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Route Mobile IPO Details

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INTRODUCTION

Incorporated on May 14, 2004, Route Mobile Limited (“Route Mobile”) provides Cloud-communication Platform as a Service (“CPaaS”) to enterprises, over-the-top (“OTT”) players and Mobile Network Operators (“MNOs”).  They were ranked as a tier 1 application-to-peer (“A2P”) service provider internationally. Route Mobile ranked 2nd globally as a tier 1 A2P service provider and also ranked 1st for ‘value-added services’ provided, its ‘implementation process’ and its ‘uptime performance’ among tier 1 vendors in 2017.  Company’s operations are internally aligned into the following business verticals: 

• Enterprise: Provides cloud-based communication platform to enterprises to enable digital communication through multiple channels;
• Mobile Operator: offerings in this segment include SMS analytics, firewall, filtering, monetization and CPaaS and hubbing solutions; and
• Business Process Outsourcing: provides a range of BPO services including client support, technical support, booking and collection services.

Its Enterprise solution comprises 2 primary components – the front-end that provides an interface for enterprises to integrate with, and a back-end which is directly integrated with over 240 MNOs and provides access to over 800 MNOs across the globe, as of June 30, 2020.
In Fiscal 2020 and in the 3 months ended June 30, 2020, it serviced 2,787 customers and 1,380 customers, respectively. As of June 30, 2020, Route Mobile has serviced over 30,150 clients, cumulatively since inception, across sectors including social media, banking and financial services, aviation, retail, internet/e-commerce, logistics, healthcare, hospitality, media and entertainment, pharmaceuticals and telecom.

For Fiscal 2018, 2019 and 2020, and the 3 months ended June 30, 2020:

• The Revenue from Operations were ₹ 504.95 crores, ₹ 844.67 crores, ₹ 956.25 crores and ₹ 309.61 crores.
• The EBITDA was ₹ 80.14 crores, ₹ 99.96 crores, ₹ 111.67 crores and ₹ 40.30 crore and EBITDA margins for the same periods were 15.73%, 11.73%, 11.53% and 12.90%, respectively.
• The Profit was ₹ 46.68 crore, ₹ 54.53 crores, ₹ 69.10 crores and ₹ 26.93 crores, respectively.

STRATEGIES

Continue to develop omni-channel digital communication offerings and innovative solutions
Route Mobile’s R&D team has augmented its CPaaS platform with several new channels of digital communication, which will drive growth in the near term. It has made significant investments in developing its communication services and solutions.

Continue to focus on developer community program
Route Mobile API Developer is an initiative to formally launch its developer community program. The objective of this program is to enable developers to leverage the capabilities of its CPaaS platform and seamlessly deploy communication features within their applications/software.

Enhance service offerings through inorganic opportunities
Route mobile continues to focus on building its presence in new markets and addressing the need for cloud-communications services in new industries. They intend to continue its strategic expansion plans through inorganic growth opportunities in new markets.

Grow presence in additional markets to serve clients locally
For attracting and new clients, they plan to focus on further strengthening its position in certain important enterprise markets, such as Africa and Latin America. They have operations in Kenya, Ghana, Uganda, Zambia and Nigeria, through its subsidiaries.

Leverage the CPaaS platform and BPO expertise to deliver virtual contact centre solutions
Route Mobile added BPO capabilities through the acquisition of Call2Connect. They intend to leverage Call2Connect’s expertise in a call centre and other BPO services, combined with its expertise in technology-driven digital communication.

STRENGTHS

Omni-channel cloud communication platform service provider with diversified service offerings for enterprises
Route Mobile was ranked 2nd globally as a tier 1 A2P service provider for 2017 (Source: ROCCO Report 2017). Being an associate member of the GSMA and an accredited open hub connectivity solution provider allows them to manage both A2P and P2P traffic for enterprises and MNOs.

MNO focused suite of products
Route Mobile offers its CPaaS to MNOs by which they help them extend A2P messaging services to enterprises and other aggregators. They recently added the IVN solution for MNOs to offer additional mobile number to existing subscribers, on the same mobile device.

Global connectivity through established relationships with MNOs
As of June 30, 2020, Route Mobile had direct relationships with over 240 MNOs (“Super Network”) and provided its enterprise clients with access to over 800 mobile networks.

Diversified and global client base across industries serviced locally
In FY2018, 2019 and 2020 and in 3 months ended June 30, 2020, its 10 largest clients accounted for 36.08%, 46%, 52.50% and 63.65% of its revenue from operations, while their single largest client accounted for 6.49%, 19.86%, 14.58% and 15.45% of its revenue from operations in such periods.

Scalable delivery platform supported by robust infrastructure
Company’s cloud-based delivery platform enables them to build and manage applications without having to create and maintain the underlying infrastructure for each client. They require limited capital expenditure when they add new clients or services or when traffic volumes increase

Robust business model and consistent financial track record
The company has a number of clients on a pre-paid business model where the client pays upfront allowing them to reduce the overall working capital cycle. Its total revenue increased at a CAGR of 37.61% from ₹ 504.95 crore in Fiscal 2018 to ₹ 956.25 crore in Fiscal 2020 and was ₹ 309.61 crore in the 3 months ended June 30, 2020. In Fiscal 2018, 2019 and 2020, and in the 3 months ended June 30, 2020, 41.77%, 24.99%, 17.01% and 15.47% of its revenue from operations, respectively, were prepaid. The standard terms of the agreements with its post-paid clients require payments to be made within 30 - 60 days.

