Amiable Logistics coming with an IPO to raise Rs 4.37 crore

Amiable Logistics (India)

• Amiable Logistics is coming out with an initial public offering (IPO) of 5,39,200 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 81 per equity share.
• The issue will open for subscription on November 2, 2022 and will close on November 7, 2022.
  
• The shares will be listed on NSE Emerge Platform.
• The share is priced 8.10 times higher to its face value of Rs 10.
• Book running lead manager to the issue is Shreni Shares.
• Compliance Officer for the issue is Mansi Nirav Gandhi.

Profile of the company

The company is in the business of providing services to importers and exporters for the smooth clearance of all kind of imports and exports by air and sea as a clearing and forwarding agent and customs house broker. Its services also include import export consultancy, international freight forwarding, recovery of all type of claims including custom & insurance, warehousing, and transportation through air, road and sea. The company is Member of “The Brihanmumbai Custom House Agent’s Association” popularly known as BCHAA or BCBA. BCBA is an Association of Custom house brokers, licensed by the Commissioner of Customs, Mumbai, under the provisions of the Customs Act 1962.

The company is certified by Indian Customs in its Authorized Economic Operators (AEO) programme under CBIC Circular Number 33/2016-Customs, dated July 22, 2016 in appreciation of its commitment to secure the international supply chain and in compliance with the WCO’s SAFE Framework of Standards. AEO is a voluntary programme. It enables Indian Customs to enhance and streamline cargo security through close cooperation with the principle stakeholders of the international supply chain viz. importers, exporters, logistics providers, custodians or terminal operators, custom brokers and warehouse operators.

The company initially started the work as custom clearance broker and then swiftly moved across domains, geographies and industries to offer a gamut of services for the logistics industry. It offers its customers, transport management services and also freight related services. It also provides complete range of services like Freight Forwarding (Sea freight & Air freight), Custom Clearance, Warehousing, Transportation, Multimodal Transportation, loading/unloading of items to facilitate its customers with end-to-end solutions and other related value-added services. The company’s strength lies in an extensive communication network covering like Mumbai, JNPT, Ahmedabad, Mundra, Delhi, Chennai, Kolkata & others supported by a strong fleet of fast and adequate transportation facilities. It has developed strong relationships with the trade community through its prompt and efficient services. It is also specialist in Door-toDoor services.

Proceed is being used for:

• Funding working capital requirements.
  
• General corporate purposes.

Industry overview

The logistics industry facilitates the trade entrepreneurial activities between two or more parties by means of transporting, storing and delivering goods through either B2B, B2C or C2C supply chain networks. At the present time, logistics companies implement cargo transportation services by land, air and water while adapting to the changing nature of the economic patterns and digitization. This industry is one of the backbones of international trade worth over 5.7 trillion euros. The Asia-Pacific region was the leading logistics market in 2020. Logistics refers to the process of storing and transporting resources, such as equipment, inventory, food, liquids, and materials, from one location to the desired destination. It includes the management of the flow of goods from production to the point of consumption to meeting the requirement of customers. It helps enterprises create additional value, save costs, deliver a better customer experience, and improve brand reputation. At present, various organizations around the world are focusing on strategic logistics management to reduce their transport expenses.

Logistics sector globally has a market size of over $5.2 trillion as per a report from IMARC group. On an average, sector accounts for anywhere between 8-20% in various country's GDP. Logistics costs in India are higher than those in developed countries. USA spends 9.5 per cent of the GDP on logistics while Germany is even more competitive with a share of eight per cent. Higher logistics costs in India could be ascribed to the lack of efficient inter-modal and multi-modal traditional systems thereby presenting significant future scope for development and efficiency. India has the second-largest population in the world with 1.38 billion people and its logistics market is estimated to be around $210 Billion. The domestic logistics market is growing at a faster pace than the economy and is expected to maintain its CAGR of 8-10% in coming years. As per various reports logistics sector contributes around 13% of GDP. Last decade has witnessed multifold changes in logistics landscape like implementation of GST, improvement in road infrastructure and high degree of automation leading to improvement in logistics efficiency. It is estimated that these reforms have led to around 200 to 300 BPS improvement in overall logistics cost to GDP ratio.

