Blended business model
Meet Amit Mangilal Jain, a second-generation real estate entrepreneur whose family has been involved in real estate development since 1986. Jain emphasises the importance of timely completion of projects, discipline, and fiscal prudence. Through his unconventional approach, the CMD of Arkade Developers has ensured a track record of completing projects ahead of schedule. This Mumbai Metropolitan Region (MMR) player has created a scalable business model with consistent financial performance. Jain has always avoided debt, calling it the bane of the real estate business.
Today, Arkade Developers Limited is a leading player and ranked among the top 10 developers in terms of supply in select micro-markets of the MMR, Maharashtra (Source: Anarock Report). Over the last two decades, the Arkade Group has completed 28 projects (including stand-alone projects executed by the promoter through their proprietorship and/or joint development arrangements with third parties), aggregating more than 4.5 million sq ft of development and catering to approximately 4,000 customers.
Out of the 28 completed projects, 17 were new developments and 11 were redevelopment projects. Arkade has developed a strong brand proposition and boasts a successful track record, with deep industry lineage. The company’s operations are strategically located in the western suburbs of the MMR, Maharashtra, though they have also developed high-end luxury projects in South Mumbai and the eastern suburbs.
As of 30 June 2024, Arkade has developed 2.20 million sq ft of residential property (including through partnership entities in which Arkade holds a majority stake). Between 2017 and Q1 2024, Arkade launched 1,220 residential units and sold 1,045 units in various MMR markets.
Redevelopment projects
Similarly, the Arkade Group has successfully undertaken 10 redevelopment projects (from 2003 to March 2024) within Mumbai city: nine in the western suburbs and one in South-Central Mumbai. These projects, totalling a combined constructed area of 643,000 sq ft, were also completed and delivered on time.
Arkade’s current portfolio of ongoing projects includes gated communities such as Arkade Nest, Arkade Aspire, Arkade Prime, and Arkade Aura. As of 30 June 2024, of the six projects currently under development, three are new developments and three are redevelopment projects, constituting 50 per cent each of their under-development portfolio. The company posted total income of Rs635.71 crore in FY24, Rs224.01 crore in FY23, Rs237.18 crore in FY22, and Rs113.19 crore in FY21. PAT (Profit After Tax) was Rs122.81 crore in FY24, Rs50.77 crore in FY23, Rs50.84 crore in FY22, and Rs21.72 crore in FY21.
The issue consists of a fresh issue of Equity Shares aggregating up to Rs410 crore. Promoters are not selling any stake in the IPO. The company proposes to utilise the net proceeds from the issue to fund development expenses, acquire yet-to-be-identified land for real estate projects, and for general corporate purposes.
Jain explains their strategy: “We aim to continue expanding in the eastern region of the MMR, Maharashtra. We believe that the eastern region will enable us to acquire larger parcels of land at competitive prices, allowing us to build larger premium projects. We also aim to move up the value chain into premium and luxury residential premises. Our focus remains on our blended business model, and we intend to capitalise on our experience, project quality, and quick turnaround times to identify prime locations and deliver premium residential premises in this region.”
Arkade has already completed one project in the eastern region and has launched a new project in Mulund, where the average capital value in Mulund West is currently Rs25,261 per sq ft on carpet, which is significantly higher than the Mumbai average (Source: Anarock Report).
Jain adds: “Our experience shows that entering into redevelopment arrangements with housing societies allows us to remain capital-efficient, as the capital required for such projects is less than for new developments. The abundance of redevelopment opportunities in emerging regions such as the western and eastern parts of the MMR, Maharashtra, supports this approach. Our efficient use of capital and the financial strength derived from redevelopment projects provide us with the flexibility to undertake new developments in growing areas of the MMR, enabling us to deliver more premium properties.”
Arkade Developers
Issue opens on
16 September 2024
Price Band
Rs121 to Rs128 per Equity Share.
Bids can be made for a minimum of 110 Equity Shares and in multiples of 110 Equity Shares thereafter.
BLRM
Unistone Capital
Listing
BSE and NSE
NEW ISSUES
Going multi-modal in logistics
Western Carriers (India) Ltd (WCIL) is a large private, multi-modal, rail-focussed, 4PL asset-light logistics company of India going by container volumes handled by private players in 2022-23. The company’s domestic and EXIM market share, based on container volumes handled, was 6 per cent and 2 per cent respectively in 2022-23. 4PL implies a single point of contact for supply chain management, managing resources, technology and infrastructure and providing strategic insights and management.
