Plada Infotech Services coming with IPO to raise Rs 12.36 crore

Plada Infotech Services

• Plada Infotech Services is coming out with an initial public offering (IPO) of 25,74,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 48 per equity share.
• The issue will open for subscription on September 29, 2023 and will close on October 4, 2023.
• The shares will be listed on NSE Emerge Platform.
• The share is priced 4.80 times higher to its face value of Rs 10.
• Book running lead managers to the issue is Indorient Financial Services.
• Compliance Officer for the issue is Abhishek Jain.

Profile of the company

Plada Infotech Services is engaged in BPO services specializing in the area of support services solutions. The company provides wide ranges of support services such as Call Centre, Contact Point Verifications, Site Visits, Document check/ Pickup, E-KYC, Skip Tracing, Employee Back Check, Staffing Solutions, Payroll Management, Payment Collections (soft), AMC Booking Services etc. to its clients and specializes in providing End to End solutions to customers/ clients. 

It specializes in delivering comprehensive Business Process Outsourcing (BPO) services tailored to its clients' specific needs. Its focus is on exceeding delivery standards and providing high-quality solutions using the latest technology and industry best practices. With a team of skilled professionals, it offers a diverse range of services to support various aspects of its clients' business operations. The company's business operations span across various regions within India, with a notable concentration of business activities in the states of Maharashtra and Tamil Nadu. While the company's presence is pan-India, a significant portion of its revenue is generated from these two states, showcasing the company's strong market presence and engagement within these regions. 

The company currently operates solely within the boundaries of India and does not have any business activities, subsidiaries, or operations in foreign countries. The company's focus remains on its domestic operations, ensuring efficient service delivery and customer satisfaction within the Indian market. The company maintains well-defined and established business agreements with all of its clients. These agreements outline the terms, scope, and responsibilities of both the company and its clients, ensuring clear expectations and a harmonious working relationship. It is noteworthy that the company does not employ contractual employees within its organizational structure. This strategic choice is aligned with the company's commitment to maintaining a stable and reliable workforce that is directly associated with its operations and values.

Proceed is being used for:

• Meeting the working capital requirements.
• Purchasing Laptops and accessories for IT development.
• Repayment and / or prepayment in part or in full, of certain outstanding loans of the company.
• General Corporate Purposes.
• Meeting the issue expenses.

Industry overview

India’s digital economy is estimated to reach $1 trillion by 2025. By 2025-2026, India is expected to have 60-65 million jobs that require digital skills, according to a Ministry of Electronics & IT report titled India's trillion-dollar digital opportunity. The IT industry added 4.45 lakh new employees in FY22, bringing the total employment in the sector to 50 lakh employees. The IT-BPM services revenue reached $ 94 billion in FY21. Exports from the Indian IT industry are expected to be around US$ 178 billion in FY22. Export of IT services has been the major contributor, accounting for more than 51% of total IT export (including hardware). BPM and engineering and R&D (ER&D) and software products export accounted for 20.78% each to total IT exports during FY21. 

Indian software product industry is expected to reach $100 billion by 2025. Indian companies are focusing on investing internationally to expand their global footprint and enhance their global delivery centres. In line with this, in February 2021, Tata Consultancy Services announced plans to recruit 1,500 technology employees across the UK over the next year. The development would build capabilities for TCS to deliver their services efficiently to the UK customers.

In June 2022, Redington India, an IT provider, entered into a multi-year strategic agreement with Amazon Web Services (AWS) to drive cloud technology adoption in India. In June 2022, German tech major SAP AG launched its metaverse initiative in India, aimed at accelerating cloud adoption among Indian enterprises. In August 2022, the Indian Computer Emergency Response Team (CERT-In), in collaboration with the Cyber Security Agency of Singapore (CSA), successfully planned and carried out the 'Synergy' Cyber Security Exercise for 13 countries to build network resiliency against ransomware attacks. In November 2021, the government launched Internet Exchange in Uttarakhand to enhance the quality of internet services in the state.