Experienced Promoters and senior management team
Its Promoters, Sandipkumar Gupta and Rajdipkumar Gupta have approximately 2 decades of experience in the software and the communications sector. Its senior management team, have deep experience in product development, strategy development, designing and installation of IT networks.

MANAGEMENT

The company was incorporated as ‘Routesms Solutions Private Limited’ on May 14, 2004, at Mumbai. The company was promoted by Sandipkumar Gupta and Rajdipkumar Gupta, each one holding 14,400,000 Equity Shares representing 28.80% of the pre-offer issued, subscribed and paid-up equity share capital of the company.

Chandrakant Gupta is the Chairman and Non-executive Director of the company. He has been on the Board since 2007.

Rajdip Kumar Gupta is the Promoter, Managing Director and Group Chief Executive Officer of the company. He’s associated with the company since inception and has more than 18 years of experience in the field of software designing and development.

Sandip Kumar Gupta is the Promoter and Non-Executive Director of the company. He’s associated with the company since inception and has over 18 years of experience in audit and accounts and business analysis.

Ramachandran Sivathanu is the Independent Director of the company. Prior to joining the company, he has worked with Loop Telecom Pvt. Ltd., Loop Mobile (India) Ltd., Meridian Mobile Pvt. Ltd., RPG Cellular Services Ltd., etc.

Nimesh Salot is the Independent Director of the company. He has more than 14 years of experience in the field of investment banking.

Sudha Navandar is the Independent Director of the company. She is also an independent director on the board of Goa Glass Fibre Ltd, Anand Rathi Financial Services Ltd. and Anand Rathi Wealth Services Ltd.

Gautam Badalia is the Chief Strategy Officer of the company. He is responsible for the development and execution of strategic initiatives to support long term growth of the company and enhance shareholders value.

Rathindra Das is the Head Legal, Company Secretary and Compliance Officer of the company. He has over 8 years of experience in compliance and secretarial matters.

Rahul Pandey is the Chief Credit Officer of the company. He is responsible for coordinating the debts of existing creditors.

Sharad Kumar is the Executive Vice President – Middle East. He has over 18 years of experience in the telecom sector.

IPO DETAILS

BID/OFFER OPENS ON Sept 9, 2020
ISSUE TYPE Book Built Issue
BID/OFFER CLOSES ON  Sept 11, 2020
ISSUE SIZE

Rs. 600 Crore

FRESH ISSUE Rs. 240 Crore
OFFER FOR SALE Rs 360 Crore
ISSUE PRICE Rs 345 to Rs 359 Per Equity Share
FACE VALUE Rs 10 Per Equity Share 
MARKET LOT 40 Shares
LISTING AT BSE, NSE

Tentative Dates

Finalisation of Basis of Allotment Sept 16, 2020
Refunds / Unblocking ASBA Fund Sept 17, 2020
Credit of Equity Shares to DP Account Sept 18, 2020
IPO Shares Listing Date Sept 21, 2020

OBJECTS OF THE OFFER

The offer comprises the Offer for Sale and the Fresh Issue

The Proceeds from the Offer for Sale
The Company will not receive any proceeds from the Offer for Sale

Objects of the Fresh Issue
The Company proposes to utilise the Net Proceeds towards funding the following objects:
1. Repayment or pre-payment, in full or part, of certain borrowings of our Company;
2. Acquisitions and other strategic initiatives;
3. Purchase of office premises in Mumbai; and
4. General corporate purposes.

SHAREHOLDING PATTERN

The major Equity Shareholders holding 1% or more of the paid-up Equity Share capital of our Company and the number of Equity Shares held by them as on the date of this Red Herring Prospectus are set forth in the table below:

Name of shareholder Number of Equity Shares on a fully diluted basis % of the preOffer Equity Share capital (%) on a fully diluted basis
Sandipkumar Gupta 14,400,000 28.46
Rajdipkumar Gupta 14,400,000 28.46
CC Gupta Family Trust 5,000,000 9.88
Sunita Gupta 4,320,000 8.54
Sarika Gupta 4,320,000 8.54
Chandrakant Gupta 2,300,000 4.55
Chamelidevi Gupta 2,300,000 4.55
Krisharya Trust 2,000,000 3.95
  Pre Issue Post Issue
Shareholding (%) Promoters & Promoters Group 96.00% 66.33%
Public 4.00% 33.67%
Total 100% 100%

FINANCIAL OVERVIEW

Values in Rs. Crore

Fiscal/Financial Periods Total Revenue Total Expenses Profit for the Year Total Assets Short Term Borrowings Long Term Borrowings
31 March 2018 509.49 452.99 46.68 447.36 77.77 3.57
31 March 2019 852.38 787.37 54.53 505.78 73.16 3.95
31 March 2020 968.10 883.98 69.10 626.55 37.36 3.71
30 June 2020 312.30 279.61 26.93 634.83 38.82 3.70

Total Revenue 

Total Expenses

Profit for the Year

Total Assets

Short Term Borrowings

Long Term Borrowings

STASTICAL OVERVIEW

Fiscal/Financial Periods Basic EPS (In Rs.) RoNW(%) NAV (In Rs.)
31 March 2018 9.57 29.74 32.17
31 March 2019 11.4 26.42 42.36
31 March 2020 13.83 25.58 54.07
30 June 2020 5.42 9.12 59.40

Note:EPS & RoNW for the quarter ended June 30,2020 have not been annualized.

Basic EPS (In Rs.)

RoNW(%)

NAV (In Rs.)

COMPARISION WITH LISTED INDUSTRY PEERS

There are no listed entities in India whose business portfolio is comparable with that of our business.

REFERENCES:

1. RHP (Route Mobile Ltd.)
2. www.routemobile.com

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