About the Company
Founded in December 2003, SJ Logistics (MCap 850 Cr) specializes in delivering logistics and supply chain solutions to clients worldwide. The company provides key services like freight forwarding, customs clearance, and transportation handling. As a registered Multimodal Transport Operator, SJ Logistics is equipped to manage multimodal transportation efficiently. The company serves customers across various regions, including Russia, the USA, Brazil, and Australia, ensuring global reach and seamless operations.
About the Management
Mr. Rajen Shah, the Managing Director of SJ Logistics, first gained experience in the EXIM (Export-Import) market while working with Johnson Tiles. In 1999, he founded SJ Shipping Agency as a proprietary concern, which was later converted into a private limited company. During the company’s initial seven years, it focused primarily on steel commodities, setting the stage for its expansion into other sectors. The company has over 20 years of experience and have completed over 350 projects.
- Team Strength – 33 permanent employees (as of 31st Mar 2024).
- Ratio of Remuneration of each Directors to the Median Remuneration of Employees:
- Rajen Shah: 6.85:1
- Jeet Shah: 6.85:1
- Kulshekhar Kumar: 5.82:1
SJ Logistics – Business Verticals
Project Cargo
- Specialises in transporting oversized, critical, and high-value cargo related to infrastructure projects.
- Completes the projects on a turnkey contract basis, ensuring end-to-end handling.
- Handles various types of cargo like power-generating sets, excavators, transmission towers, earth-moving equipment, ODC (Over Dimensional Cargo), and break-bulk cargo.
- Exported to developing nations in Africa and South America, from clients based in Gujarat and Kolkata.
Ocean Freight Forwarding
- Facilitates the shipping of goods in and out of India via sea routes.
- Leverages an extensive network and strong carrier relationships to secure competitive cargo space.
- Specializes in exporting yarn and yarn products for clients based in Rajasthan, Gujarat, Madhya Pradesh, and Ludhiana.
- Also handles goods such as automobiles, heavy engineering products, power transmission equipment, rubber tapes, pharmaceuticals, carpets, handicrafts, and iron and steel items.
- Primary export destinations include South America, Europe, Gulf countries, and Africa.
Air Freight Forwarding
- Provides air freight services for both import and export shipments to and from India.
- Maintains long-term relationships with reputable airlines to handle a wide range of shipments, from small parcels to large consignments.
Warehousing
- Plans to establish a 38,910 sq. ft. warehousing facility in Bhiwandi, District Thane, Maharashtra, for efficient storage and handling of cargo.
Customs Clearance
- Prepares and submits the required documentation for import and export processes.
- Represents clients during customs examinations, assessments, and the payment of duties, ensuring smooth clearance of customs procedures.
NVOCC Cargo (Non-Vessel Operating Common Carrier)
- These are basically transportation intermediaries that provide ocean freight services without owning or operating ships.
- SJ Logistics provides NVOCC cargo handling services in Gulf and Upper Gulf regions.
- Operates under an agency agreement with Good Voyage Shipping Services based in the Middle East.
Door Delivery
- Ensures end-to-end cargo handling and delivery directly to the buyer’s location.
- Services include warehousing, intermodal transportation, delivery, and customs clearance.
- Facilitates container door delivery services to land-locked countries.
Note: The company doesn’t own any shipping vessels or inland transport vehicles. Instead, it forms long term contracts with shipping lines, local transport providers to deliver its logistics services.
Industries Served
- Yarn & Textile Commodities
- Automobile
- Heavy Engineering Goods
- Power Transmission
- Rubber Tapes
- Pharmaceutical
- Carpet Handicraft Items
- Iron And Steel Items
Geographies Served
In FY23, SJ Logistics processed 3,100 bills of lading, serving a wide range of global markets.
- Africa
- South America
- Australia
- Europe
- Middle East
- Southeast Asia
- Russia
- USA
SJ Logistics – Clientele
SJ Logistics – Niche Vertical: Project Cargo
Logistics Market Outlook
The Indian logistics sector is one of the largest in the world, presenting vast growth opportunities. In 2024, the India Freight and Logistics Market is estimated to be worth $317.3 billion and is projected to reach $545.6 billion by 2030, growing at a CAGR of 9.46%. Logistics services encompass packaging, transportation, warehousing, and supply chain management, all vital for connecting suppliers to end customers. The industry significantly contributes 13-14% to India’s GDP and employs over 22 million people, underlining its importance in the nation’s economic progress.
Key Growth Drivers
- Technological Advancements: The adoption of technologies like Blockchain, IoT, and AI is revolutionizing logistics, improving transparency, operational efficiency, and supply chain management.
- Infrastructure Improvements: Government initiatives like the National Logistics Policy (NLP) and the Dedicated Freight Corridor (DFC) aim to reduce logistics costs, improve efficiency, and streamline supply chains.
- E-commerce Boom: The rapid rise in e-commerce and international trade is driving demand for efficient logistics services, with air and surface cargo playing a crucial role in meeting the growing needs of the market.
- Government Initiatives: Policies like Make in India, PM Gati Shakti National Master Plan, and the development of logistics parks are designed to create an integrated logistics ecosystem. These efforts aim to reduce logistics costs to 8-10% of GDP by 2030, leading to an expected increase in exports.