Pros and strengths

Maintaining long term relationship with clients: Its track record of delivering solutions to complex business problems backed by demonstrable industry and technology expertise has helped it forges strong relationships with its clients. It has maintained long term relationship with its key customers by providing services according to their requirements and specifications.

Distribution network: Its distribution network offers PAN India coverage with 12 office locations across 12 cities and coverage across other cities through its network of resident engineers working remotely. Such PAN India coverage enables it to cater to a diverse mix of customers including Banks, corporates, small and medium enterprises (SMEs) and other business entities. Its geographic coverage and operational network also ensures that it maintains the quality of service to its customer.

Experienced promoter and senior management team: It has a qualified management team, with extensive industry experience in the services it offers. Its strong Promoter background and an experienced senior management team have helped it to offer high standards of customer service and support to its end customers.

Risks and concerns

Depends on top five enterprise customers: Its business is concentrated around key customers, which account for a significant amount of its revenue. If it fail to keep these customers or fail to diversify its customer base, its business, results of operations, cash flows and financial condition may be materially adversely affected. Its revenue from operations from its top five enterprise customers together represented 88%, 91%, and 89% of its revenue from operations for the financial year ended March 31, 2023, March 31, 2022 and March 31, 2021 respectively. Its heavy reliance on its top five enterprise customers, exposes it to potential revenue concentration risk. Any unforeseen adverse changes in its relationships with these customers, including the loss of business, could have a material impact on its financial performance.

Depends on key personnel:  Its success is substantially dependent on the expertise and services of its Directors, Promoters and its Key Managerial Personnel. They provide expertise which enables it to make well informed decisions in relation to its business and its future prospects. Its future performance will depend upon the continued services of these persons. Demand for Key Managerial Personnel in the industry is intense and key personnel are at-will employees and may terminate their employment relationship with it at any time. It cannot assure that it will be able to retain any or all, or that its succession planning will help to replace, the key members of its management.

Unable to attract new customers: It is important to its continued growth that it retains its existing customers. Its customers have no obligation to renew it services at the same prices and terms. While it has not faced instances in the past, where the existing clients did not renew their agreements, its customer retention or its customers’ use of its services may decline or fluctuate as a result of a number of factors, including its customers’ satisfaction with its offerings, its prices and pricing plans, reductions in its customers’ spending levels etc. If it is unable to successfully acquire new customers, retain its existing customers, or expand sales to existing customers, its business, financial condition, and results of operations could be adversely affected.

Outlook

The company is engaged in BPO services specializing in the area of support services solutions. The company provides wide ranges of support services such as Call Centre, Contact Point Verifications, Site Visits, Document check/ Pickup, E-KYC, Skip Tracing, Employee Back Check, Staffing Solutions, Payroll Management, Payment Collections (soft), AMC Booking Services etc. to its clients and specializes in providing End to End solutions to customers/ clients. On the concern side, its business is concentrated around key customers, which account for a significant amount of its revenue. If it fail to keep these customers or fail to diversify its customer base, its business, results of operations, cash flows and financial condition may be materially adversely affected.

The company is coming out with an IPO of 25,74,000 equity shares of Rs 10 each at a fixed price of Rs 48 per share to mobilize Rs 12.36 crore. On performance front, in the fiscal year 2023 the revenue stood to Rs 6,216.96 lakh as against to Rs 4,877.85 lakh in the Fiscal year 2022, thereby recorded an increased in the revenue on a proportionate basis as compared to Fiscal year 2022 primarily driven by higher merchandise acquisition activities, growth in its manpower supply and payroll services and enhance account management activities. For the Fiscal 2023, the company reported a net profit after tax of Rs 233.82 lakh, as against a net profit after tax of Rs 109.97 lakh in Fiscal 2022. Meanwhile, it has invested significantly in equipping its technical team with the latest and specialized infrastructure and modern technology. It will continue to invest in the upgradation and modernization of its infrastructure and technology.