About Ashapura Logistics Limited

Ashapura Logistics is an integrated logistics company in India, primarily operating in (i) Cargo handling and freight forwarding segment; (ii) Transportation (including project logistics and third-party logistics (“3PL”)); Warehousing (iii) and Distribution and (iv) other services (including coastal movement). They have pan-India operations through their network of 9 (Nine) branch offices as at the Date of Red Herring Prospectus. 

With over 20 (Twenty) years of their operational experience since inception, they provide differentiated logistics solutions with their: (a) pan-India presence, (b) integrated service offerings, (c) focus on improving service through technology, and (d) large network of vehicle fleet. Their management has focused on providing quality services to their customers over decades of operations and thereby building credibility with their customer base, including their longstanding customers.

They rely on an ‘asset-based’ business model wherein the assets necessary for quality services to their customers, such as commercial vehicles, containers and warehouses, are either owned or provided by a network of their business partners on lease basis. Accordingly, they have maintained their owned fleet of vehicle along with network of business partners from whom they hire the required vehicles on need basis. Further, their material subsidiary i.e., Jai Ambe Transmovers Private Limited is also engaged in the business of transportation services, having large fleet of owned commercial vehicles. As on March 31, 2024, they have maintained owned fleet of 250 of commercial trucks (Comprising 181 trucks of their material subsidiary i.e., Jai Ambe and 69 trucks owned by our company). Access to such large vehicle network enables them to scale their business as the demand increases and also cater to large business opportunities. Further, they also own 60 containers of 40 TEUs providing edge in our cargo handling business. Their warehouse distribution network comprises of 7 (Seven) warehouses across India situated at prompt locations such as Gujarat, Maharashtra, Karnataka and Tamilnadu.

Additionally, their technology-enabled ‘asset-based’ business model facilitates the flexibility to develop and offer customized logistics solutions to a diverse set of customers and industries. They actively promote a ‘technology first’ culture with a view to scale the business efficiently and enhance the customer experience. They have developed software (IMPEX) for ease of their operations, which trace and track entire operations of their cargo handling and transportation segment. Further, they are in process of development of another software, dedicated to their transportation segment. Their primary technological capabilities encompass demand generation, track and trace, fleet operations, pricing control, and vendor ecosystem enablement.

They have established longstanding relationships with a diverse set of customers. For the financial year ended 2024, 2023, and 2022, they along with their subsidiaries catered to 560, 536 and 508 customers, respectively, spread across multiple industries, including Auto mobile, West Paper, Textile and Steel industry. Some of their marquee customers includes Name of Ford India Private Limited, Piramal Glass Private Limited, TT Steel Services Private Limited and JK Paper Limited.

INDUSTRY: FREIGHT FORWARDING, WAREHOUSING AND LOGISTICS SERVICES:
"Freight forwarding and logistic services" are services of any kind relating to the carriage (performed by single mode or multimodal transport means), consolidation, storage, handling, packing or distribution of goods, as well as ancillary and advisory services in connection therewith, including but not limited to customs and fiscal matters, declaring the goods for official purposes, procuring insurance of the goods and collecting or procuring payment or documents relating to the goods. Freight forwarding services also include logistic services with modern information and communication technology in connection with the carriage, handling or storage of the goods, and de facto total supply chain management. These services can be tailored to meet the flexible application of the services provided. Freight forwarding is all about the facilitation of international trade. The freight forwarder is the party who ensures that internationally traded goods move from point of origin to point of destination to arrive: 
• at the right place 
• at the right time 
• in good condition 
• at the most economical cost 

To accomplish this, expertise is required in a number of different areas:

Logistics
Close cooperation is required with transporters in every mode – road, rail, sea and air. Freight forwarders are constantly negotiating freight rates and service conditions with transport providers, comparing the costs of moving cargo along different routes via different modes and then designing logistics service chains, which provide the best compromise between cost, speed and reliability.

Regulatory compliance
A vital ingredient to successfully trading between world markets is that every transaction must comply with many regulatory measures and requirements, sometimes carrying fairly complex procedures, especially those associated with customs and security. In the area of regulatory compliance, the specialised skills and knowledge of the freight forwarder come to the fore. Traders who avail themselves of the service of skilled freight forwarders find the assistance they need to make their trade efficient, secure and compliant.

