Table of content
AFCOM Holdings Introduction
AFCOM Holdings Limited was incorporated in February 2013 and has since become a significant player in the air cargo transportation industry.
AFCOM specializes in transporting cargo on an airport-to-airport basis. Their operations primarily involve cargo flights to ASEAN countries, with a strong emphasis on Singapore.
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Brief about AFCOM Holdings
Summary of the business
Limited (“Company”) in the year 2013 by Capt. Deepak Parasuraman, an aviation industry veteran with a vision to start cargo airline business. We applied for airline license to the Ministry of Civil Aviation, India and after due compliances in the year 2017, Company obtained the NOC from the Ministry of Civil Aviation, India to function and operate cargo airlines.
AFCOM Holdings have been operating Cargo Flights to the ASEAN countries, particularly to Singapore. We are led by a management team that has extensive industry experience. Promoters, Capt. Deepak Parasuraman, Wg. Cdr Jagan Mohan Manthena, Kannan Ramakrishnan and Manjula Annamalai have been instrumental in the growth of the business. Capt. Deepak Parasuraman and Wg.Cdr Jaganmohan Manthena both have over three decades of experience in the aviation industry. Their experience in the aviation industry has helped us grow business operations. Kannan Ramakrishnan has extensive experience in the Automobile retail industry. AFCOM Holdings have a committed senior management team that has extensive experience in the Cargo logistics and forwarding business, which positions us well to capitalize on future growth opportunities. Board of Directors includes a combination of management executives and independent members who bring in significant business expertise including in the areas of marketing, finance, and corporate governance.
History
AFCOM Holdings Company was originally incorporated as ‘AFCOM HOLDINGS PRIVATE LIMITED’ a private limited company under the Companies Act, 2013 with the Registrar of Companies (“ROC”), Tamil Nadu, Chennai, Andaman and Nicobar Islands pursuant to Certificate of Incorporation dated 15th February, 2013. The name of the company was changed from ‘AFCOM HOLDINGS PRIVATE LIMITED’ to ‘AFCOM HOLDINGS LIMITED’, consequent to conversion of our company from private limited company to public limited company, pursuant to Special Resolution passed by the shareholders of our Company in the Extra-ordinary General Meeting held on 27th March, 2023, and a fresh certificate of incorporation consequent to change of name was issued by ROC, Chennai on 11th July, 2023. The corporate identification number of company is U51201TN2013PLC089652.
Promoters & Board of Directors
- The Promoters of AFCOM Holdings Company are
- Capt. Deepak Parasuraman
- Mr. Kannan Ramakrishnan
- Wg.Cdr Jaganmohan Manthena
- Mrs Manjula Annamalai.
Board of directors
| Name | Designation |
| Capt. Deepak Parasuraman | Managing Director |
| Kannan Ramakrishnan | Whole time Director |
| Wg. Cdr Jagan Mohan Manthena | Non Executive Director |
| Dr. Lalit Gupta | Independent Director |
| Srinivasan Natarajan | Independent Director |
| Rashmi Prithviraj | Independent Director |
Share Holding pattern
| Name of the Shareholder | % of holding |
| Promoters | |
| Capt. Deepak Parasuraman | 24.47% |
| Wg.Cdr. Jaganmohan Manthena | 7.36% |
| Mr. Kannan Ramakrishnan | 1.34% |
| Mrs. Manjula Annamalai | 19.74% |
| Promoter Group | |
| Thiagaraja | 6.02% |
| Public | 41.07% |
Qualitative Factors
- Workforce Expertise
- Leadership Excellence
- Advanced Inspection Systems
- Delivery Commitment
- Specialized Talent Retention
Strategy
- Growth through fleet expansion
- Growth through Market expansion
Industry Outlook
The Indian logistics sector is one of the largest in the world and presents a large addressable opportunity, with a direct spend of US$216 billion in Fiscal 2020. The sector is expected to grow to US$365 billion by Fiscal 2026 at a CAGR of 9%, driven by:
- Strong underlying economic growth
- Favourable regulatory environment in logistics, resulting in evolution of efficient supply chain formats
- Improvement in India’s transportation infrastructure, especially highway connectivity
- Growth of the domestic manufacturing sector, driven by favourable policy support and increased domestic and foreign investments
