About Supreme Facility Management Limited

Supreme Facility Management is an integrated business services provider focused in offering Integrated Facility Management (“IFM”) services and other Support Services (“Support Services”) to industries across multiple sectors. Their IFM service portfolio broadly includes (i) soft services such as housekeeping and cleaning services, disinfecting and sanitizing services, pest control, horticulture, and facade cleaning; (ii) hard service such as maintenance, repair, overhaul and performance management of electrical, plumbing and maintenance services (iii) Staffing Service where we supply the workforce for various support service; The Other Support Services portfolio broadly includes (i) Employee Transportation (“ET”) services whereby they provide transportation services for the employees of their clients; (ii) Corporate Food Solution Services (“CFSS”) whereby they offer catering services for employees of their corporate clients; (iii) Supply Chain Management Services (“SCM”) whereby they provide Third-party logistics (3PL) service for their clients and (iv) Production Support Services (“PSS”) whereby they supplying the workforce to the manufacturing companies for production, material handling, and maintenance. In catering their clients with their service portfolio, they are supported by their Subsidiaries and Associate.

As on June 30, 2024, Supreme Facility Management have an employee strength of over 10,935 employees, which acts as a catalyst to their growth. The Bankers to Company are Axis Bank Limited and HDFC Bank Limited.

Indian IFM Market Analysis
IFM market in India has been growing steadily over the last decade and is set to witness significant growth momentum over the next 5 years. According to industry reports, the market was valued at around INR 90 Thousand Crores in 2023 and is expected to reach 190 Thousand Crores by 2029, growing at a compound annual growth rate (CAGR) of approximately 36.12%. In India out of the Facility Market 39% of the business are in Outsourced model to Third party facility Management Companies.

The facility management market in India has been growing significantly in recent years. Facility management refers to the professional management of facilities such as manufacturing Hubs, office buildings, shopping malls, hospitals, hotels, airports, and educational institutions to ensure their efficient operation and maintenance. In India 39% of the business are in Outsourced model to Third party facility Management Companies in 2023 which will increase as there is increase in the Demand for IFM Services to 50% by 2029.

The demand for IFM services has increased as people’s preferences for a safe, clean, and secure environment have grown. The Government plan to develop 100+ Smart Cities will result in a surge in Infrastructure creations. Given the current expansion and increase in investments in IT, Manufacturing, IteS and BFSI segments, the demand for professional IFM services is increasing, IT sector is shifting to more personalized/ customized services utilizing both Hard and Soft FM services. Investments in other segments such as healthcare and retail are also propelling the demand for IFM services.

Employee Mobility Services Industry India
The market for corporate employee mobility services is fragmented, including unorganized players. Organized player utilizes the technological assistance for fleet and employee commute management which broaden the scope of their offerings.

The COVID-19 pandemic hampered the market by forcing many companies to work from home, resulting in less employee transportation. However, as economies have recovered from the lockdown, a return to office is expected to provide transportation service operators with numerous opportunities in the coming years. Moreover, governments in various states are also initiatives to improve employee commute systems.

Over the long term, employee mobility services are becoming more popular as people have become more aware of the significance of improved transportation safety measures. In addition, with the low prices offered by transportation providers, employees are choosing them to save time and effort when traveling. Therefore, players are coming up with new product developments and launches for employee mobility services.

Rising incidents of transportation insecurity, assaults, rude behavior, and high fees in ride-hailing and ride-sharing vehicles have prompted employers to consider their employees' safety. This factor is also in charge of driving market growth.

Asia-Pacific is expected to dominate the market due to a growing corporate office presence. It is because many North American and European MNCs are establishing offices, factories, warehouses, and plants in countries such as India, China, and the Philippines, owing to rising demand for goods and low labor costs. 

The Corporate Employee Transportation Service Market is segmented by ownership (company-owned transportation service, outsourced transportation service, rentals, and pick and drop transportation service), passenger vehicle type (cars, vans, and bus), service type (Mobility as a Service (MaaS) and Software as a Service (SaaS)).

The market in focus is expected to grow significantly during the forecast period due to an increase in employee numbers across the country.

Supply Chain Management Industry
Statistics suggest that the Indian logistics and supply chain market gives employment to more than 22 million people. The warehousing, industrial, and logistics (WIL) sectors are projected to be crucial for attaining India's vision of being a US$ 5 trillion economy by FY25. The warehouse and logistics industry has benefited the most from the COVID-19 epidemic, increasing its share from 2% in 2020 to 20% in 2021. Because of the growing shift from discretionary to essential internet buying during the COVID-19 epidemic, the e-commerce industry became more appealing and attractive.

The expansion of this industry is likely to be aided by a robust economy, government efforts to improve infrastructure, and a favorable 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, totaling 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, fueled 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.

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.

The warehousing space requirement was at 169.4 million sq ft in 2018 has grown to 307.4 million sq ft by H1 of 2022 and is expected to touch 500 million sq ft by 2025.

