Platinumone Business Services coming with an IPO to raise upto Rs 4 crore

Platinumone Business Services

• Platinumone Business Services has come out with an initial public offering (IPO) of 422400 Equity Shares of face value of Rs 10 each for cash at a fixed price of Rs 92 per equity share. 
• The issue will open on September 2, 2021 and will close on September 7, 2021.
• The shares will be listed on SME Platform of BSE.
• The share is priced 9.20 times higher to its face value of Rs 10.
• Book running lead manager to the issue is Gretex Corporate Services.
• Compliance Officer for the issue is Sony Devhare. 

Profile of the company

The company is engaged in the business of providing Business Process Management Services. Business Process Management Services (BPMS) has an endless reach in the today’s market. In today’s business world mid-size companies to large corporate are focusing on out sourcing model for their various activities. India's cost competitiveness in providing IT services, which is approximately 3-4 times cheaper than the US, continues to be the mainstay of its Unique Selling Proposition (USP) in the global sourcing market. Since BPMS being an endless market, it has focused on special area in BPMS which is Customer Acquisition. The company provides services to mid-size and large corporates to fulfill their Customer Acquisition needs. The company provide services in various industries namely FMCG, Real Estate, Furniture, Insurance, Consumer Durables etc. Its tailor-made solutions offers customized engagement models to facilitate the ease of doing their business.

The company provides processes like Lead Conversion, Customer Care, Channel Management, Lead Generation and Loyalty Program being delivered through their Call Centres. Additionally, Sales Enablement as a service delivered through a Team of Domain Experts empowering Sales Partners face to face or digitally. It has a dedicated team of professionals comprising of experienced personnel in every Industry.

Proceed is being used for:

• Meeting working capital requirement.
• General corporate purposes.

Industry overview

The global sourcing market in India continues to grow at a higher pace compared to the IT-BPM industry. India is the leading sourcing destination across the world, accounting for approximately 55% market share of the $200-250 billion global services sourcing business in 2019-20. The IT industry accounted for 8% of India’s GDP in 2020. Exports from the Indian IT industry are expected to increase by 1.9% to reach $150 billion in FY21. In 2020, the IT industry recorded 138,000 new hires. According to STPI (Software Technology Park of India), the software exports by its registered units increased by 7% YoY to reach Rs. 5 lakh crore ($67.40 billion) in FY21 from Rs. 4.66 lakh crore ($62.82 billion) in FY20, driven by rapid digitization and the IT industry's timely transition to remote working environments that helped to keep up the industry’s growth amid coronavirus pandemic. India has become the digital capabilities hub of the world with around 75 per cent of global digital talent present in the country.

Share of the services sector accounted for 55.39% of the total GVA in FY21. India’s services sector GVA increased at a CAGR of 11.43% to Rs. 101.47 trillion ($1,439.48 billion) in FY20, from Rs. 68.81 trillion ($1,005.30 billion) in FY16. Between FY16 and FY20, financial, real estate and professional services augmented at a CAGR of 11.68% (in Rs terms), while trade, hotels, transport, communication and services related to broadcasting rose at a CAGR of 10.98% (in Rs terms). According to RBI, in April 2021, service exports stood at $21.17 billion, while imports stood at $10.61 billion. The India Services Business Activity Index/ Nikkei/IHS Markit Services Purchasing Managers' Index fell to 46.4 in May 2021 from 54.0 in April 2021, as output and new orders declined due to COVID-19-induced restrictions to contain the spread of coronavirus.

Pros and strengths

Needs of customers: The company has a system in place which has attained high level of knowledge about the needs of its customers, resulting from continuous two-way communication between its representatives and customers. It has a team of individuals who are constantly analyzing the market scenario and studying its customer’s requirements. It try to cater to its customer’s requirements by offering them a vast basket of product range. Its experience combined with its professionalism and capacity to deliver has helped it to grow at a steady rate in the last 12 years. Its aim is to earn customer's trust and confidence through personal attention, passion for what it does and commitment to long-lasting relationship. It is prepared to go an extra mile to deliver to its customers’ a measurable business value and help them adopt and succeed in the service industry.

