Rapid Multimodal Logistics coming with IPO to raise Rs 8.49 crore

Rapid Multimodal Logistics

• Rapid Multimodal Logistics is coming out with an initial public offering (IPO) of 10,11,200 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 84 per equity share.
• The issue will open on August 22, 2024 and will close on August 27, 2024.
• The shares will be listed on SME Platform of BSE.
• The share is priced 8.40 times higher to its face value of Rs 10.
• Book running lead manager to the issue is Gretex Corporate Services.
• Compliance Officer for the issue is Varsha Jhanwar.

Profile of the company

Rapid Multimodal Logistics is a Chennai based company engaged in the business of providing one-stop logistical solution to its clients. It majorly caters to the B2B segment of the industry. It provides an end-to-end logistics solution to manufacturers/traders to transport raw materials or finished goods. It is involved in the management and coordination of the movement of raw materials or finished goods throughout the supply chain, from the point of origin to the destination. The company provides single as well as multimodal transportation services which involves the coordinated use of multiple modes of transportation (such as road, rail, sea) within a single, integrated supply chain to optimize efficiency and meet the unique requirements of shipments. Right from shipment planning, Route Optimization, Carrier Selection, Documentation, Containerization, Tracking and to Communication and Coordination, Last-Mile Delivery, Performance Evaluation.

The company encompasses a diverse range of industries, including but not limited to Glass, Plywood, Paper, Edible oil, Gypsum boards, Iron & Steel, Scraps, Tiles, Sanitary, Liquor industry. The company’s commitment to excellence is exemplified in its ability to tailor its logistics and supply chain solutions to meet the unique demands of each industry it serves. The company understands the intricacies and specific requirements of these varied sectors, allowing it to provide customized and efficient services that contribute to the seamless functioning of its clients’ operations. This broad industry coverage underscores its adaptability and commitment to being a comprehensive and reliable partner, capable of navigating the distinctive challenges presented by diverse business landscapes. The company is in collaboration with one of the leading players in Logistics Industry. It has a tie up agreement with them on yearly renewal of contract of railway shipments for its clients. For Railway and Coastal transport orders, it deals with their authorized designated person.

Proceed is being used for:

• Working capital requirements
• General corporate purposes

Industry Overview

The Indian logistics industry includes all inbound and outbound components of the manufacturing and service supply chains. Significant factors that will increase the demand for India's logistics sector include the country's anticipated GDP growth of $26 trillion by fiscal year 2048 ($6 trillion by 2030) and its objective to accelerate merchandise exports to $1 trillion by 2030. This would open a huge opportunity for India's transport and logistics sector, which is expected to increase at a CAGR of 4.5% from 2022 to 2050, reaching 15.6 trillion tonnes kilometres. The Indian transport and logistics business is expected to be around Rs 13-16 lakh crore ($156.18-192.23 billion) in 2022. By 2030, India wants to lower its logistics expenditures from 13-14% of GDP to 8-10% of the GDP. It is projected that a 10% reduction in indirect logistics costs is expected to result in a 5% to 8% increase in exports.

Transport and logistics refer to the procedures involved in the manufacture, storage, inventory, delivery, and distribution of specific commodities or services. The logistics sector in India was predicted to account for 14.4% of GDP in 2022. It is the primary source of income for more than 22 million people. The overall logistics sector in India includes 37 export promotion councils, 40 Participating Government Agencies (PGAs), 20 government agencies, 10,000 goods, and 500 certifications. Between the financial years 2015-16 to 2019-20, India invested approximately $10.2 trillion in the development of infrastructure. The freight movement in India is significantly prejudiced towards road transportation, which transports 66% of goods (in ton-kilometres). This is followed by rail (31%), shipping (3%), and air (1%). To facilitate cargo transportation, India has a vast network of support infrastructure, including more than 129 inland container depots, more than 168 container goods stations, and 300 m sq. ft. of warehouse capacity.

