Rapid Fleet Management Services coming with IPO to raise Rs 43.87 crore

Rapid Fleet Management Services

• Rapid Fleet Management Services is coming out with an initial public offering (IPO) of 22,84,800 equity shares in a price band Rs 183-192 per equity share.
• The issue will open on March 21, 2025 and will close on March 25, 2025.
• The shares will be listed on SME Platform of NSE.
• The face value of the share is Rs 10 and is priced 18.3 times of its face value on the lower side and 19.2 times on the higher side.
• Book running lead manager to the issue is Gretex Corporate Services.
• Compliance Officer for the issue is Ankita Gupta. 

Profile of the company

Rapid Fleet Management Services is a Chennai based company engaged in the business of providing logistics services tailored to the diverse needs of its B2B and B2C clientele. The company is engaged in road transportation. Its process begins with order booking, followed by route planning to optimize efficiency. Each shipment is carefully matched with an appropriate vehicle, factoring in cargo specifics for safe transit. Whether loading from designated stops or its warehouse, its team ensures goods are secured for the journey ahead. Utilizing GPS, FAST-TAG SIM TRACKING navigation systems, it tracks and monitors every movement, providing real-time updates. Upon arrival at the destination, its unloading procedures guarantee safe delivery. 

It serves a wide array of industries, including but not limited to Tyre, Logistics, Electronics, FMCG, Renewable, Durables, FNB, Chemicals. It prides itself on reliability and adaptability in meeting its clients' transportation needs. It is an ISO 9001:2015 certified service provider who handle client requirements in a professional manner to ensure the highest degree of customer satisfaction. Since inception, it has consistently been providing solutions powered by its own fleet vehicles, guided by a team of dedicated professionals with extensive expertise in logistics.

It secured an opportunity to register itself as a service provider for prominent tire manufacturers in the country, catering to well-established brands. It developed its own Mobile App which is being used for its entire flow of business process. To drive operational efficiency and scale the company’s business for future growth, company has implemented Digitify, an advanced Transport Management System (TMS) that seamlessly integrates with Tally and bank payment APIs. This comprehensive system offers a unified platform to manage crucial aspects such as order matching, order management, vendor management, and vendor risk management.

Proceed is being used for:

• Purchase of vehicles (Goods Carriages)
• Working capital requirements
• General corporate purposes

Industry overview 

The Indian logistics industry is growing, due to a flourishing e-commerce market and technological advancement. The logistics sector in India is predicted to account for 14.4% of the GDP. The industry has progressed from a transportation and storage-focused activity to a specialised function that now encompasses end-to-end product planning and management, value-added services for last-mile delivery, predictive planning, and analytics, among other things. One of the key drivers of this expansion is projected to be the rise of India's logistics industry, which employs 22 million people and serves as the backbone for various businesses. 

The logistics sector in India was valued at $250 billion in 2021, with the market predicted to increase to an astounding $380 billion by 2025, at a healthy 10%-12% year-on-year growth rate. Moreover, the government is planning to reduce the logistics and supply chain cost in India from 13-14% to 10% of the GDP as per industry standards. The industry is crucial for the efficient movement of products and services across the nation and in the global markets. The logistics business is highly fragmented and has over 1,000 active participants, including major local players, worldwide industry leaders, the express division of the government postal service, and rising start-ups that focus on e-commerce delivery

The warehousing and logistics industry in India is a dynamic and rapidly growing sector that is expected to play an increasingly important role in the country's economy. Despite some challenges, the sector is well-positioned for long-term growth and presents exciting opportunities for investors and businesses. With the government's focus on improving infrastructure and the rise of e-commerce, the sector is expected to be a key driver of economic growth in the country. Moreover, with the increasing adoption of technology and the government's push for a digital economy, there is also significant potential for logistics players to leverage data analytics, artificial intelligence, and machine learning to improve operational efficiency and enhance customer experience. There are also opportunities for foreign investment as international companies look to tap into India's growing logistics market.

Pros and strengths

Implementation of an integrated TMS - Digitify Book: Its dedication to delivering reliable professional services is rooted in its belief in the critical role of efficiency and technology. To reinforce this commitment, it has had integrated TMS - Digitify Book, a cutting-edge solution designed to elevate its operational capabilities. This innovative tool enhances its service delivery by streamlining processes, optimizing resource utilization, and ensuring unwavering consistency across all its endeavours.

