tci express ltd Management discussions

1) Macro-Economic Overview:

1.1) India Economic Overview:

In these uncertain times, when the global economy grapples with numerous challenges, the Indian economy has demonstrated remarkable resilience. India has emerged as a shining beacon in the global economy, leading growth and becoming the worlds fifth-largest economy, surpassing the $3.75 trillion mark in 2023. As India gains prominence in the global economic landscape, it becomes increasingly challenging to insulate itself from global headwinds completely. Although India is expected to be impacted by the worldwide slowdown, the likelihood of it slipping into a recession is extremely low. According to the Recession Probabilities Worldwide 2023 data, India has a 0% probability of recession this year, while the UK and the US face 75% and 65% chances of recession, respectively. Canada and Germany have recession probabilities of 60%.

According to the World Banks Global Economic Prospects report published in June 2023, India is projected to achieve growth rates of 6.3%, 6.4%, and 6.5% in 2023, 2024, and 2025, respectively. These growth rates significantly outpace developed countries such as the US, EU, and Japan. In a slightly conservative estimate, the IMF expects India to grow at approximately 5.9% in 2023.

According to EYs "Envisioning the future of Indian logistics @ 2047" report, India is expected to sustain its robust economic performance and reach a US$26 trillion economy by FY48. This will present a noteworthy prospect for the transportation and logistics sector in India. EY predicts that the sector will experience a compound annual growth rate (CAGR) of around

4.5% from 2022 to 2050, leading to an estimated total distance of 15.6 trillion-ton kilometers traveled by 2050.

The Reserve Bank of India (RBI), which was among the first central banks to pause its monetary tightening, has increased interest rates by only 2.5%, compared to countries like the US and UK that have struggled to rein in rising inflation even after raising policy rates by approximately 5% and 4.5%, respectively. Displaying confidence in the domestic economy, the RBI has set a GDP growth forecast of 6.5% for the fiscal year 2023-24, banking on domestic solid indicators such as well-managed inflation, a narrowing current account deficit, sustainable domestic demand, favourable bond yields, and ample foreign exchange reserves. The banking sector in India has also exhibited robust fundamentals amidst the failures witnessed by major US financial institutions, resembling a house of cards. The Indian banking sector is well-positioned to sustain and support economic growth, propelling India into a high-growth trajectory.

India has demonstrated remarkable resilience in navigating global headwinds and is now poised for growth despite uncertainties. The countrys proactive approach has positioned it well to overcome any challenges that may arise on its path to progress. The Reserve Bank of India (RBI) has expressed immense confidence in the Indian economy, affirming that India will not slow down and will maintain the momentum achieved in 2022-23. The outlook remains optimistic for India, regardless of the prevailing circumstances.

All attention in India is now focused on the monsoon season, with concerns about the potential impacts of El Nino. While opinions vary regarding whether India will receive above or below-average rainfall, the Indian Meteorological Department expects rain to range between 96 to 104 per cent. Additionally, food grain production is anticipated to reach a record 323.6 million tonnes, reflecting a 2.5 per cent increase from the previous year. Although agriculture contributes just over 20% to Indias GDP, it holds significant importance in instilling optimism in the overall economy.

Numerous analysts and economists have predicted that this decade will belong to India, projecting a tripling of Indias GDP and nearly doubling per capita income by 2031, driven by manufacturing and export opportunities. The Governments commitment to infrastructure development and strengthening the supply chain further enhances the favourable prospects for India. Indian diplomats have also played a commendable role in maintaining relationships with the West and the East, avoiding taking sides and positioning India as a bridge between the two. The world is increasingly looking to India as a solution for a bipolar world, recognising its potential as a bridge between different regions.

