Marinetrans India coming with IPO to raise Rs 10.92 crore

Marinetrans India 

• Marinetrans India is coming out with an initial public offering (IPO) of 42,00,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 26 per equity share.
• The issue will open for subscription on November 30, 2023 and will close on December 5, 2023.
• The shares will be listed on NSE Emerge Platform.
• The share is priced 2.60 times higher to its face value of Rs 10.
• Book running lead manager to the issue is Swaraj Shares and Securities.
• Compliance Officer for the issue is Nikhil Kishor Joshi.

Profile of the company

Marinetrans India initially started as a freight forwarder, then went to Door-to-Door Delivery and 3PL services for the logistics industry via informal arrangement with the third-party service providers. It offers its customers a comprehensive range of transport management and freight-related services. Its services encompass Freight Forwarding, including both sea freight and air freight. Additionally, it have informal partnerships with various intermediaries to provide ancillary services such as Transportation, Multimodal Transportation, Project cargo handling, Third Party Logistics, Packaging, loading/unloading and unpacking of items. These additional services enable it to provide end-to-end solutions and other value-added services that cater to its customers’ diverse needs.

Its primary objective is to ensure the safe transportation and delivery of goods from start to finish. It achieves this by leveraging its expertise to identify and recommend the optimal solution for each client’s specific business environment. Its dedicated team of skilled shipping and customs specialists works diligently to provide clients with customized solutions at affordable rates. Strengthening customer relationships and consistently delivering quality products, services and solutions are at the core of its mission.

The company operates from its Head office situated in Navi Mumbai, Maharashtra, along with one of its branches located in Ahmedabad, Gujarat. The company mainly operates through JNPT, Nhava Sheva, Mundra, Kandla, Chennai, Vizag, etc. and can take cargo from any location in India to across the world. The company is mainly responsible for obtaining and confirming the Sales Booking Request, Confirming the Shipping Line, ensuring Direct Customer Transport, Stuffing and ensuring transportation in dock, and co-ordinating with the customer until the delivery of the goods. Since, the company is majorly a point of contact between the Shipping Line, and the customer, the Company does not per se operate through ports.

Proceed is being used for:

• Funding of working capital requirements of the company.
• General corporate expenses
• Issue expenses

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. A warehouse is an essential component of corporate infrastructure and one of the primary enablers in the global supply chain. The Indian warehousing market is predicted to reach $34.99 billion, expanding at a CAGR of 15.64% from 2022 to 2027. Modern warehouse facilities and technology-driven solutions have changed the warehousing sector in India in recent years.

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. The government has made it easier for foreign companies to invest in the sector by allowing 100% foreign direct investment in logistics parks and warehouses.

Pros and strengths

Smooth flow of operations: Developing a wide clientele base through a value-based relationship approach is a significant accomplishment. Overall, its focus on building and maintaining valued-based relationships has been instrumental in developing a wide clientele base and improving its customer retention strategy.

Well-defined organizational structure: Having a qualified and experienced management team is a valuable asset for any company. Their ability to make timely decisions and ensure operational efficiency contributes to the smooth functioning of its business. By empowering its management team, it provides them with the authority and autonomy to make effective decisions, which can streamline processes and drive success. It’s senior’ management's role in pioneering growth and fostering a culture of innovation, entrepreneurship, and teamwork is commendable. By leveraging the expertise of its management team and fostering a motivated workforce, it enhances its competitive advantage and increase the likelihood of achieving success. These factors can significantly contribute to the company's competitiveness and future growth.

Existing supplier relationship: Maintaining relationships with suppliers is crucial for any organization, regardless of its size. Its existing supplier relationships provide several benefits that protect its business and contribute to its success. Building trust and understanding with its suppliers can create a sense of partnership and reliability, fostering long-term collaboration. This can lead to preferential treatment, faster response times, and customized solutions tailored to its specific needs.

Risks and concerns

Heavily dependent on third party service provider: It is heavily depend upon third-party vessels, trucks, trailers and other transportation vehicles of various for supply of assets and services, which inter-alia includes, vehicles, for inland transportation of goods, containers for carrying goods, warehouses for storage etc. Its ability to service its customers depends on the availability reliability, satisfactory and continuous services of such third parties for these outsourced services. Events beyond its control or that of its suppliers such as (i) equipment and vehicles shortages, particularly among contracted truckload carriers and ocean carriers; (ii) interruptions or stoppages in transportation services as a result of labour disputes and strikes; (iii) network congestion, weather related issues, ‘Acts of God’ or acts of terrorism; and (iv) increases in operating expenses for carriers, such as fuel costs, insurance premiums and licensing expenses; may affect the cost, availability or ability to provide their services.

Face competition: It faces competition from a number of domestic third-party logistics service providers, especially as the trend toward larger-scale logistics providers in India continues, and also of some of the international players. Some of its competitors have significantly greater financial and marketing resources and operate larger networks than it does. 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 ourselves from its competitors, it may not be able to compete effectively.

Success depends on Promoters, Directors and Key managerial personnel: Its success depends upon the continuing services of Promoters, Directors and Key Managerial Personnel who are the natural person in control of the company. Its Promoters, Director, and Key Managerial Personnel have vast experience in the field of logistics and infrastructure. They have established cordial relations with various customers in the past, which has benefited the company’s customer and supplier relations. If its Promoters, Director and Key Managerial Personnel or any member of the senior management team is unable or in unwilling to continue his present position, it may not be able to replace him easily or at all, and its business, financial condition, results of operations and prospects may be materially and adversely affected.

Outlook

The company is engaged in the business of International Freight Forwarding, Non Vessel Common Operating carrier (NVOCC), Sea Freight Booking in the Shipping Industry. The company initially started as a freight forwarder, then went to Door-to-Door Delivery and 3PL services for the logistics industry via informal arrangement with the third-party service providers. On the concern side, there are no entry barriers in its industry which puts it to the threat of competition from new entrants as there are numerous players operating in the industry. It faces tough competition in its business from a large number of unorganized as well as from organized players operating in the similar space.

The company is coming out with an IPO of 42,00,000 equity shares of Rs 10 each at a fixed price of Rs 26 per share to mobilize Rs 10.92 crore. On performance front, the Revenue from operations has decreased by 26.05% from Rs 20,321.22 lakh for FY 2021-22 to Rs 15,027.09 lakh for FY 2022-23. The logistics and supply chain industry experienced significant disruptions due to COVID-19 in 2020-21, leading to record-high container freight rates. Profit after tax has decreased by 17.94% from Rs 186.24 lakh for FY 2021-22 to Rs 152.83 lakh for FY 2022-23. Meanwhile, expanding of sales volume through expansion, diversification, and geographical outreach is a sound growth strategy. By focusing on scaling its operations in other markets, it aims to tap into new opportunities and broaden its client base, ultimately leading to increased revenues.