The uneven distribution of modes of transport has resulted in low operational efficiency, causing the GOI to launch a number of logistics-specific programmes, including GatiShakti and the National Logistics Policy. These initiatives seek to improve India's logistics sector by making it more environmentally friendly, agile, transparent, and integrated. The logistics management regimen is capable of overcoming infrastructural disadvantages in the short term while providing cutting edge competitiveness in the long term. Physical transporters that execute their business processes manually and offline can use various technologies such as AI, Big data, and IoT to improve their service and compete in an international market by delivering real-time and end-to-end connections. To realise the full potential of the sector, stakeholders such as service providers, customers, and the government of India must work and complement one another. The sector is experiencing significant infrastructural expansion, a stronger emphasis on digitalization, and a larger emphasis on sustainable logistics. The launch of numerous start-ups, as well as the Government's digital initiatives such as 'Make in India,' Unified Logistics Platform (ULIP), and others, are assisting in bringing greater transparency to the logistics sector. The digitization of work processes to enable paperless processing of paperwork and clearances, as well as improved shipment tracking, aids in increasing the pace of goods movement and lowering logistics costs.

Pros and strengths

Versatile range of transportation solutions: The company’s commitment to operational excellence is evident in its versatile range of transportation solutions, seamlessly integrating with its exemplary route optimization practices for unparalleled efficiency. Demonstrating unmatched expertise, it meticulously refines its logistics operations, customizing routes to the highest standards of effectiveness and resource utilization. Embodying a dedication to efficiency and cost-effectiveness, it ensures that its transportation routes are streamlined with precision. At the core of its organizational philosophy lies an unwavering commitment to exceeding expectations, offering clients a diverse spectrum of transportation alternatives. The company’s extensive selection ensures clients have the flexibility to tailor solutions precisely to their unique requirements, be it road, rail, or coastal shipping. This goes beyond a mere service - it defines an experience marked by adaptability, efficiency, and the assurance of a logistics solution tailored to perfection. This holistic approach positions it at the forefront of logistics, delivering not just solutions but an unparalleled logistics experience.

Optimal cost management: The company’s pursuit of optimal cost efficiency involves a meticulous analysis and optimization of every facet of its supply chain, spanning from procurement to transportation and distribution. It is dedicated to striking the perfect equilibrium between cost-effectiveness and service excellence. By embracing advanced technologies, implementing streamlined processes, and cultivating strategic collaborations, it achieves the delicate balance of minimizing operational expenses while upholding the highest standards of quality and reliability. In this ever-evolving landscape, its unwavering commitment to achieving optimal cost in logistics not only amplifies its competitiveness but also guarantees the delivery of unparalleled value to its clients.

Fostering long-term partnerships: As a multimodal logistics company, the company places a premium on cultivating enduring relationships that transcend transactional engagements. The company’s commitment extends beyond the immediate logistics solutions it provides; it encompasses the nurturing of long-term partnerships built on trust, reliability, and mutual success. It understands that sustained success is a collaborative effort, and its approach revolves around creating a symbiotic relationship with its clients. By actively engaging in open communication, understanding evolving needs, and consistently delivering on its promises, it fortifies the foundation for enduring partnerships. This commitment to long-term relationships is ingrained in its organizational ethos. It goes beyond the conventional supplier-client dynamic, evolving into a strategic collaboration where both parties contribute to each other's success. The company’s focus on shared success is not just a business strategy; it's a testament to its dedication to becoming a valued partner on the journey of its clients, ensuring their logistical needs are not just met but surpassed with excellence.