PAN India transport: Implementing PAN India services is for its business due to its multifaceted advantages. Operating from North to South, East to West, such a comprehensive network ensures reliable deliveries and extensive reach, instilling peace of mind in customers. By forging strategic alliances and maintaining an expansive network, businesses can guarantee efficient transportation solutions that transcend geographical barriers. This approach is particularly crucial for the company as it enables them to cater to diverse industries, offering timely deliveries, optimized routes, and a steadfast commitment to meeting distribution needs.

Dynamic approach to market fluctuations: Its operational strategy revolves around a dynamic approach to market fluctuations, where it meticulously matches truck availability with prevailing rates and service quality standards. Around 35-40% of its revenue is derived from its owned trucks, ensuring a reliable and consistent service offering. Meanwhile, the remaining 60% is generated through market trucks, where it maintains stringent standards of reliability. Notably, it secures 80-90% advance payments during the booking process for market trucks, mitigating financial risks and ensuring seamless operations. Furthermore, its owned truck operations are streamlined through a contractual arrangement with drivers, who are compensated on a trip basis, ensuring operational competence.

Risks and concerns

Dependent on top 10 customers: Its business operations are highly dependent on its top customers, which exposes it to a high risk of customer concentration. Loss of one or more of these customers or a reduction in the amount of business it obtains from them for any reason including due to loss of, or failure to renew existing arrangements; adverse general economic conditions; disputes with such customers; decline in business of such customers; adverse changes in the financial condition of such customers; adverse change in any of such customers’ supply chain strategies; reduction in their outsourcing of logistics operations; or if such customers decide to choose its competitors over the company, could have an adverse effect on its business, results of operations, financial condition and cash flows.

Rely on third party service provider: It depends on third-party service provider to set-up and maintain Digitify TMS which handles the complete lifecycle of full truck operations such as Indent Creation, Indent Matching, Trip Confirmation and Dispatch, Tracking and Monitoring & Proof of Delivery. It cannot guarantee that the supply of these services will not be interrupted. Its business operations could be affected if there is a disruption in the third-party services. It cannot ensure that this third- party service provider would operate within the necessary performance standards or specifications. 

Highly fragmented and competitive industry: It operates in a competitive industry across its business verticals. In particular, the road transport industry is highly unorganized and fragmented in nature, and comprises players providing transportation services, intermediaries, such as transport contractors, booking agents and brokers, and consignors. In the logistics industry, it competes with a variety of local, regional and global logistics service providers of varying sizes, operations and financial resources.

Outlook

Rapid Fleet Management Services is a Chennai based company who provides road transportation logistics services tailored to the diverse needs of its B2B and B2C clientele. Its process begins with order booking, followed by route planning to optimize efficiency. On the concern side, it derives majority of its revenue from the State of Tamil Nadu. Such geographical concentration of its business in this region heightens its exposure to adverse developments related to competition, as well as economic and demographic changes in this region which may adversely affect its business prospects, financial conditions and results of operations.

The company is coming out with a maiden IPO of 22,84,800 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 183-192 per equity share. The aggregate size of the offer is around Rs 41.81 crore to Rs 43.87 crore based on lower and upper price band respectively. On performance front, the company’s revenue from operations increased by 9.54%, from Rs 10,552.33 lakh for the financial year ended March 31, 2023, to Rs 11,558.61 lakh for the financial year ended March 31, 2024. Moreover, Profit After Tax for the year increased by 71.25%, from Rs 471.34 lakh for the financial year ended March 31, 2023, to Rs 807.19 lakh for the financial year ended March 31, 2024.

Meanwhile, it strives towards evaluating opportunities for geographic expansion into new regions or cities with high demand for transportation logistics services. It plans to diversify service offerings to cater to a broader range of industries, cargo types, and customer segments, reducing reliance on specific markets or sectors, keeping in mind prudent risk management strategies to mitigate potential challenges such as infrastructure limitations, regulatory hurdles, and competitive pressures for a balance expansion at India level.