The Indian Governments infrastructure push, logistics development, and industrial corridor development are expected to contribute significantly to raising industrial competitiveness and boosting future growth. In addition, the Governments commitment to increase capital expenditure, despite targeting a lower fiscal deficit, is expected to spur demand. Improving labour market conditions and consumer confidence will drive growth in private consumption, while the recovery in tourism and other contact services will boost the services sector. The softening trends in world oil markets bring much cheer to emerging economies like India, which heavily rely on fuel imports. Since last year, when geopolitical events caused crude oil prices to soar, countries that depend on importing most of their fuel needs have faced significant stress. However, the current market conditions have been favourable, with oil prices hovering around $70-75 per barrel for US crude and the benchmark Brent crude. This bearish outlook on oil prices is particularly relieving for India, which relies on imports for over 80% of its fuel consumption.

Source: Reserve Bank of India: Bulletin, June 2023

1.1.1) Indias Micro, Small and Medium Enterprises (MSME) Sector Driving Economic and Logistics Growth Budget Allocation for MSME Sector:

The Small and Medium Enterprises (MSME) sector plays a crucial role in Indias growth journey, accounting for almost one-third of Indias economy. MSMEs contribute significantly to expanding entrepreneurial endeavours through business innovations and producing a diverse range of products and services to meet the demands of both domestic and global markets. They provide enormous employment opportunities at comparatively lower capital costs than large industries. They help industrialise rural and backward areas, reducing regional imbalances and ensuring a more equitable national income and wealth distribution.

According to the available data, the MSME sector has been responsible for creating 11.10 crore jobs, with 360.41 lakhs in manufacturing, 387.18 lakhs in trade, 362.82 lakhs in other services, and 0.07 lakhs in non-captive electricity generation and transmission. Additionally, as per the National Sample Survey (NSS), approximately 633.88 lakh unincorporated non-agriculture MSMEs are engaged in various economic activities, excluding those registered under specific sections of the Factories Act, Companies Act, and construction activities. Of these 633.88 lakh enterprises, 196.65 lakh are involved in manufacturing, 0.03 lakh are in non-captive electricity generation and transmission, 230.35 lakh are in the trade sector, and 206.85 lakh belong to other services. The MSME sector in India plays a crucial role in job creation and contributes significantly to various sectors of the economy.

Source: Ministry of Micro, Small and Medium Enterprises, Annual Report 2022-23, Classification of MSME by Nature:

1.1.2) Budget 2023 Highlights for MSMEs: Key Provisions to Boost Growth and Employment

• A record allocation of Rs. 22,138 crore for MSMEs in Union Budget 2023

• Infusion of Rs.9,000 crore into the Credit Guarantee Fund Trust for Micro and Small Enterprises Credit Guarantee Scheme

• Additional collateral-free credit of Rs.2 lakh crore to MSMEs and reduction of credit cost by 1%

• Expansion of turnover limit for micro units for presumptive taxation from Rs. 2 crore to Rs. 3 crore

• About 100 transport infrastructure projects were identified to help sectors such as coal, fertiliser, food grain, steel, and shipping, amounting to Rs.75,000 crore, to be funded in part by private players.

• Earmarking of Rs.10,000 crore for the creation of the Urban Infrastructure Development Fund (UIDF)

Source: https://www.tpci.in/indiabusinesstrade/blogs/union-budget-2023-whats-in-for-msmes/#:~:text=MSMEs%20 in%20Budget%202023%2D24&text=DigiLocker%20 s e r v i c e s % 2 0 a r e % 2 0 t o % 2 0 b e , 1 % 2 5 % 2 0 a n d % 2 0 expanding%20employment%20opportunities.

1.2) Indian Logistics Industry:

With its vast landmass spanning approximately 3.3 million square kilometres, India faces significant logistical challenges in transporting and moving goods. As the country recently surpassed China as the most populous nation in the world, with a population of 1.43 billion, logistics plays a crucial role in Indias economy. The domestic logistics market is expanding faster than the overall economy and is projected to maintain a compound annual growth rate (CAGR) of 8-10% in the coming years. This sector contributes around 13% to Indias Gross Domestic Product (GDP). The thought leadership report, "Envisioning the future of Indian logistics@2047," co-presented by EY and the Bombay Chamber of Commerce & Industry (BCCI), highlights the potential growth and challenges in

Indias logistics sector. It emphasises critical drivers for increased demand, including Indias projected GDP growth to $26 trillion by FY48 and the target to accelerate merchandise exports to $1 trillion by 2030. In FY22, Indias transportation and logistics sector experienced substantial growth, with exports increasing by 44.6% to $422 billion and imports growing by 55.4% to $613 billion. This growth has propelled the sector by a value ranging between $400 billion and $420 billion (INR 32-34 lakh crore) in 2022.