Several initiatives have been taken by Govt. to develop the warehousing sector. The introduction of GST, 100% FDI, awarding of infrastructure status to the industry and alternative investment vehicles such as REITs which provide low risk, good capital appreciation opportunities and easy exit routes have aided in investors’ interest in warehousing as a new industrial asset class.

Third party logistics (3PL) followed by ecom, is the second largest incentive contributing to the increased demand for grade A warehouses. The ecom is expected to take up 165% more space in Indian warehousing over the next 5 years, while 3PL and other sectors will take up 56% and 43%.

Govt. launched the NLP with the primary goal of lowering logistics costs and streamlining processes for seamless coordination. Moreover, the policy is touted to assist Indian businesses especially MSMEs to become globally competitive as it creates robust logistics infrastructure for facilitating seamless trades.

Industry Outlook of Corporate Food Services
India's food service market is expected to reach USD 79.65 billion by 2028, growing at a CAGR of 11.19 per cent from USD 41.1 billion in 2022, according to a report.

Despite over 20 lakh jobs lost during the peak of the COVID-19 pandemic, the industry is expected to reach employment figures of 1 crore by 2025, as per the Food Service and Restaurant Business Report 2022-23.

The restaurants and food service market in the country is divided into two segments with the unorganized segment accounting for the major share, the report said, adding that the organized sector also grew at a strong rate between 2014 and 2020.

"India's food service market is anticipated to project robust growth in the forecast period with an impressive CAGR of 11.19 per cent and reach USD 79.65 billion by 2028, further to that the country's quick service restaurants (QSR) market is estimated to be USD 690.21 million in 2022 and is expected to reach USD 1069.3 million by 2027, growing at a CAGR of 9.15 per cent.

Over FY20-25, the QSR chain market is estimated to be the highest-growing sub-segment -- at 23 per cent CAGR -- in the entire food service market, not just the chain market.

In terms employment, the food services industry in India had a total of about over 7.3 million in 2021. "Despite over two million jobs lost during the peak of the COVID-19 pandemic, the industry is expected to reach 10 million by 2025.

Growth in the economy and rising investments in services, industry and education sector has played a crucial role in the growth of food services and catering market. India’s high growth trajectory has resulted in Industries and offices moving to semi-urban area of cities and this has fueled the demand for on-site or off site kitchens to serve employees who must travel long distances to reach office locations.

Industry Overview of Production Support Service
Manufacturing is emerging as an integral pillar in the country’s economic growth, thanks to the performance of key sectors like automotive, engineering, chemicals, pharmaceuticals, and consumer durables. The Indian manufacturing industry generated 16-17% of India’s GDP pre-pandemic and is projected to be one of the fastest growing sectors.

With 17% of the nation’s GDP and over 27.3 million workers, the manufacturing sector plays a significant role in the Indian economy. Through the implementation of different programmes and policies, the Indian government hopes to have 25% of the economy’s output come from manufacturing by 2025.

The manufacturing GVA at current prices was estimated at US$ 110.48 billion in the first quarter of FY24. ▪ Significant initiatives have been introduced under Aatmanirbhar Bharat and Make in India programmes to enhance India’s manufacturing capabilities and exports across the industries. Sector specific Production Linked incentives (PLI) have been introduced in the aftermath of the pandemic to incentivize domestic and foreign investments and to develop global champions in the manufacturing industry.

Automotive and Engineering industry are key demand driver for PSS in India and accounts for 30% of the total market in FY 2024. 

SUPREME FACILITY MANAGEMENT LIMITED COMPETITIVE STRENGTHS
1. Diverse portfolio of services
2. Longstanding relationship with customers across diverse sectors, with recurring business
3. Wide presence with large and efficient workforce coupled with strong recruitment capabilities
4. Technology at the forefront of their current and future business
5. Highly experienced Management team

SUPREME FACILITY MANAGEMENT LIMITED GROWTH STRATEGIES
1. Retain, strengthen and grow customer base with a focus on deepening relationships with existing customers
2. Grow market share in key segments
3. Introduce new products and services catering to existing and new customer segments
4. Pursue inorganic growth through strategic acquisitions of high margin businesses supplemental to their operations
5. Continue to improve operating margins

SUPREME FACILITY MANAGEMENT LIMITED RISK FACTORS & CONCERNS
1. Substantial portion of the revenues has been dependent upon their few clients.
2. The industries in which they operate are intensely competitive and have low barriers to entry.
3. They may be affected by competition law, the adverse application or interpretation of which could adversely affect the business.
4. SCM business has contributing 7.79% of Revenue which have one major customer. 
5. The Company may incur penalties or liabilities for delayed compliance with certain provisions of the RBI under FEMA Act.
6. They are dependent on the vendors for the supply of equipment and products that they use in providing their services and solutions.