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PDP Shipping & Projects

• PDP Shipping & Projects is coming out with an initial public offering (IPO) of 9,37,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 135 per equity share.
• The issue opens on March 10, 2025 and will close on March 12, 2025.
• The shares will be listed on BSE SME Platform.
• The share is priced at 13.50 times higher to its face value of Rs 10.
• Book running lead manager to the issue is Sun Capital Advisory Services.
• Compliance Officer for the issue is Vijay Kumar Jha.

Profile of the company

PDP Shipping & Projects was incorporated as a private limited company in 2009 and converted into a public limited company in 2015. The company’s primary business is providing services of logistic and transport. The company is providing end-to-end solutions in the logistics & transport industry as a Multi Modal Transport Operator (MTO), sea and air freight transportation, custom clearance services and value added services in Logistics industry. It is an accredited Authorized Economic Operator (AEO) providing end to end logistics services and licensed by the Directorate General of Shipping, Government of India to work as a MTO and a Customs Broker, Licensed by Mumbai Customs, Department of Revenue of Government of India. It is into business of providing services of International Freight Forwarding and global end to end transportation solutions and offering specialized services in project logistics (including super heavylift super Over Dimension Cargo (ODC) handlings, floating & beaching roll on - roll off (RoRo) loadouts, sea towing operations, sea fastening and other engineering solutions in project cargo and transportation).

It handles the transport of cargo worldwide which are of various shapes, sizes, and weights via sea, air, road, rail, coastal barges, or through multi-modal transportation. It accepts cargo as Full Container Load (FCL), Less than Container Load (LCL), breakbulk (i.e. handling and transporting cargo that does not fit into standard shipping containers), ODC, heavy lift and project cargo.

It is into business segment of providing services of logistic and transport. It is providing services of international freight forwarding, air freight, sea freight including documentation, customs clearance, packaging, warehousing, and distribution, pre-carriage, onwards carriage, cargo tracking, port or Container Freight Station (CFS) operations & ocean freight services, custom broker, project cargo, sea towage, breakbulk, heavy lifts including RoRo loadouts, spreading weight techniques, making suitable temporary jetties & RoRo ramps, route survey & reinforcements of transit roads - bridges-vessels, structural calculations - stowage - sea fastening designing, multi modal transportation. Its core specialty is handling pre-defined project transports dynamics, heavy lifts, over dimensional cargo, offshore cargo & heavy engineering transportations, integrated logistics solutions, time-bound shipments, temperature-critical cargo, exhibition cargo, door-to-door services etc.

Proceed is being used for:

• Part funding long-term working capital requirement
• General corporate purposes

Industry Overview

Logistics and transportation Industry is crucial to both enterprises and the economy. In today's interconnected world, shipping and logistics are at the heart of the economy, acting as vital gateways for international trade and business. A nation with a strong and effective logistics sector offers an efficient forward and reverse flow of goods and services, which eventually translates to fast-paced growth. 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. According to the Logistics Performance Index (LPI) of the World Bank, India has climbed six positions to reach the position of 38th rank out of 139 nations. The improvement is attributed to a variety of factors, including technological advancement, data-driven decision-making, and legislative initiatives targeted at promoting world-class infrastructure. The National Logistics Policy (NLP) and the PM Gati Shakti programme are significant overarching policy moves taken by the central government in this area to deliver outcomes by 2024-25.

Increasing investment and cargo traffic point towards a healthy outlook for the Indian ports sector. Providers of services such as operation and maintenance (O&M), pilotage and harbouring and marine assets such as barges and dredgers are benefiting from these investments. The capacity addition at ports is expected to grow at a CAGR of 5-6% till 2022, thereby adding 275-325 MT of capacity. Domestic waterways have found to be a cost-effective and environmentally sustainable mode of freight transportation. The government aims to operationalize 23 waterways by 2030. As part of the Sagarmala project, more than 574 projects worth Rs. 6 lakh crore ($82 billion) have been planned for implementation between 2015 and 2035. In Maritime India Summit 2021, the Ministry of Ports, Shipping and Waterways identified a total of 400 projects worth Rs. 2.25 lakh crore ($31 billion) investment potential.

Pros and strengths

Integrated, end-to-end logistics services and solutions: The company provides integrated, end-to-end logistics service solutions that address the requirements of its clients. Use of integrated, end-to-end solutions from a single third-party logistics service provider, which results in cost efficiencies for its clients, which in turn encourages them to use its services. It also provides its clients with value-added services such as packaging & dunnage, arranging fumigation, securing cargo during transportation and custom clearance. Its business development and solutions are dedicated to, and specialize in, designing customized integrated logistics solutions for its clients, which have helped improve service levels, cost, quality, scalability and visibility of its clients’ supply chain. This integrated approach allows it to exploit network and infrastructure synergies, reduces its dependence on any single business line and also reduces the effect of cyclicality in its customers’ businesses on its operations.