Pros and strengths

Diversified revenue sources and customer base: The company offers a range of logistic and related services, making it a one stop logistics solution for customers. In addition to the regular logistic services, it also provides value added services to enhance its appeal to customers. Such range of services eases the gives its customers the comfort of outsourcing a substantial quantum of their logistics management to it. The company’s widespread client-base across various industry verticals has enabled it to leverage the know-how that it has acquired from its experience with a set of clients across a wider spectrum. The company’s growing presence across several industry verticals has helped it to reduce its dependence on only one industry.

Modern processes and technology: The company has invested significant resources in technological capabilities and has developed a scalable technology system. The company uses process and technology to continuously improve its business operations and customer service. This enables it to execute logistics requirements of its clients seamlessly. The company’s business is supported by modern logistics facilities and methods.

Infrastructural Strength: The company is the preferred clearing and forwarding agent for leading Importers & Exporters because of its extensive and well established infrastructure. Its strength lies in an extensive communication network covering like Mumbai, JNPT, Ahmedabad, Mundra, Delhi, Chennai, Kolkata & others supported by a strong fleet of fast and adequate transportation facilities. It has developed strong relationships with the trade community through its prompt and efficient services. It is also specialist in Door-to-Door services.

Risks and concerns

Substantial revenue comes from clients based in India only: The company has derived a substantial portion of its revenue from services offered to clients based in India only. If the economic conditions of India become volatile or uncertain or the conditions in the financial market were to deteriorate, especially in recent times due to the COVID-19 pandemic, or if there are any changes in laws applicable to its services and operations or if any restrictive conditions are imposed on it or its business, the pricing of its services may become less favourable for it. Further, its clients located in these geographies may reduce or postpone their spending significantly which would adversely affect its operations and financial conditions. Any reduction in spending on third party logistic services may lower the demand for its services and negatively affect its revenues and profitability.

High working capital requirement: The company’s business demands working capital requirements. In case there are insufficient cash flows to meet its working capital requirement or it is unable to arrange the same from other sources or there are delays in disbursement of arranged funds, or it is unable to procure funds on favourable terms, it may result into its inability to finance its working capital needs on a timely basis which may have an adverse effect on its operations, profitability and growth prospects.

Stiff competition: Growing competition may result in a decline in its market share and may affect its margins which may adversely affect its business operations and its financial condition. The company operates in an industry, which faces intense competition from established as well as unorganized players. The company’s competition depends on several factors, which include quality, price and its pace in keeping up with the changing trends. Competition emerges from both organized as well as unorganized sector. If it is unable to effectively compete its revenues and reputation may be adversely affected and the company will not be able to achieve its long-term strategies.

Outlook

Amiable Logistics (India) is in the business of providing services to importers and exporters for the smooth clearance of all kinds of imports and exports by air and sea as a clearing and forwarding agent and customs house broker. The company is a member of “The Brihanmumbai Custom House Agent's Association” popularly known as BCHAA or BCBA. The company's services also include import-export consultancy, international freight forwarding, recovery of all types of claims including customs & insurance, warehousing, and transportation through air, road and sea. On the concern side, the company’s revenues are highly dependent on clients located in India. Any decline in the economic health of India could adversely affect its business, financial condition and results of operations. Moreover, the company requires 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.

The company is coming out with an IPO of 5,39,200 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 81 per equity share to mobilize Rs 4.37 crore. On performance front, the company’s revenue from operations was increased by 23.78% to Rs 1,703.74 lakh for the FY22 from Rs 1,376.38 lakh for the FY21 due to increase in revenue in the year FY22 by RS 327.36 lakh on account of sales of services provided to importers and exporters for the smooth clearance of all kind of imports and exports by Air & Sea. The company’s profit for the year increased by 63.06% to Rs 48.38 lakh in FY22 from Rs 29.67 lakh in FY21. Going forward, the company’s integrated, end-to-end logistics services focus on creating solutions that address the requirements of its client. This shall help it to cater to expand its customer base and increase its revenue from operations. With the kind of knowledge and experience in the industry segment, the company is well poised to leverage the opportunity this industry offers. It may continue to strive to offer qualitative and diverse products to meet evolving preferences of customers.