- Rapid growth of the digital economy, which has led to creation of digital-native business models such as ecommerce, direct-to-consumer and social commerce
- Growth in offline commerce driven by increased offline consumption, industrial activity and cross border trade
The expansion of this industry is likely to be aided by a robust economy, government efforts to improve infrastructure, and a favourable business environment. Increasing consumerism and a huge consumer base are fostering the growth of retail and e-commerce in India. The Indian retail sector’s market size is predicted to increase at a CAGR of 9% between 2019 and 2030, totalling more than US$ 1.8 trillion. Large international funds and corporations have invested in warehousing developers and operators to grow their reach and geographical footprint, which are the sector’s key differentiators. The Government of India has taken many initiatives to strengthen the sector’s infrastructure, including the establishment of dedicated freight corridors and the extension of road and rail networks, to improve connectivity and decrease travel times. Another critical governmental intervention has been the sector’s digital transformation, projects such as Digital India, Bharat Net, and the National Logistics Portal would aid in the industry’s digitization. Furthermore, the government has announced the establishment of logistics parks and warehouses across the country to provide appropriate storage facilities for enterprises. The warehouse sector has grown rapidly in recent years, fuelled by the expansion of e-commerce, solid infrastructure, the adoption of GST, and the advent of organized retail. The recently implemented National Logistics Policy intends to reduce India’s logistics costs from the double digits of GDP to the single digits by 2030.
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 US$ 250 billion in 2021, with the market predicted to increase to an astounding US$ 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 industry includes transportation, warehousing, and value-added services like packaging, labelling, and inventory management. With the advent of technology-driven solutions such as transportation management systems (TMS) and warehouse management systems, India’s logistics industry has witnessed tremendous development in recent years (WMS). These solutions have assisted logistics firms in increasing operational efficiency, lowering costs, and improving customer service. As depicted in the below pie chart (left), representing the segment-wise breakup of the logistics sector in FY21. Roads have the largest percentage share of 73% followed by rail (18%), water (5%) and air (5%).
The Indian logistics sector is valued at USD$ 150 billion, contributing 14.4 % of the country’s GDP. With the easing of FDI norms, the proposed implementation of GST, increasing globalization, growth of e-commerce, positive changes in the regulatory policies, and government initiatives such as “Sagarmala”, “Make in India”.
The sector is expected to touch $200 billion by 2020. In the World Bank’s Logistics performance ranking 2016, India’s ranks have improved from 54 in 2014 to 35 in 2016, jumping 19 places. Out of this USD 150 billion logistics cost, almost 99% is accounted for by the unorganized sector (such as owners of less than 5 trucks, affiliated to a broker or a transport company, small warehouse operators, customs brokers, freight forwarders, etc.), and slightly more than 1%, i.e. approximately USD 1.5 billion, is contributed by the organized sector. However, the industry is growing at a fast pace and if India can bring down its logistics cost from 14% to 9% of the GDP (level in the US), savings to the tune of USD 50 billion will be realized at the current GDP level, making Indian goods more competitive in the global market. Moreover, growth in the logistics sector would imply improved service delivery and customer satisfaction leading to the growth of export of Indian goods and potential for the creation of job opportunities.
Business Data
Business Model of AFCOM Holdings
Company is engaged in carriage of cargo on airport-to-airport basis. AFCOM Holdings Business is guided by three operating principles:
- People- centricity: Network, routes and the solution offer for the last mile connectivity helps the industry to solve the supply chain problem that are faced by the customers.
