Pranik Logistics Ltd. IPO: Key Details

Pranik Logistics

• Pranik Logistics is coming out with an initial public offering (IPO) of 29,18,400 equity shares in a price band Rs 73-77 per equity share.
• The issue will open on October 10, 2024 and will close on October 14, 2024.
• The shares will be listed on SME Platform of NSE.
• The face value of the share is Rs 10 and is priced 7.30 times of its face value on the lower side and 7.70 times on the higher side.
• Book running lead manager to the issue is Narnolia Financial Services.
• Compliance Officer for the issue is Ayon Biswas.

Profile of the company

Pranik Logistics is engaged as carrying and forwarding agent providing end-to-end Logistics solutions i.e. from the point of origin to the point of consumption, in order to meet the needs of its customers and corporations. It is a pan India logistics provider, acting as carrying and forwarding agent and providing integrated services including transportation, warehousing, material handling and freight forwarding to its customers belonging to various industries such as Retail, Customer Durables, Telecom, Manufacturing, Pharma, etc. Since its establishment in 2015, it has over the period expanded the ambit of its services. The company offers customized services as per the requirements of its customers. The company has a dedicated team of employees and agents, who manage the entire supply chain effectively and efficiently.

The company manages a fleet of commercial vehicles, comprising more than 80 vehicles that it owns, and any further requirement is managed through leasing the vehicles on trip-to-trip basis. Its fleet encompasses various types of trucks categorized by design, size, and capacity. Its container trucks are utilized for parcel transportation, while Platform Trucks handle heavy-duty goods like automotive parts and machinery. The diversity of its transportation vehicles allows it to cater to a wide range of consignments. Further, it operates a total of 30 warehouses, which are directly managed by the company.

The technological systems that the company uses for managing the logistics operations are provided by its clients that enable it to improve its service quality, consistency and increase its operating efficiency. The company’s accounting systems also enable it to implement stringent financial controls. It has obtained certifications from FSSAI for facilitating the delivery of perishable goods in West Bengal only. 

Proceed is being used for:

• Meeting expenses for investment in technology 
• Meeting capital expenditure requirement of the company
• Meeting working capital requirements of the company
• Meeting general corporate purposes
• Meeting the issue expenses

Industry Overview

India Smart Warehousing Market size was estimated at $2.93 billion in 2023. During the forecast period between 2024 and 2030, the size of India Smart Warehousing Market is projected to grow at a CAGR of 14.65% reaching a value of $6.66 billion by 2030. Major growth drivers for the India Smart Warehousing Market include the growing multi-channel distribution networks, an increasing emphasis on environmentally friendly initiatives and rising sustainability measures to reduce waste. The dynamic and globalized nature of supply chain networks further contributes to propelling the market's expansion. Also, the ongoing Industry 4.0 revolution is transforming contemporary warehouse operations through the integration of technologies such as Big Data analytics, Artificial Intelligence, autonomous robotics, augmented reality, and the Internet of Things. The smart warehousing industry is advancing significantly, driven by the increasing popularity of e-commerce and the ongoing process of digitization. 

Meanwhile, the global logistics market size reached $5.4 Trillion in 2023. Looking forward, the market is expected to reach $7.9 Trillion by 2032, exhibiting a growth rate (CAGR) of 4.1% during 2024-2032. The market is experiencing robust growth, driven by rapid expansion of e-commerce sector, rising technological advancements, such as the Internet of Things (IoT), ongoing globalization of trade, increasing focus on environmental sustainability, and growing consumer demand for faster delivery systems. The India logistics market size reached $282.3 Billion in 2023. Looking forward, the market is expected to reach $557.4 Billion by 2032, exhibiting a growth rate (CAGR) of 7.85% during 2024-2032. The significant expansion in the e-commerce and online retail industry, the implementation of favorable government policies encouraging the adoption of logistics services, and emerging technological advancements are some of the major factors contributing to the market growth.

Nowadays, key players in the market are employing a diverse range of strategies to fortify their positions and harness the industry's growth potential. In addition, logistics companies are embracing technology to enhance their operational efficiency and customer experience. They are adopting advanced tracking and monitoring systems, implementing IoT solutions for real-time visibility, and leveraging data analytics to optimize routes, reduce transit times, and enhance overall supply chain management. Moreover, companies are offering tailored logistics solutions to cater to diverse industry needs from specialized temperature-controlled transportation for perishables to specialized handling for high-value goods, customization ensures better alignment with clients’ requirements. Besides this, key players are focusing on customer satisfaction, and providing seamless tracking, transparent communication, and flexible delivery options. 