Risks and concerns

Significantly dependent on clients from few industries and performance of their industry: The company is dependent significantly on clients operating in the Iron and Steel, Paper, Gypsum Board, Tiles & Sanitary industries in India. Its clients operating in the abovementioned industry contributed 21%, 19%. 17% and 17% respectively to its total revenue from operations in Fiscal 2023. As a result of its dependence on these clients, any loss of business from, or any significant reduction in the volume of business with, any of these clients, if not replaced, could materially and adversely affect its business, financial condition and results of operations. Any significant reduction in sales and production by its clients, such as the substantial deterioration in production that followed the global financial crisis, could have a significant negative effect on the demand for its services. Demand is also subject to seasonal variations in revenue. In addition, the company is particularly affected by adverse developments in India that affect the sale of products from Iron and Steel, Paper, Gypsum Board, Tiles & Sanitary industries in India. If one or a combination of the foregoing factors were to arise, its business, financial condition, results of operations and prospects could be materially and adversely affected.

Dependent significantly on its vendors to provide transport facilities: The company does not own any vehicles for logistics services, it relies on third-party vendors to provide transportation services. This dependence exposes the company to the risks associated with the performance and stability of these vendors. Any disruptions or significant decreases in the transportation industry could impact these services' availability, reliability, and cost, directly affecting the company's ability to fulfil its contractual obligations and meet customer demands. If the company loses any transportation provider, it may be difficult to find a suitable replacement quickly and at competitive rates. Consolidation within the transportation industry could lead to reduced competition and increased prices for services, impacting the company's profitability. A downturn in the transportation industry could lead to decreased demand for services, putting pressure on the company’s margins and revenue. A shortage of qualified drivers or other transportation personnel could lead to service disruptions and increased costs.

Stiff competition: The company operates in a highly competitive industry, dominated by a large number of unorganized players. Many segments within the logistics industry are highly commoditized and have low barriers to entry or exit, leading to a market with a very high degree of fragmentation. Increased competition from other organized and unorganized third-party logistics or people transport providers (including its business partners) may lead to a reduction in its revenues, reduced profit margins or a loss of market share. The company’s success depends on its ability to anticipate, understand and address the preferences of its existing and prospective clients as well as to understand evolving industry trends and its failure to adequately do so could adversely affect its business. Further, if its level of service deteriorates, or if it is unable to provide its services in a timely, reliable, safe and secure manner, its reputation and business may suffer.

Outlook

Rapid Multimodal Logistics is a Chennai-based company engaged in providing a one-stop logistical solution to its clients. The company primarily caters to the B2B segment of the industry. The company offers both single and multimodal transportation services. These services involve using multiple modes of transportation, like road, rail, and sea, in one supply chain to improve efficiency and meet shipment requirements. This includes planning, route optimization, selecting carriers, documentation, containerization, tracking, communication, last-mile delivery, and performance evaluation. On the concern side, the company is dependent significantly on its clients from different industries and are highly dependent on the performance of their industry. A loss of, or a significant decrease in their business could adversely affect its business and profitability. Moreover, the company operates in a highly fragmented and competitive industry and increased competition may lead to a reduction in its revenues, reduced profit margins or a loss of market share. 

The company is coming out with a maiden IPO of 10,11,200 equity shares of Rs 10 each at a fixed price of Rs 84 per share to mobilize Rs 8.49 crore. On performance front, the company’s revenue from operations decreased by Rs 90.39 lakh from Rs 7,272.75 lakh for the financial year ended 31 March, 2023 to Rs 7,182.36 lakh for the financial year ended 31 March, 2024 due to decrease in the market orders of the company. Moreover, the company’s profit after tax decreased by Rs 21.25 lakh from Rs 200.48 lakh for the financial year ended 31 March, 2024 to Rs 179.23 lakh for the financial year ended 31 March, 2024.

The company aims to improve its business in Tamil Nadu, especially Chennai, by refining processes, partnering with local industries. By listening to feedback and analysing performance, it continuously enhances its operations. The company seeks towards collaborations with nearby industries and SEZs, it aims to boost logistical efficiency. The company aims to establish an Inland Container Depot (ICD) infrastructure is a pivotal step for cost-effective development. Going forward, the company aims to pursue new avenues for growth and expansion by exploring innovative approaches to global trade partnerships and licensing opportunities, ensuring the company remains competitive and resilient in the ever-changing market environment.