- Core Values are:
- Customer first
- Service Excellence
- Act with Integrity
- Build on trust
- Innovation
- Reliable
- Core Values are:
- Growth through partnership: Believe that systemic change requires cooperation and collaboration. AFCOM Holdings infrastructure and technology capabilities are designed to be accessible to partners in India and around the world.
- Efficiency, always: Saving money for AFCOM Holdings customers through approach arising out of above core values not only allows them to do more but also helps the customers to improve their efficiency amongst the competition.
Verticals
- Cargo Dollies
- These types of equipment transport cargo between terminals and aircraft. They come in various sizes and designs to accommodate different types of cargo, from small packages to larger containers.
- Pallet Loaders
- Pallet loaders are designed to move Unit Load Devices (ULDs) on and off aircraft. They ensure smooth cargo transfers between the airport terminal and the aircraft’s cargo hold.
- Container Loaders and Unloaders
- Containers are machines that efficiently load and unload containers from aircraft. They are crucial for handling larger shipments.
- Forklifts
- They are essential for moving cargo within airport storage areas. Forklifts are used for lifting heavy and oversized items.
- Conveyor Belt Systems
- These systems streamline cargo movement within terminals by transporting baggage, packages, and other items to different processing areas.
- ULD Handling Systems
- Standardised containers and pallets known as Unit Load Devices (ULDs) are managed by ULD handling systems. These systems include equipment like ULD dollies, transporters, and storage units, ensuring efficient management of cargo containers.
Types of cargo handled by AFCOM Holdings Company:
| General Cargo | Machinery, Spare parts, Electronics, Garments, Leather goods, Chemicals (Non-Dangerous Goods) and IT product |
| Perishable | flowers, food items, confectionery, marine products, Live plants, fruits and vegetables, dairy products, |
| ODC | machinery, special equipment, aircraft spare parts and engines |
| Hazardous | batteries, paint materials, chemicals, all dangerous goods (from Class 1 to 9) |
| Pharma | bulk raw materials, medicines, tablets, vaccines, injections, gel packed medicines Service on Air – temperature shipment can be controlled from – 2 to – 5degrees as per our aircraft facility. |
| Express | envelops, courier parcels |
| High Value Goods | Gold, silver, diamonds, gems and jewellery, precious art and artifacts, currency |
| Project Cargo | Some goods that are fragile that need exceptional handling with special equipmentand care at both ends from loading to unloading. It may contain all forms of Cargo such as General Cargos, Over Dimensional Cargo etc., |
Geography presence
- AFCOM specializes in transporting cargo on an airport-to-airport basis. Their operations primarily involve cargo flights to ASEAN countries, with a strong emphasis on Singapore.
Customer dependency
- Top five customers have contributed 98.71%, 75.99%, 84.32% and 100% of AFCOM Holdings revenues for the period ended February 29, 2024 and year ended March 31, 2023, March 31, 2022 and March 31, 2021.
Competition
At present AFCOM Holdings have very little to negligible direct competition in markets in which we operate. Other competitors to the Company are passenger aircrafts with their belly capacity wherein, cargo dimensions, lot size and space availability are subject to load factors of passenger cargo. The said passenger airline industry is highly competitive and fragmented. While there are few competitors offering services similar to that of ours and based in India, we believe that, we score much better than competitors in customer service and reliability.
Peer companies comparison
- There are no listed companies in india that engage in a business that is similar to that of AFCOM Holdings company. (DRHP Reference)
Group companies
- M/s. FLYSBS Aviation Private Limited
- M/s. Chryseum Corporate Services Private Limited
- M/s. AAR Indamer Technics Private Limited
SWOT ANALYSIS
- STRENGTHS
- Speedy transportation
- Safety of the cargo
- Security
- Low land occupancy
- Zero Pilferage
- High level of expertise for special cargo
- WEAKNESS
- Over capacity
- perceived as not price competitive
- weak economics of most carriers
- value not explained properly
- lack of transparency & Comms between stakeholders
- OPPORTUNITIES
- E- Commerce Growth
- Growth of trade and economy
- New Technologies (IoT, digital platforms, big data, automation)
- Global turbulence on Sea Frieght due to Red Sea issues
- THREATS
- Big players in this sector
- Fuel Costs
- Trade protectionism
- Airport congestion
- Increased regulatory oversight on aircraft loading
- Ground waiting times
Business risk factors
- AFCOM Holdings top five customers contribute majority of revenues from operations. Any loss of business from one or more of them may adversely affect revenues and profitability.