Large existing network: The company has tapped markets across the countries by establishing a relationship through its network with international companies through network group and associates. It has created a network through its reliable service providers and vendors. Its ability to develop mutually beneficial business relationship with large international players has enabled it to further expand its reach outside India by leveraging its global networks without having to establish any of its overseas offices and without incurring any additional fixed costs. Apart from these companies, over the years it has established a strong relationship with the shipping lines, airlines and port authorities. These airlines, shipping companies, transporters and other vendors are crucial to its business. By maintaining its good relationship with them, it is able to procure space on board on priority basis and on commercially feasible terms. This network also helps it to negotiate favourable commercial terms and operational advantages for its clients during high demand and peak load times.

Existing client relationship: The company constantly tries to address its customer needs relating to various services that it provides. Its existing client relationships help it to get repeat business from its customers. This has helped it to maintain a long-term working relationship with its customers and improve its customer retention strategy. Its large client-base across various industry verticals has enabled it to cross-leverage the know-how and best practices that it has acquired from its experience with a set of clients across a wider spectrum of clients.

Risks and concerns

Significant revenue comes from limited customers: The company derived a significant portion of its revenues from a limited number of customers. The company has garnered 97.80%, 96.73% and 95.88% of its total revenue from top 10 customers in FY24, FY23 and FY22 respectively. Any decline in its quality standards, growing competition and any change in the demand for its services by these customers may adversely affect its ability to retain them. The company cannot assure that it shall generate the same quantum of business, or any business at all, from these customers, and any loss of business from one or more of them may adversely affect its revenues and profitability.

Geographical constrain: The company provides international freight forwarding services and derives a portion of its revenue from international operations. Its overseas revenue from operation to total revenue from operation ratio has been 39.74%, 61.04%, 28.04% and 8.28%, for the period ended November 30, 2024 and the Financial Years ended March 31, 2024, March 31, 2023 and March 31, 2022, respectively. Its majority of overseas business operations and overseas revenue are in and from Brazil. Out of total Revenue from Brazil to total overseas revenue ratio has been 74.83%, 97.17%, 95.56% and 53.46% for the period ended November 30, 2024 and the Financial Years ended March 31, 2024, March 31, 2023 and March 31, 2022, respectively. A natural calamity, economic slowdown or any disruption in Brazil may hinder it from conducting its business operations in Brazil, economically and otherwise. Due to such factors, it may experience pronounced adverse effects on its results of operations, financial condition and cash-flows than if it were further diversified across different overseas geographical locations.

Does not have long-term work orders from its customers: The company typically enters into short-term work orders. Within the duration of these work order, the scope of services can vary depending upon the requirements of its customers. Therefore, it needs to seek new requirements or cross-sell its service offerings when its current services are completed or terminated with existing customers, and secure new customers in order to expand its business. Similarly, there is no assurance that customers availing its services will look to obtain further services from it or expand their relationship to avail its other offerings. Further, if its customers shift their business for the services it offers to its competitors, or if it is unsuccessful in retaining them by offering competitive rates and favourable contract terms, its business, financial condition, cash flows and results of operations may be adversely affected.

Outlook

PDP Shipping & Projects provides end-to-end logistics solutions, including sea/air freight, customs clearance, and project logistics. As an Authorized Economic Operator (AEO), the company offers global cargo transportation via sea, air, road, rail, and multi-modal options. The company has integrated, end-to-end logistics services and solutions with large existing network. On the concern side, the company derives a significant portion of its revenues from a limited number of customers. The loss of any significant clients may have an adverse effect on its business, financial condition, results of operations, and prospects. Moreover, most of its overseas revenue from operations are in and from a single country - Brazil. Due to this geographic concentration of its overseas business operations, its results of operations and growth might be restricted to the economic and demographic conditions of Brazil.

The company is coming out with an IPO of 9,37,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 135 per equity share to mobilize Rs 12.65 crore. On performance front, revenue from operations had decreased by 8.74%, from Rs 2,248.19 lakh in Fiscal 2023 to Rs 2,051.60 lakh in Fiscal 2024. This decrease in revenue was on account of a sharp fall in global ocean freight rates with respect to previous year, which impacted its revenue from operations. The company’s profit after tax had increased by 37.57% from Rs 168.19 lakh in the Fiscal 2023 to Rs 231.39 lakh in Fiscal 2024. 

The company intends to aggressively penetrate in the domestic and international markets and expand its market presence by expanding its service and distribution network. It will continue to work with domestic and international merchants to grow its cross-border businesses and broaden its service offerings in international markets. It targets to further penetrate its existing markets and expand into other regions. It intends to add branch offices as well as increase the depth of its existing network in due course of time. It plans to drive its international business growth by forming new business alliances and forging more candid relations with all active business associations. It also aims to expand its business and cover new geographic locations with the help of its marketing team. It intends to cater to the increasing demand of its existing customers by enhancing the distribution and supply reach in different parts of the world by adding competent human capital.