Afcom Holdings Limited
Company
| Logo Website 🔗 |  |
| Business Activity | Logistics |
| Division | Air Transport |
| Sub-class | Freight/Cargo |
| Location | Office -Chennai, Tamilnadu |
| Establishment Year | 2013 |
| Total Number of Employees | 47 (21 – Crew Members) |
Management
| Managing Director | Capt. Deepak Parasuraman |
| Educational Qualifications | Bachelor of Commerce degree, Doctoral Degree on Trade and Trade barriers |
| Experience | 25 years of experience in managing and operating several businesses in relation to aviation and the air cargo industry |
| Annual Salary as % of Revenue | 0.41% |
About
- AFCOM Holdings Limited is an air cargo service provider. The company operates cargo flights, primarily to ASEAN countries such as Singapore, Indonesia, and Brunei.
- Their services encompass the entire air cargo process, including:
- Air Freight Forwarding: This involves booking cargo space on airlines, preparing documentation, and coordinating transportation to and from airports.
- Customs Clearance: AFCOM handles import and export customs procedures for their client’s cargo.
- Warehousing and Distribution: The company may offer warehousing facilities for temporary storage and manage the distribution of goods to their final destinations.
- They handle different types of cargo
- General Cargo: This category, consists of machinery, spare parts, electronics, garments, leather goods, and chemicals, accounting for 71.98% of their revenue.
- Perishable Cargo: This category, which includes fruits, vegetables, flowers, and pharmaceuticals, makes up 26.02%.
- Other Cargo: AFCOM also handles other specialized cargo types, such as dangerous goods, valuable cargo, and live animals.
- AFCOM Holdings Limited currently operates a fleet of two Boeing 737-800 Boeing Converted Freighter (BCF) aircraft. Each of these aircraft has a cargo capacity of 22 tonnes and is acquired through dry lease agreements, meaning AFCOM leases the aircraft without crew, maintenance, or insurance, which are handled directly by the company.
- Agreement Structure: Afcom Holdings establishes formal agreements with General Sales and Service Agents (GSSAs). These agreements mandate that the GSSAs must direct a minimum of 50% of their cargo volume to Afcom Holdings. Afcom Holdings compensates GSSAs through a commission and incentive structure.
- The company has GSSA agreements with Air Logistics Group (part of World Freight Company) and Taylor Logistics Private Limited (part of the TTK Group).
- Geographic Coverage: Afcom Holdings has established relationships with GSSAs in various countries, including India, Hong Kong, Singapore, Thailand, Japan, South Korea, China, and Taiwan.
Work Flow Chart
Revenue – Category
Revenue – Location
Audit and Legal
- Related party transactions represented 0.64% of Afcom Holdings revenues for FY 2024.
- There are no auditor qualifications on the restated financial information of Afcom Holdings Limited.
- The company acknowledges “inadvertent delays” in both EPF and TDS payments for which they have paid penalties.
- Promoter: There are six pending tax cases against the promoter, totalling ₹73.59 lakhs.
- Group Company (Fly Sbs Aviation Pvt. Ltd.): This group company faces a pending income tax case with a demand of ₹24.3 lakhs for the assessment year 2021-2022.
- Afcom Holdings Limited: There are pending tax cases, including an income tax demand of ₹7.37 Cr for the assessment year 2022-2023 which makes up the major part of the total contingent liabilities amounting to ₹7.78 Cr.
SWOT Analysis
Strengths
| Experienced Management Team: The senior management of Afcom Holdings Limited has a longstanding presence in the air cargo industry. |
| Company has high level of expertise for special cargo requirements |
| They are operating in a relatively niche area with entry barriers. |
Weaknesses
| Lack of Traceable Documentation for Key Personnel: Relevant copies of educational qualifications and experience for Capt. Deepak Parasuraman, the Managing Director and Promoter, are not traceable which raises concerns about transparency. |
| They have just two aircrafts, and the entire company depends on them and any issue related to aircrafts can very adversely impact the company. |
| The company has been running on a negative operating cashflow for the past few years, the continuation of which can adversely impact the company |
Opportunities
| Capitalizing on E-commerce Growth: As e-commerce continues to grow, the demand for efficient and reliable air freight services is also likely to increase, presenting a significant opportunity for Afcom Holdings Limited. |
Threats
| The company has been running on a negative operating cashflow for the past few years, continuation of which can adversely impact the company |
| Rise in aircraft fuel costs can severely impact the profit margins of the company |
Porter’s Five Forces
| Threat of New Entrants | LOW |
| There are regulatory hurdles and licensing requirements in the industry, which could potentially act as a barrier to entry for new competitors. |
| Bargaining Power of Suppliers | CANNOT INFER |
| Among the major costs to the company, while the pricing of fuel is dependent more on global cues than supplier and there is not enough data to infer bargaining power on lease of aircrafts. |
| Bargaining Power of Buyers | HIGH |
| The company has concentrated customer base and they are crucial for its revenues, which gives the buyers a high bargaining power |
| Threat of Substitute Products or Services | MODERATE |
| While other modes of transport like sea transport cannot substitute specific category the company is working in but passenger aircrafts with additional cargo facilities can act as a substitute. |
| Rivalry Among Existing Competitors | LOW |
| Afcom Holdings Limited indicated that they face very little to negligible direct competition in the markets in which they operate. |
Peer Comparison
- The company stated that there are no listed companies in India that operate in a business similar to Afcom Holdings Limited.
Green Box
- The company intends to acquire aircraft on a dry lease basis, adding to its current fleet of 2 Boeing 737-800 BCF aircraft. Afcom Holdings also plans to expand its market presence in the Indian logistics sector and other ASEAN countries. The company sees an opportunity to operate smaller capacity, shorter range, and more frequent flights in this market.
- Several factors can drive the Company’s growth:
- Increasing consumerism
- Growth of retail and e-commerce
- Technological advancements
- Hazardous Cargo Handling Expertise: Afcom Holdings Limited possesses the necessary equipment, skilled personnel, and established procedures to handle hazardous cargo effectively. Their commitment to international safety standards, specialized staff, and rigorous procedures highlight their strength in managing this complex aspect of air cargo.
- Early Mover Advantage: Afcom Holdings operates in a highly regulated industry with significant barriers to entry, giving it an early mover advantage.
Amber Box
- The debt structure of Afcom Holdings Limited, as of 2024, can be characterized as moderately leveraged, with a total debt of ₹ 15.50 Cr and a debt-to-equity ratio of 0.15.
Red Box
- Afcom Holdings Limited has consistently recorded negative net cash flow from operating activities for the last few years.
- Record-keeping issues and delayed filings: In the past they delayed filing statutory forms with the Registrar of Companies (ROC), acknowledging the payment of additional fees of 4.4 lakhs due to these delays. They were also unable to locate certain forms from years 2013 and 2014 like 23AC, Form 20B, Form DIR-12 and Form ADT-1.
- Contingent Liabilities: The company has 7.8Cr contingent liabilities
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