Gurugram-based e-commerce logistics company Ecom Express has filed an initial public offering (IPO) paper with the capital market regulator SEBI to raise up to ₹2,600 crore by public listing of shares on the domestic bourses. The IPO of the new age company comprises fresh equities worth up to ₹1,284.5 crore and an offer for sale (OFS) of shares up to ₹1,315.5 crore by existing shareholders.
As per the offer document filed with the Securities and Exchange Board of India (SEBI), Ecom Express plans to tap vast opportunities in adjacencies such as quick commerce, reverse logistics, time-definite deliveries, heavy shipments, fulfilment services and modular services as well as data-led value added services.
Out of the proposed fresh equity issuance of ₹1,284.5 crore, the pure-play B2C e-commerce logistics solutions provider plans to use ₹387.44 crore for funding capital expenditure towards setting up new processing centers with automation and new fulfilment centres. The company will utilise another ₹239.23 crore to invest in enhancement of technological and data science capabilities, including cloud infrastructure.
Besides, ₹73.71 crore to be used for investing in computers and information technology equipment, and ₹87.91 crore for repayment of certain borrowings availed by the company. The remaining capital will be deployed towards general corporate purposes and unidentified inorganic acquisitions.
Incorporated in 2012, Ecom Express provides logistics and supply chain solutions across 29 states and 6 union territories, serving 27,000+ pin codes throughout India. With a network of 317 large facilities (covering sorting hubs, processing centers, return centers, and fulfilment centers), and 3,421 delivery centers, the PIN codes collectively account for approximately 97% of India’s population, as per RedSeer report mentioned in the DRHP. It acquired a controlling stake in Paperfly Private Limited, a logistics solutions provider company based in Bangladesh, in January 2021.
For the financial year 2023-24, the company reported steady increase in its total income to ₹2,652.89, from ₹2,575.52 crore in FY23 and ₹2,120.89 crore in FY22. The loss narrowed to ₹255.87 crore in FY24 as compared to ₹428.13 crore in FY23, albeit it has higher than ₹91.39 crore loss reported in FY23.
To invest ₹387.44 crore for setting up new processing centers
Backed by global private equity firm Warburg Pincus LLC, the company proposes to utilise ₹387.44 crore as capital expenditure towards setting up new processing centers with automation and new fulfilment centres. As of March 31, 2024, the company operated 115 processing centers, 32 fulfilment centers, and 33 automated sortation systems in India, as per the DRHP.
“With increase in e-commerce volumes and consumers’ expectations, we propose to increase our automated processing capabilities to match scale and improve service levels for our customers,” it says in the DRHP.
Out of ₹387.44 crore, the company plans to use ₹265.87 crore for setting up the processing centers and purchase of automated sortation systems. Of this, it proposes to utilise ₹235.25 crore for purchasing of automated sorters which will be housed in the processing centers to be set up from the IPO proceeds. Another ₹30.61 crore will be used for establishing 8 processing centers in the states of Uttar Pradesh, Madhya Pradesh, Haryana, West Bengal, Maharashtra, and Punjab.
As of March 31, 2024, the company operated 32 fulfilment centers in India on a leasehold basis, which is used for shipping and warehousing of logistics. The sizes of the fulfilment centers vary from 1,400 to 2,00,000 square feet depending on the requirement of its customers. As per the IPO document, the company intends to set up fulfilment centers in the states of Karnataka, Tamil Nadu, Telangana, Maharashtra and Haryana.
To use ₹239 cr for technological enhancement, data science capabilities
The company plans to use ₹239.23 crore out of the net proceeds towards investment in enhancement of its technological and data science capabilities including cloud infrastructure. The investment includes expenses payable by the company to Amazon Web Services India Private Limited. On February 15, 2023, the company entered into an arrangement with Amazon Web Services India by way of which, the company’s management has estimated an annual financial payments of ₹50.30 crore for five consecutive years starting from 2023.
To invest ₹73.71 in computers and IT equipment
The company has invested in IT equipment and infrastructure in order to improve efficiency and meet changing customer requirements and expectations. It plans to utilise ₹73.71 crore of the net IPO proceeds towards investment in computers and IT equipment and infrastructure.
“We expect to continue to incur capital expenditure for enhancing our IT infrastructure by investing in handheld devices, laptops, printers, firewall and switches, scanners among others,” the DRHP noted.
To repay ₹87.91 crore debt
As on June 30, 2024, the company had outstanding debt of ₹165.64 crore, including borrowings in the form of terms loans and fund based and non-fund based working capital facilities. It intends to utilise ₹87.91 crore of the net proceeds for repayment of certain borrowings availed by the company.
“Our company may utilise the net proceeds towards repayment of loans availed from Axis Bank Limited, either in full or in part,” it says in the DRHP. It availed ₹150 crore term loan from Axis Bank in December 2021, out of which half of the amount is outstanding.
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