Skyways Air IPO: Tech, global diversification to drive growth; debt reduction a key focus, says CMD

Skyways Air Services is relying on technology, a diversified international business and rising Indian trade to sustain growth as it prepares to tap the capital markets, Chairman and Managing Director Yashpal Sharma said in an interview. He said the company expects the logistics sector to benefit from higher manufacturing activity and sustained economic growth, which, in turn, should support demand across cargo and allied services.

Sharma said Skyways, which has been in the logistics business for more than four decades, has become a leading player in India’s air cargo export segment with a 5.64 per cent market share. The company provides integrated logistics services across air and ocean freight, trucking, warehousing, express and e-commerce solutions, backed by technology developed over the past several years. “We have over 9,500 customers today,” Sharma said, adding that the company has increasingly focused on serving both large corporates and MSMEs through technology-enabled logistics solutions.

Technology, customer wallet expansion key growth drivers
Skyways handled around 84 million kg of air cargo last year, apart from volumes moved through other modes. Sharma said the company has recorded substantial growth in both revenue and profitability over the past several years, with technology becoming an increasingly important part of the business.

According to Sharma, technology and the company’s capacity arrangements with global carriers have helped Skyways increase its share of existing customers’ logistics spending while also bringing in new customers. He said he expects the Indian logistics industry to gain from rising manufacturing activity and broader economic growth. With India’s GDP expected to grow at 6-8 per cent over the next couple of decades, Sharma said logistics should remain a structurally attractive sector.

International business remains dominant
International logistics continues to form the core of Skyways’ business, accounting for more than 97 per cent of its revenue. The company entered the domestic segment only around four to five years ago, making it a relatively nascent business for the group.

Sharma said pharmaceuticals have become a more important vertical for the company, now contributing more than 22 per cent of the business compared with around 9 per cent three years ago. Textiles and ready-made garments account for about 13.5 per cent, while machinery and auto parts also make up a significant share of the product mix.

He said Skyways’ geographical exposure is diversified, with no single country contributing more than around 12-13 per cent of its business, which provides some protection against disruption in any one market. Air cargo accounts for about 77 per cent of Skyways’ revenue, while the remaining 23 per cent comes from other logistics services. Sharma said the non-air business is growing significantly in absolute terms even as the air cargo business continues to post strong revenue and volume growth.

West Asia crisis highlighted carrier network strength
Sharma said the company’s global carrier relationships helped it manage disruptions caused by the West Asia crisis earlier this year. Several airlines operating through the Middle East faced temporary disruption, affecting cargo capacity. However, Skyways was able to move customer shipments to European, Indian and Far East carriers through its global contracts.

“We were able to not just keep all our business and make sure that their business never got impacted. In fact, we were able to gain some businesses in that period as well,” Sharma said. He said the episode showed the importance of the company’s diversified carrier network and its ability to reroute shipments quickly during disruption.

Air cargo market offers room for growth
Sharma estimated India’s logistics industry at around $357 billion and said the market is expected to reach roughly $530 billion over the next five years. India’s air cargo market handled around 3.96 million tonnes last year, covering both domestic and international cargo, and Sharma said Skyways has historically grown at nearly twice the pace of the broader air cargo market.

He also pointed to India’s plans to expand air cargo capacity, with the government targeting around 10 million tonnes of air cargo in the coming years. The expansion of the airport network, which currently spans around 165 airports, is expected to support sector growth. “We see so much of new airports, huge demand,” Sharma said, adding that Skyways expects to benefit from rising goods movement and its technology capabilities.

IPO proceeds to reduce debt, support working capital
Sharma said debt reduction will be a key use of the capital raised through the IPO. Around Rs 216 crore of the proceeds will be used to retire debt, while another Rs 130 crore will go towards future working capital requirements. He added that the company also has around Rs 420 crore in cash and cash equivalents.

According to Sharma, deleveraging would help improve profitability and give Skyways greater financial flexibility to pursue future growth opportunities.

Promoters to retain 57 per cent stake after listing
Despite promoter participation in the offer for sale, Sharma said the promoters will continue to hold around 57 per cent of Skyways after listing. He described this as a sign of the family’s long-term commitment to the business. Sharma said Skyways is now being led by the second generation, while the third generation, including his daughter, has also joined the business. Around 6-7 per centof the company will remain with other directors and employees, he said.

Sharma said Skyways is looking to build on its international exposure, diversified customer and product base, technology investments and plans to deleverage its balance sheet, as it positions itself for expected growth in India’s logistics and air cargo markets.

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