Currently, road transportation holds the majority share in Indias freight movement, accounting for 66% of cargo transportation. It is followed by rail (31%), shipping (3%), and air (1%). This uneven distribution of transportation modes leads to operational inefficiencies. In order to address this concern, the Government of India (GOI) has implemented initiatives like GatiShakti and the National Logistics Policy. These initiatives are aimed at establishing an integrated, transparent, agile, and environmental friendly logistics sector. As India strives to enhance its manufacturing capabilities to meet growing domestic demands and fuel its expanding export aspirations, the preference for road transportation is expected to further strengthen in the future. Consequently, there will be a heightened need for express logistics, particularly for High Value shipments & Time-Sensitive demand. This presents a remarkable opportunity for companies specializing in B2B surface transport.

To fully realise the potential of the logistics sector, collaboration among stakeholders such as service providers, customers, and the GOI is essential. Despite the launch of initiatives like GatiShakti and the National Logistics Policy, challenges related to implementation, infrastructure development, digital readiness, and supply chain transparency need to be addressed.

In recent years, there have been significant developments in infrastructure, digitalisation, and sustainability within Indias logistics sector. Initiatives like "Make in India" and the "Unified Logistics Platform" (ULIP) is promoting transparency through digitisation, leading to faster processing, optimized costs, and improved shipment tracking. Additionally, adopting technologies such as automation, robotics, artificial intelligence (AI), and last-mile delivery innovations are revolutionising the industry. Consolidation of warehousing and the implementation of Fastag-enabled expressways further enhance efficiency.

The GOI has taken steps to support the express B2B industry, including initiatives such as e-invoicing, using BS-VI vehicles, and implementing GST, e-waybill, and Fastag. These measures streamline processes, improve compliance, and boost efficiency in the logistics industry.

The Centre has also increased the official maximum load-carrying capacity of heavy vehicles, including trucks, by 20-25% and eliminated the mandatory annual renewal of fitness certificates for freight carriers. These changes aim to enhance the capacity and efficiency of freight transportation.

GOI has implemented the Scrap Policy to promote sustainability in the logistics industry by phasing out older vehicles and encouraging the adoption of greener technologies. Through this policy, emissions will be reduced, and the logistics fleet will be modernised, leading to improved efficiency and reliability. On-road driver facilities are essential for ensuring driver well-being and compliance with rest regulations. In India, the logistics industry is actively embracing green technology, including alternative fuel vehicles and renewable energy, to minimise emissions and enhance sustainability. These initiatives, supported by GOI, are crucial in creating a greener and more efficient logistics ecosystem.

Notable government initiatives like the National Logistics Policy (NLP) and the Unified Logistics Platform (ULIP) will significantly impact the express industry. The NLP aims to streamline logistics operations, optimise multimodal transportation, and enhance trade facilitation. The

ULIP serves as a centralised digital platform for managing logistics processes and documentation, leading to improved efficiency and transparency. The Governments scrap policy will also have implications for the industry, promoting sustainable practices and addressing environmental concerns.

The Government is undertaking various infrastructure projects to support the express and logistics industries. These include the development of expressways, green corridors, and multimodal logistics parks. These infrastructure projects will enhance connectivity, reduce transportation time, and facilitate smoother movement of goods.

Source: A Report on Indian Express Logistics Industry 2022 and LEADS Report 2022 https://pib.gov.in/ Pressreleaseshare. aspx?PRID=1538941

1.2.1) Key policy support from the Government

• The National Logistics Policy (NLP) guides states and union territories (UTs) in formulating and implementing their own logistics policies through a Comprehensive Logistics Action Plan (CLAP). The CLAP focuses on integrated digital logistics systems, standardisation of physical assets, warehousing service quality standards, logistics human resources development, state engagement, EXIM logistics, service improvement framework, and sectoral plans for efficient logistics. This policy aims to enhance logistics efficiency and promote trade.