Opportunities
- Global Trade Shifts: India stands to benefit from global manufacturing shifts, attracting companies to set up operations with improved infrastructure and trade agreements.
- Air Shipments: India’s strategic geographic location and investments in airport infrastructure make it a key player in the global air freight market, especially for e-commerce, pharmaceuticals, and high-value goods.
- Project Cargo: Indian companies, particularly those in transmission tower projects, have opportunities in the expanding global energy sector. Expertise in infrastructure projects and sustainable solutions position Indian firms to bid for international contracts.
- Global Supply Chain Integration: India’s growing role in global supply chains, driven by advancements in technology and its strategic location, strengthens its position in sectors like IT, manufacturing, and pharmaceuticals.
Threats
- Economic Volatility: Fluctuations in the global economy may impact trade volumes, affecting logistics demand.
- Regulatory Changes: New regulations and compliance requirements can introduce challenges for businesses operating in multiple regions.
- Increased Competition: The sector faces rising competition from both domestic and international players, pushing companies to innovate and adapt to remain competitive.
SJ Logistics – Revenue Breakup
Financials
- Compounded Sales Growth of 61.6% (82% Y-o-Y) over the last 2 years.
- EBITDA margin increased from 8.52% to 10.87%.
- PAT margin has also improved from 5.55% to 8.35%
- The Debt-Equity Ratio looks very strong at 0.12.
- Cash Flow from Operations is negative due to increase in receivables which is a concern.
- Debtor Days and Cash Conversion Cycle has improved from last year.
- ROCE looks healthy at 33%.
SJ Logistics – Strength and Growth Triggers
- IATA (International Air Transport Association) License: Obtained an IATA license in July 2024. With this, the company has achieved a significant milestone as they foray into the air freight forwarding business.
The IATA license will not only increase SJ Logistics’ credibility but also strengthen partnerships with airlines, ensuring compliance with international standards. - Tailored Solutions for PSUs: SJ Logistics is now focusing on providing logistics services tailored for PSUs aimed at optimizing supply chain efficiency, reducing costs, and ensuring timely delivery. The company has already registered with several PSUs and is actively pursuing further opportunities.
With years of experience, SJ Logistics intends to establish itself as the preferred logistics partner for PSUs, creating enduring partnerships that contribute to their success. - Geographic Expansion: Plans to expand its presence in new geographies.
- Increase in Network and Capacity: The company plans to open additional offices and expand capacity at existing branches, enhancing their ability to handle higher volumes of cargo and improve service efficiency.
- Recognition: Mr. Rajen Shah has been honored as the winner of the “Dynamic Entrepreneur of the Year” award at the 14th All India Maritime & Logistics Awards (MALA). This prestigious event recognizes innovation, best practices, and quality service within the maritime and logistics sector. The awards are determined by a panel of industry leaders, making them a significant acknowledgment from the sector itself.
- Certifications:
Why does PrudentParrot find this Company interesting?
- Focus on High-Value Project Cargo: SJ Logistics specializes in handling oversized and high-value project cargo, such as power generation equipment, transmission towers, and earth-moving machinery. This niche focus on complex, high-margin projects differentiates the company in a market with fewer competitors.
Although the company has been involved in export of textile, they have strategically shifted towards power generation equipment exports, which is gaining traction in Africa. The company has onboarded leading players like Sterling & Wilson Renewables are their client. - Aggressive Growth Targets: Management has set ambitious growth targets, aiming to approx. double their revenue from ₹271 Cr in FY24 to ₹500 Cr in FY25, with projections to reach ₹700 Cr in FY26 and ₹1000 Cr in FY27, reflecting an impressive CAGR of ~50%.
- Improving Profitability and Margins: The company has provided guidance to increase its PAT margin from 8% to 10% over the next few years, signalling a focus on improving profitability.
- Strong Order Book: SJ Logistics boasts a ₹340 Cr order book, providing strong visibility on future revenues.
- Promoter’s Strong Commitment: The Promoter and MD, Rajen Shah, is infusing ₹40 Cr to buy 700,000 share warrants at ₹576, convertible within 18 months. This significant personal investment demonstrates his strong commitment and confidence in the company’s future growth.
- Strategic Investment by Non-Promoters: An additional ₹39.97 Cr is being infused by non-promoters through a preferential allotment to buy 694,000 shares at ₹576. This includes investments from ace investor Sandeep Singh, highlighting external investor confidence in the company’s potential.
- Expanding International Presence: The company has a growing international footprint, serving clients in diverse regions such as Africa, South America, Australia, Europe, the Gulf, Southeast Asia, Russia, and the USA. This broad geographical reach reduces dependency on any single market and allows the company to capture global growth opportunities.
- Recognition and Industry Standing: The company’s CMD was honoured with the “Dynamic Entrepreneur of the Year” award at the prestigious All India Maritime & Logistics Awards. This recognition reflects the leadership’s innovative approach and successful management, further boosting the company’s credibility and reputation in the logistics industry.
- Strong Financial Health: With a Debt-Equity Ratio of 0.12, SJ Logistics is in a strong financial position, having minimal debt and maintaining a healthy balance sheet.
Special thanks to @Jinesh bhai for consolidating the Concall notes.
See you next time.
Until then… Stay Prudent!
Disclaimer: This article is provided for informational purposes only and should not be considered as an investment advice
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