Pros and strengths

Asset-light business model: The company operates its business primarily on the basis of an “asset-light” business model which allows flexibility and scalability in operations and high capital efficiency. This model offers a variety of flexible, scalable, solutions. An “asset-light” business model also helps it to reduce its capital expenditure requirements, mitigate the effects of operational risks relating to maintenance costs and depreciation in addition to reducing the effect of any risks emanating from changes in laws and regulations. The company owns 86 vehicles, and any further requirement is managed through leasing the vehicles on trip-to-trip basis. The company has outsourced a variable number of vehicles, either through leasing arrangements or on a per trip basis. However, the exact total number of the same cannot be specified.

Long-standing client relationships with its clients across multiple verticals: The company enjoys long-standing relationships with its customers. These long-standing relationships are the result of its commitment to quality, timely delivery, etc. Over the period of a decade, the company has gained invaluable experience in assisting its customers by incorporating the latest technologies, efficiently utilizing its capabilities, equipment’s, and materials, and thereby constantly improving its offerings in order to meet their needs.

Quality assurance and standards: The company has obtained a license from FSSAI for facilitating the delivery of perishable goods. It adheres to quality standards as per Industry; hence it gets repetitive orders from its customers, which enables it to maintain its brand image in the market. 

Risks and concerns  

Maximum revenue comes from top 10 customer: The company derives most of its revenues from operations from limited set of customers and more than 50% of the revenue is from its top 2 customers. The company garnered 84.97%, 92.72% and 94.16% of revenue from top 10 customers in FY24, FY23 and FY22. As its business is currently concentrated among relatively few significant customers, it may experience reduction in cash flows and liquidity and its business would be negatively affected if it loses one or more of its major customers or if the amount of business from one or more of them is significantly reduced for any reason, including as a result of a dispute with or disqualification by a major customer.

Geographical constrain: The company operates its business operations from its registered office at West Bengal and has a strong presence in east India. These states contribute to a substantial portion of its revenues for the period ended June 30, 2024, and year ended on March 31, 2024, 2023 & 2022. Any factors relating to political and geographical changes, growing competition and any change in demand may adversely affect its business. The company cannot assure that it shall generate the same quantum of business, or any business at all, from these states, and loss of business from one or more of them may adversely affect its revenues and profitability.

Huge working capital requirement: The company’s business operations require a significant amount of working capital. In its business, working capital is often required for its day-to-day business operations including managing freight, forwarding and fuel expenses. In the event it is unable to source the required amount of working capital, it might not be able to efficiently satisfy the demand and preferences of its customers in a timely manner or at all. Even if it is able to source the required amount of funds, it cannot assure that such funds would be sufficient to meet its cost estimates and that any increase in the expenses will not affect its business.

Outlook

Pranik Logistics offers integrated logistics solutions. It is a PAN India logistics provider operating as a freight forwarder and transporter, providing integrated services such as transportation, warehousing, material handling, and freight forwarding to its clients in various industries such as retail, consumer durables, telecom, manufacturing, pharma, etc. The company has its own fleet of 86 commercial vehicles, which can also be leased if required. In addition, the company has a total of 30 warehouses that are managed directly by the company. On the concern side, the company is dependent on its top customers for a significant portion of its revenues. The loss of a major customer or significant reduction in demand from any of its major customers may adversely affect its business, financial condition, results of operations and prospects. Moreover, the company’s top five states contribute its major revenue for the period ended June 30, 2024, and Financial Year 2024, 2023, 2022. Any loss of business from one or more of these states may adversely affect its revenues and profitability.

The company is coming out with a maiden IPO of 29,18,400 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 73-77 per equity share. The aggregate size of the offer is around Rs 21.30 crore to Rs 22.47 crore based on lower and upper price band respectively. On performance front, the company’s total income for the year ended March 31, 2024, stood at Rs 6,770.08 lakh whereas in Financial Year 2022-23 it stood at Rs 6,090.62 lakh representing an increase of 11.16%. The increase in total income of the company is due to a significant increase in the revenue of the company and general growth in the business operations of the company. Moroever, the restated profit after tax for the year ended March 31, 2024, stood at Rs 406.56 lakh whereas in Financial Year 2022-23 it stood at Rs 93.23 lakh representing an increase of 336.08%.

The company has established a widespread geographic presence across the nation, mainly in the east. The company’s expansion strategy aims to further extend its reach into new markets and regions. This strategy is pursued by its team with the objective of tapping into new customer bases, accessing untapped markets, and capitalizing on growth opportunities beyond the company’s existing locations. It continues to expand its Pan-India network of branches, agencies and warehouses for its business operations. The company intends to add a significant number of branches and warehouses in northern, central and western regions of India as well as increase the depth of its existing network in key States.