- Top five customers have contributed 98.71%, 75.99%, 84.32% and 100% of our revenues for the period ended February 29, 2024 and year ended March 31, 2023, March 31, 2022 and March 31, 2021.
- Company has experienced negative cash flow in the past and may continue to do so in future, which could have a material adverse effect on business, prospects, financial condition, cash flows and results of operations.
Financials
(Rs In Lakhs, except NAV & EPS)
| Particulars | February 29, 2024 | 2023 | 2022 | 2021 |
| Revenue from Operations | 13369.97 | 8414.42 | 4827.4 | 1388.72 |
| EBITDA | 3299.55 | 1915.34 | 991.39 | -598.23 |
| Profit/Loss for the period/year | 2310.37 | 1358.62 | 514.8 | -420.31 |
| Net Asset Value | 55.98 | 41.64 | 87.31 | -15.85 |
| Earnings per share | 13.09 13.09 | 7.94 7.94 | 4.37 5.02 | (3.59) (3.59) |
Key Financial Ratios
| RATIOS | Feb 29, 2024 | March 31, 2023 | March 31, 2022 | March 31, 2021 |
| Current Ratio | 3.95 | 6.87 | 8.05 | 6.2 |
| Debt-Equity Ratio | 0.15 | 0.01 | 0 | -4.36 |
| Debt Service Coverage Ratio | 3.04 | 510.44 | 10.29 | 0 |
| Return on Equity Ratio | 26.53% | 28.57% | 55.82% | 247.20% |
| Trade Receivables Turnover Ratio | 8.33 | 5.63 | 5.99 | 22.63 |
| Inventory Turnover Ratio | 10.74 | 29.04 | NA | NA |
| Trade payable Turnover Ratio | 46.69 | 45.2 | 63.05 | NIL |
| Net Capital Turnover Ratio | 1.94 | 2.18 | 3.32 | 3.72 |
| Net Profit Ratio | 17.28% | 16.15% | 10.66% | -30.27% |
| Return on Capital Employed | 28.30% | 25.88% | 45.15% | -70.04% |
Key Performance Indicators
(Rs In Lakhs)
| Key Performance Indicator | February 29,2024 | F.Y 2022-23 | F.Y 2021-22 | F.Y 2020-21 |
| Revenue from Operations | 13369. 97 | 8414.42 | 4827.40 | 1388.72 |
| Growth in Revenue from Operations (%) | 58.89% | 74.31% | 247.62% | 24894.87% |
| Total Income | 13416.38 | 8490.12 | 4866.97 | 1388.72 |
| EBITDA | 3299.55 | 1915.34 | 991.39 | -598.23 |
| EBITDA Margin (%) | 24.59% | 22.56% | 20.37% | (43.08%) |
| Net Profit for the Year / Period | 2310.37 | 1358.62 | 514.80 | (420.31) |
| PAT Margin (%) | 17.28% | 16.15% | 10.66% | (30.27%) |
| Return on Net Worth | 26.53% | 28.57% | 55.82% | 247.20% |
| Return on Capital Employed | 34.63% | 39.94% | 59.44% | (103.67%) |
| Debt-Equity Ratio | 0.15 | 0.01 | 0.00 | (4.36) |
Balance Sheet
(Rs In Lakhs)
| Particulars | Feb 29, 2024 | March 31, 2023 | March 31, 2022 | March 31, 2021 |
| EQUITY AND LIABILITIES | ||||
| SHAREHOLDERS’ FUNDS | 10,087.71 | 7,330.57 | 2201.66 | -337.18 |
| NON-CURRENT LIABILITIES | 40.4 | 7.33 | 3.78 | 1,096.52 |
| CURRENT LIABILITIES | 2,801.64 | 947.5 | 309.07 | 140.59 |