Promoter Rajendra Sethia established his logistics business as a rail-focussed logistics business in 1972, which was later acquired by this company in 2013. Over the last 50 years, the business has continued to evolve. “We provide end-to-end, customised, multi-modal logistics solutions across the supply chain, integrating road, railway, water and air logistics along with a customised suite of value-added services,” says Sethia, CMD, WCIL.
In 2023-24, as much as 80 per cent of the company’s revenues originated from customers, who had been transacting with the company for over three years; and the customer retention rate for the top 10 customers was 100 per cent. As of 31 March 2024, the company has served a diverse base of 1,647 customers.
“WCIL has relationships with customers across varied sectors such as metals, fast-moving consumer goods (FMCG), pharmaceuticals, chemicals, engineering, oil & gas and retail,” adds Kanishka Sethia, CEO, WCIL. Some of its customers include Tata Steel, Hindalco, Jindal Stainless, JSW Steel Coated Products, BALCO and Vedanta (metals); Hindustan Unilever, Hindustan Coca-Cola, Tata Consumer, Gujarat Tea Processors and Packers (Wagh Bakri) and CG Foods (FMCG); Cipla, MCPI, Haldia Petrochemicals and Gujarat Heavy Chemicals (pharmaceuticals and chemicals); Brahmaputra Cracker & Polymer (oil & gas); Sheela Foam and DHL Logistics (utilities and others).
WCIL is one of the largest platinum business associates of CONCOR in terms of railway 20-ft equivalent units (TEUs) providing ~ 6 per cent of the domestic railway TEUs to CONCOR in 2023-24. It is the largest associate partner of CONCOR in railway TEUs, providing 4 per cent of the export-import market railway TEUs to CONCOR during the same period. The company holds custom house agency licences in most major ports. It is active in all major ports, including the Jawaharlal Nehru Port Trust, the Vizag Port Trust and the Gangavaram Port.
Profit rises
WCIL’s revenue from operations has grown at a CAGR of 4.65 per cent to Rs1,685.77 crore in 2023-24, from Rs1,470.88 crore in 2021-22. Its EBIDTA grew at a CAGR of 11.72 per cent to Rs151.82 crore from Rs108.89 crore during the same period, while the profit for the year increased to Rs80.35 crore in 2023-24 from R611.29 crore in 2021-22, at a CAGR of 9.54 per cent. The EBIDTA margin stood at 9.01 per cent in 2023-24, as against 7.40 per cent in 2021-22. Its RoE and RoCE were 22.41 per cent and 29.23 per cent respectively for 2023-24, the RoCE being among the highest in the specialty logistics industry.
WCIL has obtained a majority of the infrastructure required for the operations on lease or spot-contract. It also owns logistics infrastructure such as commercial vehicles, heavy equipment and shipping containers. As of 31 March 2024, WCIL owned over 400 GPS-enabled heavy commercial vehicles, over 100 pieces of heavy equipment (including 32 reach stackers) and over 500 shipping containers. It has 50+ branch offices and four zonal offices across 23 states in India. The warehouses are located across 12 states. It operates over 55 major public rake handling points spread across India.
WCIL provides warehousing options and operates through a network of 16 warehouses that cover 714,171.28 sq ft of warehousing facilities. Some of them are located at Guwahati, Kolkata, Chennai, Raipur, Nagpur and Mumbai.
The company operates a fully integrated ERP software, which helps it track the movement of the customers’ shipments through each of the modes and supports all aspects of the business and has the capability to generate in-depth tracking reports on the movement of the delivery fleet, stock, purchases and sales. It has automated its logistics operations from consignment notes, receipts, challans, e-way bills and GST filing to billing, invoicing, management information system and accounts.
WCIL proposes to utilise the net proceeds from the IPO towards prepayment or scheduled re-payment of a portion of certain outstanding borrowings availed by the company (up to Rs163.5 crore), as also funding capital expenditure requirements to purchase commercial vehicles, 40 ft specialised containers and 20 ft normal shipping containers and reach stackers (up to Rs151.71 crore). The balance goes to general corporate purposes.
western carriers
Issue opens on
13 September 2024
Price band
Rs163-172 per equity share of face value of Rs5 each
Listing
BSE and NSE
NEW ISSUES
Unconventional NBFC
Northern Arc Capital is unlocking credit for under-served India
T
he name Northern Arc is inspired by an ancient trade route that connected the East to the West. It created the first means of contact between the old world and the new, between those with access to a better quality of life and those without. It empowered traders to establish prosperous trade along its length, transforming the economic landscape of every geography it passed through. It was the new frontier.
