Transvoy Logistics coming with an IPO to raise Rs 5.11 crore

Transvoy Logistics India

• Transvoy Logistics India is coming out with an initial public offering (IPO) of 7,20,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 71 per equity share.
• The issue will open on January 20, 2023 and will close on January 24, 2023.
• The shares will be listed on SME Platform of BSE.
• The share is priced 7.10 times higher to its face value of Rs 10.
• Book running lead manager to the issue is Beeline Capital Advisors.
• Compliance Officer for the issue is Khewna Sahil Madhu.

Profile of the company

The company is engaged in the business of integrated logistics solutions. The company’s key expertise include NVOCC, Freight Forwarding, Custom Clearance, Transportation handlings locally as well as globally and Advisory on MEIS License Trading. The company primarily provides services to its clients’ countries namely India, China, Middle East, Sri Lanka, Singapore and Malaysia.

The company’s promoters have a combined experience of more than 42 years in logistics industry. Driven by the passion for building an integrated logistics company, backed by their experience, its Promoters have been the pillars of the company's growth and have built a strong value system for the company. With their enriching experience and progressive thinking, the company aims to continue to grow in logistics industry.

The company realizes that clients have specific requirements with regards to their shipments. It therefore spend considerable time with clients individually to understand their specific requirements. In line with the global trend the company had already taken sufficient initiatives long ago to outsource business partners and vendors, thereby being able to provide a wide range of services at economical costs.

Proceed is being used for:

• Meeting working capital requirements
• Investment in subsidiary for purchase of containers
• General corporate purpose
• Meeting issue expenses

Industry Overview

The Indian logistics industry was valued at an estimated $130 billion in 2012-13. It has grown at a CAGR of over 16 per cent over the last five years. The industry comprises the following main segments: Freight and passenger transportation via road, rail, air and water; and Warehousing and cold-storage. The contribution from the movement of goods including freight transportation and storage is about 90 per cent. Aggregate freight traffic is estimated at about 2-2.3 trillion tonne kilometres. Road dominates the mode of freight transport mix and constitutes about 60 per cent of the total freight traffic. Rail and coastal shipping account for about 32 per cent and 7 per cent, respectively, while the share of inland waterways transportation and air is less than 1 per cent each.

Air cargo volume grew at a compound annual growth rate (CAGR) of about 8.5 per cent from 0.7 MMT in 1998-99 to 2.2 MMT in 2012-13. International traffic accounts for about 64 per cent of the total air cargo traffic and domestic cargo accounts for the remaining 36 per cent. Between 1998-99 and 2012-13, domestic and international cargos have grown at a CAGR of 10.4 per cent and 7.6 per cent, respectively. Expanding cargo-handling infrastructure at airports, demand for speedy delivery, greater trade and commerce and increase in the number of flights operating - are some of the key reasons for this growth. Meanwhile, Shipping routes through coasts and inland waterways are primarily used for transportation of bulk freight. India possesses about 14,400 km of inland waterways. Over 3,600 km are navigable by large vessels, of which about 55 per cent is being used. To exploit the potential of this mode of transport, six national waterways have been declared three of which are operational while three are being developed. In 2012-13, the estimated cargo movement via inland waterways was at around 89 million tonnes.

Rapid growth in industries such as automobiles, pharmaceuticals, fast-moving consumer goods (FMCG) and retail has significantly increased the demand for movement of consumer and capital goods across the country, from entry ports to manufacturing or distribution locations or from manufacturers and distributors to consumers and exit ports. The volume of freight traffic is positively related to the GDP of the country. Therefore, as the GDP increases, the volume goods’ movement is expected to increase through all modes. During the period from 2007-2012, the agriculture and manufacturing GDP have increased from $263.6 billion to $290.7 billion at constant prices. The corresponding increase in freight traffic was from 1.3 trillion tonne kilometres (TTK) to 2.1 TTK.

Pros and strengths

Existing supplier relationship: The company’s existing supplier relationship protects the business with terms of supply and pricing of the products and services, the quality of the products and services offered etc. The company, being a small and medium size organization, rely on personal relationships with its suppliers. Further, the company also leverages the past experience of its management in maintaining effective supplier relationship ensuring uninterrupted supply chain management.

Asset light business model: The company is structured on a unique business model with service centric approach. It is an asset light company, which provides it the advantage during the selection of its suppliers. This helps the company same time, increase efficiency and ensure timely delivery.

Comprehensive solution for logistics requirement: The company 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.

Risks and concerns

No long-term contracts with its dealers/consignment agents: The company neither has any long-term contract with any of dealers and suppliers nor any marketing tie up for its services. However, the company has short term Contracts with its clients. The company’s inability to cater its services to the clients, may adversely affect its business and profitability in future. 

Freight forwarding business depends upon network of overseas agents: The company depends on its network of overseas agents for cargo handling, transportation, warehousing and timely delivery at the destination and load port for export cargo and import cargo respectively. For this purpose, it enters into agency agreements and co-operation agreements in the normal course of business with overseas agents. Any deficiency in the service levels of its overseas agents or termination of any such agency agreement can directly impact its business.

Huge working capital requirement: The company’s business requires significant working capital, part of which would be met through additional borrowings in the future. In many cases, significant amounts of working capital are required to finance the procurement of branded products before payments are received from customers. Its working capital requirements may increase, under certain conditions, where payment terms do not include advance payments or include delayed payments from customers. Additionally, its working capital requirements have increased in recent years due to the general growth of its business. All these factors may result, or have resulted, in increases in its working capital needs.

Outlook

Transvoy Logistics India is engaged in the business of integrated logistics solutions. The company offers services like NVOCC, Freight Forwarding, Custom Clearance, Transportation handling, and Advisory on MEIS License Trading. It operates primarily in India along with expanding to different parts of the world including Sri Lanka, China, Malaysia, Middle East, and Singapore. It maintains highest quality in the service and strive at satisfying the requirements of the customers. On the concern side, the company’s freight forwarding business depends upon its network of overseas agents for fulfilment of logistics needs of its customers. The company’s inability to maintain its relationships with its overseas sales agents or deficiency in the service provided by such agents may adversely affect its revenues and profitability.

The company is coming out with an IPO of 7,20,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 71 per equity share to mobilize Rs 5.11 crore. Minimum application is to be made for 1600 shares and in multiples thereon, thereafter. On performance front, the company’s total revenue jumped 8 fold to Rs 502.99 lakh in FY22 as compared to Rs 62.21 lakh in FY21. Moreover, the company’s net profit jumped 48 times to Rs 56.69 lakh in FY22 as against Rs 1.18 lakh in FY21.

Going forward, the company is focusing on increasing sales volume through expansion, diversification and spread in geographical outreach. The company’s growth in local market can fetch it new business expansion and opportunities. It is currently providing its services to several clients domestically. The company’s emphasis is on scaling of its operations in other markets which shall provide it with attractive opportunities to grow its client base and revenues. Apart from expanding business and revenues the company has is looking for areas to reduce costs and achieving efficiencies in order to remain a cost competitive company.