Timescan Logistics coming with an IPO to raise upto Rs 4.81 crore

Timescan Logistics (India) 

• Timescan Logistics (India) is coming out with an initial public offering (IPO) of 9,44,000 Equity Shares of face value of Rs 10 each for cash at a fixed price of Rs 51 per equity share.
  
• The issue will open for subscription on December 31, 2021 and will close on January 04, 2022.
  
• The shares will be listed on NSE Emerge Platform. 
  
• The share is priced 5.10 times higher to its face value of Rs 10.
  
• Book running lead manager to the issue is Finshore Management Services.
  
• Compliance Officer for the issue is Ms. S Anupriyankha.
  

Profile of the company

Timescan Logistics (India), is an ISO 9001:2015 certified company for Quality Management Services for providing services namely International Freight Forwarding, Customs Broker, Third Party Logistics (3PL), Warehousing and Transportation services. It has been registered as Custom House Broker with Custom Office – Chennai, Custom Office - Vijayawada and Custom office - Mundra under Department of Revenue, Ministry of Finance and authorised to transact business as Custom Broker all over India by the Custom Office, Chennai under Department of Revenue, Ministry of Finance. It is also registered as a Multimodal Transport Operator under the Multimodal Transportation of Goods Act, 1993 to carry on/commence the business of Multimodal transportation under the Directorate General of Shipping, Ministry of Shipping, Government of India. It is also having approximately 16,354 Sqft warehouse taken on long term lease Under Free Trade Warehousing Zone of JMD Chennai SEZ.

The company has also complied with the conditions of membership for World Cargo Alliance (WCA) and now become a member of World Cargo Alliance (WCA). World Cargo Alliance is the world’s largest and most powerful network of independent freight forwarders, which benefited the members in Global reach, Networking & events, Marketing & Promotions etc. Every member of every WCA world network is also automatically covered by the most generous and extensive financial protection program in the industry, which allows member company to conduct business with other WCA members with complete security and peace of mind. 

Proceed is being used for:

• Meeting the working capital requirements.
  
• Meeting the issue expenses.
  
• General corporate purposes.
  

Industry Overview

The Indian logistic sector is primarily categorized into four segments comprising Transportation (rail, road, air, water-ways), warehousing (Container freight stations and Inland Container Depots), freight forwarding and value-added logistics. The transportation contributes maximum (60%) to the whole pie of logistic sector which comprises of various means such as road, rail, air and water. India, despite being a low-cost country, has higher logistics cost due to various issues and challenges faced by the industry. Apart from being entangled in complex tax structure the industry is also affected by poor rate of customs efficiency of clearance processes and procedures thus affecting the international export logistics stratum. Furthermore, sub-optimal comfort provided by the existing Indian infrastructure combined with lack of implementation of efficient IT-enabled tracking and tracing mechanisms has affected the performance of logistics. A country‘s competitiveness is measured by the ease of doing business. India stands at 35th position in the logistics performance index (LPI) amongst 160 countries around the world, with Germany on top, Singapore, China and United States of America in 5th, 9th, and 10th positions, respectively, as per the World Bank report 2016.

According to the Ministry of Shipping, around 95% of India's trading by volume and 70% by value is done through maritime transport. India has 12 major and 205 notified minor and intermediate ports. Under the National Perspective Plan for Sagarmala, six new mega ports will be developed in the country. The Indian ports and shipping industry play a vital role in sustaining growth in the country’s trade and commerce. India is the sixteenth-largest maritime country in the world with a coastline of about 7,517 kms. The Indian Government plays an important role in supporting the ports sector. It has allowed Foreign Direct Investment (FDI) of up to 100% under the automatic route for port and harbour construction and maintenance projects. It has also facilitated a 10-year tax holiday to enterprises that develop, maintain and operate ports, inland waterways and inland ports. India’s key ports had a capacity of 1,534.91 million tonnes per annum (MTPA) in FY20. In FY21, all key ports in India handled 672.60 million tonnes (MT) of cargo traffic. Merchandise exports reached $ 290.63 billion in FY21. In September 2021, India’s merchandise exports grew 21.3% year-on-year to $ 33.44 billion, this was 28.5% higher than pre-COVID levels of September 2019. In October 2021, the country’s merchandise exports rose by 40.54% year-on-year to reach $ 15.13 billion. The centre has set the exports target at $ 400 billion in FY22.

Pros and strengths

Organisation stability, rich management experience and skilled team: The company’s group has an established track record of approximately 15 years which indicates the company’s ability to weather economic and business cycles and competent promoters have over a decade of relevant experience. This indicates its ability to maintain business viability and steer the business though operational hurdles. Its promoters are the guiding force behind the operational and financial decision of the company. Its promoters are responsible for the entire business operations of the company along with an experienced team of professional who assist them. This indicates its ability to maintain business viability and steer the business though operational hurdles. It has a strong management team and workforce of skilled, trained, well equipped and expertise employee that has led the organization on the path to success. Their industry knowledge and understanding also gives it the key competitive advantage.

Smooth flow of operations: Over the year, the company has developed a wide clientele base and this was done with its valued based relationship approach. Its existing relationships help it to get repeat businesses from its customers. This has helped it to maintain a long-term working relationship with its customers and improve its customer retention strategy. Its existing relationship with its clients represents a competitive advantage in gaining new clients and increasing its business.