Over the past decade, Northern Arc Capital Ltd has changed the landscape of access to finance for the sectors in which it operates. “We are the Northern Arc of the new world of finance,” emphasises Ashish Mehrotra, MD & CEO of the company. Over the last 15 years, its approach has been to create a differentiated and comprehensive play in the retail credit ecosystem across various sectors in India. Since 2009, it has facilitated financing of over Rs1.73 lakh crore, impacting over 10.18 crore lives across India as of 31 March 2024. It boasts one of the lowest credit costs in the industry among diversified NBFCs in India, as of 31 March 2024 (Source: CRISIL Report).
The company operates through three primary channels: Lending, Placement, and Fund Management. Mehrotra says: “Northern Arc is a diversified financial services platform set up primarily with the mission of catering to the diverse retail credit requirements of under-served households and businesses in India. Northern Arc has developed domain expertise in enabling credit across our focused sectors in India, namely, micro, small and medium enterprises (MSME) financing, microfinance (MFI), consumer finance, vehicle finance, affordable housing finance, and agricultural finance.”
Northern Arc has total Assets Under Management (AUM) of Rs11,710.02 crore across India, as of 31 March 2024. Tamil Nadu is the top state for Northern Arc in terms of AUM, accounting for 14.59 per cent as of 31 March 2024, with Maharashtra (11.99 per cent) and Karnataka (9.45 per cent) following suit.
In-house technology
The company’s in-house technology stack consists of Nimbus, a curated debt platform that enables end-to-end processing of debt transactions; nPOS, a co-lending and co-origination technology solution based on application programming interfaces (API); NuScore, a customised machine learning-based analytical module designed to assist their originator partners in the loan underwriting process; and AltiFi, an alternative retail debt investment platform.
Their quantitative analysis is based on over 3.52 crore data points, including loan pools they have evaluated and invested in for their originator partners through securitisations and direct assignments, as of 31 March 2024. Additionally, they have disbursed over 1.86 crore Direct to Customer Lending loans as of 31 March 2024.
Northern Arc has conducted 12 rounds of equity fund raises (including issuances of CCPS) over the last 11 fiscals, allowing them to benefit from capital sponsorship by a marquee set of equity investors. Shareholders include LeapFrog, Augusta, Eight Roads, Dvara Trust, Accion, 360 ONE Funds, SMBC, and IFC.
Financially, the company posted total income of Rs1,906.03 crore in FY24 – a 45.37 per cent increase from FY23’s total income of Rs1,311.2 crore, which itself was a 43.06 per cent increase from Rs916.55 crore in FY22. The net profit was Rs317 crore in FY24, compared to Rs242.43 crore in FY23 and Rs172.59 crore in FY22.
The initial public offering comprises a fresh issue of equity shares aggregating up to Rs500 crore and an offer for sale of up to 1.053 crore equity shares by the selling shareholders. Northern Arc intends to utilise the net proceeds to meet its future capital requirements for onward lending in its focused sectors – MSME financing, MFI, consumer finance, vehicle finance, affordable housing finance, and agricultural finance – and to ensure compliance with RBI regulations on capital adequacy for FY2025.
Northern Arc has a diverse lender base comprising banks, offshore financial institutions, NBFCs, DFIs, and HNIs. The company was upgraded to an AA- (Stable) credit rating by ICRA and India Ratings in March 2023 and September 2023, respectively, from an A+ rating for all its long-term facilities and non-convertible debentures. ICRA further re-affirmed the AA- (Stable) credit rating for all its long-term facilities and non-convertible debentures in July 2024. For short-term bank facilities and commercial papers, an A1+ rating was re-affirmed by ICRA and CARE Edge in March 2024 and again in July 2024.
Speaking about strategy, Mehrotra adds: “Our strategies are to enhance our ecosystem by growing and deepening relationships with our partners, while leveraging and scaling up our technology products. We aim to expand into adjacent sectors such as climate lending and gold loans and enhance our ESG risk management systems. We strive to expand our Fund Management channel and continue to scale our Direct to
Customer Lending channel to enhance risk-adjusted returns.
Northern Arc Capital
Issue opens on
16 September 2024
Price band
Rs249 to Rs263 per equity share. Bids can be made for a minimum of 57 equity shares and in multiples of 57 equity shares thereafter.
Listed on
BSE and NSE