Supply Chain Solutions Provider LEAP India Raises $28 Mn Debt Capital

Mumbai-based supply chain solutions provider LEAP India has raised $28.48 Mn (INR 200 Cr) debt financing from Piramal Capital & Housing Finance.

The company may also raise equity worth $35.6 Mn (INR 250 Cr) from private equity (PE) firms in the next two months.

LEAP India plans to use the funds for its capital expansion of $21.36 Mn (INR 150 Cr) this year and to replace its $25.63 Mn (INR 180 Cr) debt with low-cost loans.

Founded by Sunu Mathew in 2013, LEAP is a pallet and container rental provider across India.

LEAP India deals in returnable packaging and pooling of equipment — wooden pallets and boxes, plastic containers, metal wire mesh — catering to all sectors that use these products to store or transfer goods from one site to another.

According to the company website, its clients include Tata Motors, LG, Bluedart, Abbott, Carlsberg, All Cargo, etc.

Sunu Mathew told ET that the loan is for a tenure of seven years with a two-year moratorium that will save $13.67 Mn (INR 96 Cr) for LEAP in the first two years.

LEAP India: Traversing Logistics In India

Mathew further said that LEAP India has doubled its number of pallets to 1.7 Mn in the last year and trebled its number of foldable large containers, used primarily for ferrying automotive spares, to 40K.

The company has also started a division to lease out forklifts, an industrial truck used to lift and carry cargo across distances.

It further plans to buy 400 forklifts and increase the number to 1,000 subsequently.

LEAP India featured on Inc42’s Startup Watchlist: 7 Indian Logistics Startups To Watch Out For In 2018 and had clocked an annual revenue of $11.1 Mn (INR 78 Cr) last year.

The company had earlier targeted revenues of $15.6 Mn (INR 100 Cr) in FY17 against the $5.77 Mn (INR 37 Cr) it logged in FY16.

Even though the $11.1 Mn it clocked was short of its targeted revenue, the company saw a jump of nearly 50% from its FY16 performance.

Reports said that LEAP India was eyeing a market share of 60% with a turnover of $93.6 Mn (INR 600 Cr) by the end of 2022.

The company has already raised $23 Mn in funding and was looking to raise another $15.6 Mn (INR 100 Cr) to take its current pallet count from 1 Mn to 3 Mn in the next three years.

The logistics startup has 14 manufacturing centres and 22 warehouses across the country to manage its inventory of 100K pallets at any given point in time.

The current size of the pallets market in the country stands at $780 Mn (INR 5,000 Cr).

According to Vikram Godse, managing partner of MF Advisors LLP, with the implementation of GST, the size of warehouses will only get larger, to bring efficiencies in the supply chain. And scaling up these large warehouses will be difficult without the use of pallets. By leasing pallets to customers, LEAP is ensuring a faster proliferation of pallets across India’s warehouses.

According to its regulatory filings, LEAP India is growing at a more than 100% average rate of return (ARR), indicating a fully viable, sustainable, and profitable business model.

Also, as stated by Mathew in an earlier media statement, the company is yet to tap the huge exports market to tap; in the near future, LEAP India can also expand its services to other markets.

The Indian logistics sector, which is poised to touch $307 Bn by 2020, has always been crucial to the country’s infrastructure and economic development.

[The development was reported by ET.]