Arvind and Company Shipping Agencies IPO Review: Arvind and Company Shipping Agencies is coming up with its Initial Public Offering. This is an SME (small and medium-sized enterprise) which is going to be listed on NSE SME. The IPO will open for subscription on 12th October 2023 and closes on 16th October 2023.

In this Arvind and Company Shipping Agencies IPO Review, we look at their business, segments, financials, GMP, strengths, weaknesses & more..

Arvind and Company Shipping Agencies IPO – About The Company

 Arvind Company and Shipping Agencies, a subsidiary of the Arcadia Group, was established in 1987 in Jamnagar, Gujarat. The company operates in two primary sectors: Shipping and Forwarding, and Hospitality.

It  derives revenue majorly from 2 business verticals, as follows

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CHARTERING OF BARGES (REVENUE- 84.18%)-  Under this segment, it offers a range of services including stevedoring, cargo handling, ship agency work, dredging, underwater trenching, underwater rock breaking, port constructions, port maintenance and other marine works. The company owns five barges that are primarily used for port construction, maintenance, dredging, and transporting goods. 

These barges also facilitate the placement of cranes and backhoes and handle materials on inland waterways, rivers, canals, and coastal areas. 

The primary clientele for this division are construction companies who require barges for transporting heavy equipment, construction materials or personnel to and from construction sites located near bodies of water.

HOTEL DIVISION (REVENUE- 15.82%) – As part of its recent expansion into the hospitality sector, the company operates two hotels in Jamnagar City of Gujarat – “Hotel Millennium Plaza” and “Hotel 999”, each boasting 72 well-appointed rooms.

Arvind and Company Shipping Agencies IPO Review – Industry Overview

India’s port and shipping industry, a crucial global economic player, handles approximately 70% of the country’s trade value. With a coastline of about 7,517 km, India is strategically located on key maritime routes.

The country dominates the ship-breaking industry with a 30% global market share and hosts the world’s largest ship-breaking facility at Alang. Indian ports, which manage 90% by volume and 70% by value of India’s foreign trade, are expected to grow annually between 3% and 6% from FY24 to FY28.

The government has introduced incentives for port development and allowed 100% FDI for port construction projects. It also offers a 10-year tax break for businesses involved in port creation and operation. India plans to invest US$ 82 billion in port projects by 2035.

India’s Tourism and Hospitality industry, one of the country’s largest service sectors, has gained global recognition as a hub for spiritual tourism. The industry was valued at USD 23.50 billion in 2023 and is projected to grow at a Compound Annual Growth Rate (CAGR) of 4.73%, reaching USD 29.61 billion by 2028.

The sector provided employment to 39 million people in FY20, accounting for 8.0% of the country’s total employment. By 2029, it is anticipated to generate approximately 53 million jobs.

Arvind and Company Shipping Agencies IPO Review – Financial Highlights

Arvind company had significant financial growth over the past few years. The company’s net worth has impressively risen from ₹4.67 Cr in March 2021 to ₹9.14 Cr in March 2023. Concurrently, there has been a substantial increase in the company’s revenue, moving from ₹35 lakh to ₹7.1 Cr. The Profit After Tax (PAT) has also followed a positive trajectory, escalating from ₹23 lakhs in March 2021 to ₹3.4 Cr in March 2023.

However, it’s noteworthy that the company’s borrowing has also increased, going up from ₹1 Crore in March 2021 to ₹22.3 Cr in March 2023.

As of 2023, the company’s key financial indicators are as follows: Return on Equity (ROE) at 46.88%, Return on Capital Employed (ROCE) at 37.44%. 

 FINANCIAL METRICS:

(Source: RHP of the company)

Competitors of the company:

As per the company’s RHP Report, there is no comparable listed peer therefore information related to peer groups has not been provided.

Strengths of the Company:

  • The company provides a wide range of services tailored to meet the specific needs of its customers. These services are used for various purposes such as port construction, maintenance, dredging, transporting goods, and materials handling on inland waterways, rivers, canals, and coastal areas.
  •  Arvind Company offers flexible rental periods that align with the project timelines and logistical needs of its clients. This ensures maximum efficiency and cost-effectiveness.
  •  The company excels in understanding the specific cargo requirements, operational constraints, and logistical challenges of its clients. Based on this understanding, it offers customized solutions to optimize cargo handling and maximize efficiency.
  • Arvind and company shipping agencies offer competitive pricing for barge rentals and hotel accommodations, which gives it an edge in the market.
  • The strategic location of its facilities and its close association with vendors and customers enhances its competitive advantage.

 Weaknesses of the Company: 

  • Arvind and company shipping agencies generate all of their revenue from Gujarat. Any economic or demographic changes in this region could significantly impact the business and revenue.
  •  The company’s expansion plans outside of Gujarat may face challenges due to competition with national and local developers who have an established local presence, familiarity with local regulations, business practices and customs, stronger relationships with local contractors, suppliers, relevant government authorities, and access to existing land reserves or stronger financial positions.
  • Arvind and company shipping agencies have a limited number of clients and generate 93% of its revenue from its top 5 customers. Any decline in quality standards, increased competition, or changes in demand could adversely affect the business and its ability to retain these clients.
  • The company has high outstanding debt, This increases the company’s vulnerability to adverse economic, industry and competitive conditions and limits its flexibility in planning or changing its business.
  •  A substantial portion of the company’s profits comes from the barge chartering segment. Any damage or loss to a barge could result in operational and financial losses for the company.

Arvind and Company Shipping Agencies IPO Review – GMP

The IPO of Arvind and company shipping agencies is set at a price of ₹45. The last grey market price stands at  ₹8. The IPO is projected to list at a premium of 17.7%, with an estimated listing price of ₹53.

Arvind and company Shipping agencies IPO – Key IPO Information

PARTICULARSDETAILS
IPO Size₹14.74Cr
Fresh Issue₹14.74Cr
opening date 12th october 2023
closing date16th october 2023
face value ₹10 per share
price band₹45 per share
lot size 3000 shares
Minimum lot 1 (3000 shares)
maximum lot 1 (3000 shares)
Investment amount ₹1,35,000
listing date 25th october 2023

Promoters: Mr Arvind Kantilal Shah, Mr Vinit Arvind Shah, Mrs Parul Arvind Shah and Mr Chintan Arvind Shah are the promotors of the company 

Book Running Lead Manager:  Beeline Capital Advisors Ltd 

Registrar to the Offer: Skyline Financials Services Private Limited

The Objective of the Issue:

The Issue Proceeds from the Fresh Issue will be utilized towards the following objects:

  • Funding Capital Expenditure of the Company
  •  General Corporate Purpose
  •  To meet Public Issue Expenses

In Closing

Arvind and Company operates in the highly competitive fields of barge chartering and the hotel industry. They have a strong dedication to expanding beyond their current location in Gujarat. They strive for operational excellence and aim to increase their barge fleet annually. Their strategic location gives them an advantage that they plan to use to bolster their market position by delivering high-quality services.

However, it is important to note that this is an SME IPO  where the minimum investment amount is ₹1,35,000  Which is higher than the mainline IPO.

What do think the future holds for the company? Are you applying for the IPO? Let us know in the comments below.

Written by Niharika Jadhav

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