| TOTAL EQUITY AND LIABILITIES | 12,929.75 | 8,285.40 | 2,514.51 | 899.92 |
| ASSETS | ||||
| NON-CURRENT ASSETS | 1874.71 | 1780.1 | 27.65 | 27.91 |
| CURRENT ASSETS | 11,055.04 | 6505.3 | 2486.86 | 872.02 |
| TOTAL ASSETS | 12,929.75 | 8,285.40 | 2,514.51 | 899.92 |
Profit & Loss
(Rs In Lakhs)
| Key Performance Indicator | February 29,2024 | F.Y 2022-23 | F.Y 2021-22 | F.Y 2020-21 |
| Revenue from Operations | 13369. 97 | 8414.42 | 4827.40 | 1388.72 |
| Growth in Revenue from Operations (%) | 58.89% | 74.31% | 247.62% | 24894.87% |
| Total Income | 13416.38 | 8490.12 | 4866.97 | 1388.72 |
| EBITDA | 3299.55 | 1915.34 | 991.39 | -598.23 |
| EBITDA Margin (%) | 24.59% | 22.56% | 20.37% | (43.08%) |
| Net Profit for the Year / Period | 2310.37 | 1358.62 | 514.80 | (420.31) |
| PAT Margin (%) | 17.28% | 16.15% | 10.66% | (30.27%) |
| Return on Net Worth | 26.53% | 28.57% | 55.82% | 247.20% |
| Return on Capital Employed | 34.63% | 39.94% | 59.44% | (103.67%) |
| Debt-Equity Ratio | 0.15 | 0.01 | 0.00 | (4.36) |
Cash Flow
(Rs. In Lakhs)
| Particulars | February 29,2024 | March 31, 2023 | March 31, 2022 | March 31, 2021 |
| Net Cash from Operating Activities | (2179.13) | (1894.22) | (374.42) | (1322.15) |
| Net Cash from Investing Activities | (18.54) | (1227.47) | (4.30) | (20.45) |
| Net Cash used in Financing Activities | 1788.46 | 3739.47 | 421.32 | 1335.50 |
Capital structure
| Particulars | Pre Issue |
| Borrowings | |
| Short Term Debt | 1,528.75 |
| Long Term Debt | 18.75 |
| Total Debts | 1,547.50 |
| Shareholders’ Funds | |
| Equity Share Capital | 1,802.13 |
| Reserve and Surplus | 8,285.58 |
| Total Shareholders’ Funds | 10,087.71 |
| Long Term Debt / Shareholders’ Funds | 0.00 |
| Total Debt / Shareholders’ Funds | 0.15 |
IPO Details
AFCOM HOLDINGS LIMITED IPO Details
| Parameter | Details |
|---|---|
| IPO Type | Book Built Issue |
| Issue Size | ₹73.83 Crores |
| Issue Type | Fresh Issue |
| No. of Shares | 68.36 Lakh Shares |
| Issue Price | ₹102 – ₹108 per share |
| Minimum Order Quantity | 1200 Shares |
| Issue Open Date | August 2, 2024 |
| Issue Close Date | August 6, 2024 |
| Allotment Date | August 7, 2024 (Expected) |
| Listing Date | August 9, 2024 (Tentative) |
| Exchange | BSE SME |
Object of the issue
(₹ in lakhs)
| Particulars | Estimated amount |
| Funding Capital Expenditure towards taking of two new aircraft on Lease basis | Up to Rs. 4279.91 |
| Prepayment or repayment of all or a portion of certain outstanding borrowings availed by our company | Up to Rs. 1000 |
| Funding of Working Capital Requirement | Upto Rs. 800 |
Litigation involved
Gray Market Premium
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