successfully. This indicates its ability to maintain business viability and steer the business though operational hurdles with ease and convenience.
Smooth flow of operations: The company has maintained good relationship with its major customers and are successful in building a strong clientele base for the enhancement of its business. Its existing relationships help it to get repeat businesses from its customers. This has helped it to maintain a long-term working relationship with its customers and improve its customer retention strategy.
Well-defined organizational structure: The company has a qualified and experienced management team empowered to take decisive decisions which acts as a catalyst while performing execution of contracts and services. The company is managed by a team of competent personnel having knowledge of core aspects of nitty gritty of the business in which it is presently in force. It has an experienced management team having vast experience in the industry and this puts it in a much better position to deal with all challenges in the best interests of the customers.
Risks and concerns
Majority turnover is from few clients: The company’s clientele base is increasing over the years wherein it has been able to add new clients however the number of clients with whom it has done the high value transaction is low. Its management has been proactively involved in increasing the business and have managed to add to the clientele some of the big players and also the company has diversified into Infrastructure space wherein it has already entered into high value contracts with the Government departments. If the company is not able to sustain the momentum and deliver quality service and timely execution, it may not be able to secure big contracts or expand its business which will adversely affect its financial position.
Face competition: While the logistics industry in India is generally fragmented, the company may face competition from a number of international and domestic third-party logistics service providers, especially as the trend toward larger-scale logistics providers in India continues. Some of its competitors may have significantly greater financial and marketing resources and operate larger networks than it do. In the regions of India in which it may operate, it may face competition from certain regional logistics services providers and the unorganized sector, some of which have market presence in their respective areas of operation. It may also face competition from new entrants into the logistics service industry. If it cannot maintain, or gain, sufficient market presence or are unable to differentiate itself from its competitors, it may not be able to compete effectively.
Dependent on road network in India: The transportation and delivery services the company provides is dependent on the road network in India. There are various factors which affect road transport such as political unrest, bad weather conditions, natural calamities, road construction, road quality, regional disturbances, fatigue or exhaustion of drivers, improper conduct of the drivers, accidents or mishaps and third-party negligence. Even though it undertake various measures to avoid or mitigate such factors to the extent possible, some of these could cause extensive damage and affect its operations. Also, any such interruption or disruptions could cause delays in the delivery of goods to their destination and/or also cause damage to transported cargo. It may be held liable to pay compensation for losses incurred by its customers in this regard, and/or losses or injuries sustained by other third parties. Further, such delays and/or damage may cause a loss of reputation, which, over a period of time could lead to a decline in business.
Outlook
Incorporated in 2011, Destiny Logistics and Infra provide logistics services i.e. land-based transportation via 3rd party service providers. It offers a wide range of services i.e. packaging, loading, transportation, unloading, and unpacking of items to offer end-to-end solutions. The company's operations are concentrated in the domestic market, more particularly, in the state of West Bengal. Its group has an established track record of over 10 years which puts it in a much stronger position to deal with any adverse situation both economic and business cycle. The company has a qualified and experienced management team empowered to take decisive decisions which acts as a catalyst while performing execution of contracts and services. It is providing comprehensive third-party logistics services, end-to-end customized logistics solutions to its clients. The company focuses on attaining highest level of customer satisfaction. On the concern side, the company require high working capital for its smooth day to day operations of business and any discontinuance or its inability to acquire adequate working capital timely and on favourable terms may have an adverse effect on its operations, profitability and growth prospects. Besides, the company extends credit to certain of its customers for long periods of time and there is no assurance that it will be able to recover outstanding amounts in part, full or at all. It has and may continue to have high levels of outstanding receivables.
The company has came out with an IPO of 26,94,000 equity shares of Rs 10 each at a fixed price of Rs 20 per equity share to mobilize Rs 5.38 crore. On the performance front, during the FY 2020-21 the revenue from operation and other income of the company increased to Rs 1005.79 lakh as against Rs 674.97 lakh in the FY 2019-20, representing an increase of 49.01% from FY 2019-20. This increase was mainly due to increase in volume of operational activity of the company. The restated Profit after Tax for FY 2020-21 has increased to Rs 30.30 lakh as against Rs 5.11 lakh in the FY 2019-20, representing an increase of 492.46% from FY 2019-20. This increase was mainly due to increase in volume of operation during the FY as mentioned in total income above resulting into absorbing its fixed cost. The company’s focus lies in quality services and in this regard, it shall continue to maintain quality above all be it be customer services or to that matter well trained employees as this will ensure constant growth of its business and retain customers. Its emphasis is on expanding the scale of its operations as well as growing its supply chain network, which will provide attractive opportunities to grow its clientele base and revenues.
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