Snowman Logistics

Q1FY23 Concall Notes

• Primary Businesses: Warehousing (Cold + Dry WH) + Transportation business (incl. Snowlink)
• Pallets: 130k (Utilisation=89%): so pallets used = 115.7; WH revenue = ~50cr; Revenue/Pallet for 3m= 4334
• Net debt: 90cr
• Capex plans:
  - 75-100cr (internal + loan both)
• Kolkata cold WH:
  - land approval done
  - awaiting buildiong plan aproval from government
  - Phase I: 5k pallets
  - Phase II: 4k pallets
• New plant: Siliguri- current utilisation at 35% expects to touch 75% by october
• Growth in the current quarter YoY
  • Warehousing : +15%; (Margins: 35%)
  • Transportation: + 61%; (Margins: 4%)
  • ASP: +6%
  • Overall Margins: 24%

• QSR Sector has shown a growth of 30-35%

• Warehousing
  • Change of strategy
    • increased demand for Dry warehousing (currently 15% of revenue) from food and pharma; growing fast and is a customer pull product
    • hence, added 7-8k pallets in dry warehousing via leasing hence asset light
    • Cold WH: Kolkata WH plans on full swing
  • Offer end-to-end solution
    • except manufacturing and selling everything managed by Snowman
    • ie become like a national distributor for them
• Transportation Business
  • Reefer Vehicles: 249
  • • 82 dedicated vehicles
  • • 150 available on need basis
  • the latter two are availble via snowlink
    • asset light
    • as do not have to manage drivers, maintainence, fuel etc
    • hence margins are largely protected
  • so total 480 available
• • Snowlink Revenue:
    • 16 cr (last year 6cr); huge potential to grow
    • An aggregator service for cold chain vehicles
• Snowserve (Dedicated WH)
  • Amazon and Fraazo currently
  • Contracts: 3-9 years
  • 4 cities:
    • Delhi, Mumbai, Ahemdabad, Pune
  • this business can grow 25% yoy

Summary:

Asset heavy business in a largely unorganised sector.
Trying to improve business economics by multiple initiatives eg growing dry WH business on a lease basis thereby decreasing capes requirements, not expanding fleet rather decreasing it and going asset light by creating an aggregator platform. Also, can be a beneficiary of grocery deliveries by e-commerce players. Execution risks, macro risks and risk from competition/startup space present

Discl: Small Position; tracking