Risk management
To every international trade transaction, there is an element of risk and the increased complexity of international trading as compared to local buying and selling requires that these risks are managed with tools which are correspondingly more sophisticated. International traders require that their forwarders be in position to advise and assist them in minimising those risks which are particularly associated with the movement of goods – loss, damage and destruction, although the exposure of forwarders to the international environment in its entirety makes their counsel as regards matters like credit and currency risks very much sought after.

Finance and payment
Forwarders are entrusted with goods which are often dispatched under conditions where buyer and seller are not known to one another. Under these circumstances, the forwarder must scrupulously ensure that all requirements of the door-todoor operation are fully complied with, especially where the accurate and timely production of documentation is concerned. Excellence in this field leads to prompt settlement for goods purchased, and satisfied traders. An especially gratifying aspect of freight forwarding is the facilitation, through consultancy and networking, of the entry of new exporters and importers into new markets. More often than not, this involves advice as to alternative methods of financing for the transactions concerned and the establishment of payment methods that are mutually beneficial to both parties.

Cross functional integration
The forwarder is ideally placed to act as the catalyst to maximise the benefit from advances in information technology which are revolutionising modern traders’ processes. Furthermore, the role of the forwarder will be key because, in adopting cross functional integration strategies, companies are increasingly outsourcing their non-core activities. The ability to ensure the efficient and effective door-to-door movement of goods from country to country, from the time an order is placed until finished goods are delivered to the intended consignee, places the freight forwarder in a position to make a unique contribution to the enhancement of the value of the traded goods.

INDIA’S LOGISTICS SECTOR:
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 ecommerce 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, 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 below pie chart (right) represents the fragmented structure of the Indian logistics industry.

OVERVIEW OF THE WAREHOUSING INDUSTRY
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 US$ 34.99 billion (Rs. 2,872.10 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. With increased demand and supply throughout the years, the Indian warehousing industry is gaining traction. The key players are third-party logistics (third-party logistics) and e-commerce enterprises, which are growing into tier 2 and 3 cities and eventually increasing their proportion of secondary marketplaces. Businesses are transitioning to a hub-and-spoke model while also implementing technology to simplify operations, with an eye on the larger picture of ease, efficiency, and sustainability. 

Grade A warehouses are modernized buildings created specifically to meet the needs of warehouse logistics. They feature the most up-to-date technology, superior building materials, a prime location, and a convenient traffic interchange. Grade B objects are outdated buildings that must be rebuilt to satisfy modern warehouse logistics standards. 

As depicted, India saw a 21% year-over-year increase in the total stock of Grade A and B warehouse space in the top eight cities in 2021. The total warehousing capacity is expected to be 287 million square feet by the end of 2021, up from 238 million square feet the previous year. Grade A stock in India was 134 million square feet, representing a 5-year CAGR of 29.9%. Among the eight major cities, the three largest cities in the country, including Delhi NCR, Mumbai, and Bengaluru, contribute more than half of the warehousing stock. 

As demonstrated, 3PL/Logistics has remained the top segment in terms of warehouse space demand for the last five years. Various e-commerce areas, including retail, groceries, pharmacy, and food delivery, are likely to grow substantially as consumers shifted their purchasing habits from offline to online. COVID-19 has increased eCommerce adoption, increasing demand for online delivery of both essential and non-essential commodities. While the share of manufacturing demand from the Auto & Ancillaries and Engineering sectors has declined during the epidemic, demand from other consumption-based sectors such as Retail and FMCG has increased.

ASHAPURA LOGISTICS LIMITED STRENGTHS
1. Scaled and integrated logistics operations
2. Asset-based business model resulting into higher efficiencies
3. Optimal Utilization of Resources
4. Long-standing relationships with their clients

ASHAPURA LOGISTICS LIMITED STRATEGIES
1. Profitably fast-track growth in integrated logistic business
2. Further Strengthening of their Businesses
3. Maintaining edge over competitors
4. Expand their geographical footprint

ASHAPURA LOGISTICS LIMITED RISK FACTORS & CONCERNS
1. Their cargo handling business operations are dependent on container traffic at the various ports such as Mundra Port, Hazira Port, JN Port and other ports.
2. The Company is dependent on a few suppliers for purchases of product/service
3. Majority of their revenues are generated from state of Gujarat.
4. They derive a majority portion of their revenue from operations from their top 10 customers, contributing 36.07% revenue from operations in period ended March 31, 2024.
5. They are dependent on the performance of industries in which their customers operate, particularly paper industry.
6. They are also exposed to risks related to an escalation in fuel prices.