Well-defined organizational structure: The company has a qualified and experienced management team empowered to take timely decision which makes the operations of its business smoother and ensures efficiency in all aspects of its operations. Its senior management has pioneered its growth and fostered a culture of innovation, entrepreneurship and teamwork within its organization. A motivated and empowered employee base is key to its competitive advantage. Its Human Resources Policies are aimed towards recruiting talented employees, facilitating their integration into its organization culture and encouraging the development of their skills and expertise for becoming the next generation leaders. Its experience, knowledge and human resources will enable it to drive the business in a successful and profitable manner.

Risks and concerns

Face competition: While the logistics industry in India is generally fragmented, the company may face competition from a number of international and domestic third-party logistics service providers, especially as the trend toward larger-scale logistics providers in India continues. Some of its competitors may have significantly greater financial and marketing resources and operate larger networks than it does. In the regions of India in which it may operate, it may face competition from certain regional logistics services providers and the unorganized sector, some of which have market presence in their respective areas of operation. It may also face competition from new entrants into the logistics service industry. If it cannot maintain, or gain, sufficient market presence or are unable to differentiate itself from its competitors, it may not be able to compete effectively.

Heavily dependent on trucks, trailers and other transportation vehicles for operations: The company’s Multimodal Transportation system works as a vital connecting link in its wide arena of Logistics Management System. It has a wide array of Trucks, Trailers and other inland transportation vehicles which carry the Cargo from the Place of Origin till the Port of dispatch and from the port of landing to the place of delivery in an economical and Time bound manner. It work relentlessly to ensure that any problems that may arise are dealt with in a logical manner and in line with its customer’s requirements, and any failure or breakdown of such trucks, trailers etc. could significantly affect its operations in that business. Any significant malfunction or breakdown of its vehicles may entail significant repair and maintenance costs and cause delays in its operations. Further, if it is unable to repair the malfunctioning or breakdown, its operations may need to be suspended until it procure new vehicles to replace the same. Consequently, it may be liable for breach of its contractual obligations with its customers and this could result in significant losses due to damage to its customers’ products.

Dependence on third-party vendors: Often Break-Bulk cargo is shipped using special equipment which can prove extremely expensive. With tenacious stevedoring partners located in key transport hubs around the world, the company is often able to negotiate space on conventional vessels for break bulk, dramatically reducing costs whilst providing reliable cargo transportation. It offer specialized break bulk cargo handling services. It book vessels for break bulk cargo from third parties. Its ability to service its customers depends on the availability and costs of vessels used for transport, equipment and adequate work force of independent contractors for operations. It use vessels owned by third parties on per trip basis. Further, it often engage independent contractors for its skilled and unskilled labour needs and, in the event that such contractors are not available, this may have a material and adverse effect on its operations. It cannot assure that it will be able to obtain access to preferred third-party vendors for its vessels or independent contractors, or at attractive rates or that these vendors will have adequate available capacity to meet its needs or be able to meet its requirements in a timely manner.

Outlook

Timescan Logistics is a Multimodal Transport Operator that offers logistics services involving land, air, and sea transportation and third-party logistics provider. The business provides a complete range of transport and freight-related services like Freight Forwarding (Sea and Air), Customs Clearance, Warehousing, Transportation, Multimodal transportation, Project Cargo, Vessel Charter, packaging, loading/unloading, etc. It is a registered custom house broker with Custom offices - Chennai, Vijaywada, and Mundra and also a member of the World Cargo Alliance for its global reach. The company provides end-to-end safe mobility and delivery of items. Its job is to make sure that from raw material to finished goods sitting on the retail shelf, it provide the critical services and information necessary to give its clients a competitive advantage in the management of their supply chains. On the concern side, the transportation and delivery services the company provides is dependent on the road network in India. There are various factors which affect road transport such as political unrest, bad weather conditions, natural calamities, road construction, road quality, regional disturbances, fatigue or exhaustion of drivers, improper conduct of the drivers, accidents or mishaps and third-party negligence. Besides, the company has availed certain unsecured loan and are repayable on demand. Though its the company intends to repay the loan amount in near future, sudden recall may disrupt its operations and also may force it to opt for funding at higher interest rates, resulting in higher financial burden.

The company is coming out with an IPO of 9,44,000 equity shares of Rs 10 each at a fixed price of Rs 51 per equity share to mobilize Rs 4.81 crore. On the performance front, during the FY 2020-21 the revenue from operation and other income of the company increased to Rs 9,976.46 lakh as against Rs 6,509.76 lakh in the FY 2019-20. The increase in turnover was mainly due to getting repeated contract from existing customers and increase in volume of operational activity of the company. The restated Profit after Tax for FY 2020-21 has increased to Rs 124.91 lakh as against Rs 79.50 lakh in the FY 2019-20. As a part of the company’s growth strategy its focus is on increasing sales volume through expansion, diversification and spread in geographical outreach. The company intends to strengthen its service effort by leveraging skills of its employees which will help to increase the sales of the Company and retain customers. It plans to increase its customers by meeting contracts in hand on time, maintaining its customer relationship and renewing its relationship with existing clients.