Quality service: The company has a set of standards for itself when it comes to timeliness and quality of service it provide to its customers. The stringent systems ensure that all the services that it provide reach its customers on stipulated time and there are minimum errors to ensure reduced rejection. Its quality service for the last 12 years has earned it a goodwill from its customers, which has resulted in customer retention and order repetition. It has also helped it to add to its existing customer base. It has developed internal procedure of checking the client’s needs at each stage. Its company focuses on maintaining the level of consistently in its service, thereby building customer loyalty for its Brand.

Excellent infrastructure and technology: The company is committed to delivering Zero Downtime to its Clients. Accordingly, the company has invested in hardware and software of the highest quality. Multiple redundancies are in place to ensure business continuity irrespective of power disruption or any other issue. The IT Team is trained and committed to quick diagnosis and trouble shooting. All in all, its Clients get access to continuous Operations due to the excellent Infrastructure and Trained IT Team.

Risks and concerns

Depends on top 5 customers: The company’s top five and ten customers contribute to a substantial portion of its revenues for the year ended March 31, 2021. Any decline in its quality standards, growing competition and any change in the demand for its service by these customers may adversely affect its ability to retain them. It has maintained good and long-term relationships with its customers. However, there can be no assurance that it will continue to have such long-term relationship with them, also any delay or default in payment by these customers may adversely affect its business, financial condition and results of operations. It cannot assure that it shall generate the same quantum of business, or any business at all, from these customers, and loss of business from one or more of them may adversely affect its revenues and profitability.

Requires significant amounts of working capital: The company’s business is working capital intensive. A significant portion of its working capital is utilized towards trade receivables. It intends to continue growing by expanding its business operations. This may result in increase in the quantum of current assets particularly trade receivables. Its inability to maintain sufficient cash flow, credit facility and other sources of fund, in a timely manner, or at all, to meet the requirement of working capital could adversely affect its financial condition and result of its operations.

Face intense competition: The company compete with a number of entities that provide similar services in each of the business lines in which it operate. Its competitors may be able to respond more quickly to new or changing opportunities, technologies, and client requirements and may offer better technological services, more attractive terms to clients and adopt more aggressive pricing policies than it will be able to offer or adopt. In addition, the markets in which it compete will continue to attract new competitors and new technologies, including international providers of services similar to its.

Outlook

PlatinumOne Business Services provides customer acquisition-specific Business Process Management Services (BPMS) services to mid-size and large corporates. The company offers its services in several industries including FMCG, Real Estate, Furniture, Insurance, Consumer Durables, etc. Process offerings include Lead Conversion, Customer Care, Channel Management, Lead Generation and Loyalty Program which are delivered through their Call Centres. The company is committed to delivering Zero Downtime to its Clients. Accordingly, it has invested in hardware and software of the highest quality. It has a system in place which has attained high level of knowledge about the needs of its customers, resulting from continuous two-way communication between its representatives and customers. On the concern side, the company operate in a capital-intensive industry, which requires substantial levels of funding. It will continue to incur significant expenditure in maintaining and growing its existing infrastructure.  Its operating expenses include various fixed costs, which are as such, not dependent on sales revenue. Any shortfall in sales may cause significant variations in operating results in any particular quarter, as it would not be able to reduce its fixed operating expenses in the short term.

The company is coming out with an IPO of 422400 equity shares of Rs 10 each at a fixed price of Rs 92 per equity share to mobilize Rs 3.88 crore. On the performance front, the company’s total revenue decreased by 22.81% to Rs 2,020.81 lakh for the financial year 2020-21 from Rs 2,618.00 lakh for the financial year 2019-20. The company’s profit after tax decreased by 47.37% to Rs107.54 lakh for the financial year 2020-21 from Rs 204.32 lakh for the financial year 2019-20, reflecting a net decrease of Rs 96.78 lakh. The company will build its Technology team for specific hot skills that the organization will need in the near future. Technology will be the core of its Service Offering and its own People should deliver the development support rather than overly relying on Vendor Partners. Over time, the company wants a majority of its services to be delivered through Technology rather than via people. This will impart scalability to the business.