• The PM GatiShakti National Master Plan (PMGS-NMP) initiative aims to create and improve multimodal logistics infrastructure by collaborating with states, UTs, and their agencies. It establishes a unified decision-making platform and offers special assistance to States for capital investment through a 50-year interest-free loan of Rs.1 lakh crore. This plan seeks to strengthen logistics infrastructure and facilitate smoother movement of goods across different modes of transportation.

• The Unified Logistics Interface Platform (ULIP) and e-Logs are integral components of the NLP. ULIP is an integrated platform that enhances Indias efficiency, technology utilisation, and logistical infrastructure. On the other hand, e-Logs serve as a dashboard for easy access to logistics services, facilitating the registration, coordination, and monitoring of logistics stakeholders issues. These initiatives aim to streamline logistics operations and improve overall service quality.

• The NLP, along with the scheme for special assistance to states for capital investment, aims to boost EXIM and domestic trade while reducing logistic inefficiencies. The Government has allocated Rs. 5,000 crore to support PM GatiShakti-related expenditures in the states. These measures focus on creating a favourable environment for logistics development and promoting efficient trade facilitation.

• Under the NLP, the Comprehensive Logistics Action Plan (CLAP) proposes crucial interventions in human resources development, warehousing service quality standards, and integrated digital logistics systems. These interventions aim to enhance the skills of logistics professionals, improve warehouse operations, and leverage technology for seamless logistics services.

The overall changes and developments in infrastructure and the logistics sector in India are set to bring significant benefits to the logistics industry, including leading companies like TCI Express. The improved infrastructure, such as expanding road networks, dedicated rail tracks, and implementing initiatives like GatiShakti and the National Logistics Policy, will enhance the efficiency and speed of goods movement. This will result in reduced transit times, improved connectivity, and streamlined operations for logistics companies like TCI Express. Additionally, the emphasis on digitalisation, adoption of advanced technologies, and initiatives like the Unified Logistics Interface Platform (ULIP) will enhance transparency, enable better tracking and coordination, and optimise logistics processes. These improvements will increase customer satisfaction and cost optimization and improve overall performance for TCI Express and other express logistics companies operating in India. The positive impact of these changes will position TCI Express to serve its customers better, strengthen its competitive advantage, and contribute to its continued growth and success in the Indian logistics industry.

Source: LEADS Report 2022

1.2.2) Budget 2023 Highlights for Logistics and Supply chain management:

• The allocation of Capex of Rs. 10 lakh crore in infrastructure, roads, and railways will help the industry accelerate its growth.

• The budget emphasises structural realignment and strengthening the macroeconomic environment through prioritising investments in infrastructure, green industry, and transitioning to cleaner energy.

• The Governments emphasis on green energy and skill development demonstrates a commitment to sustainability and growth, positioning the industry for a more efficient, environmentally conscious, and skilled future.

• Promoting coastal shipping through viability gap funding builds on the strength of the outlined infrastructural developments.

• These infrastructural investments strategically position the Indian economy for increased investments and overall growth.

• During the fiscals 2020 to 2025, sectors such as Energy (24%), Roads (19%), Urban (16%), and Railways (13%) amount to around 70% of the projected capital expenditure in infrastructure in India.

• Government has already announced a Rs. 102 lakh crore national infrastructure pipeline, in accordance with the Narendra Modi governments vision to make India a $5 trillion economy by 2024-25.

1.2.3) Technologies and Innovations in Indian Logistics Industry Leveraging Advanced Technologies

Logistics companies have adopted various strategies, leveraging advanced technologies such as GPS tracking, drones, and on-demand delivery apps. These technological advancements empower logistics companies to enhance their operations by optimising delivery routes, minimising delivery times, and ultimately improving customer satisfaction.

Internet of Things (IoT)

IoT is used in Indias logistics industry to track shipments and monitor cargo temperature and humidity. The technology also enables real-time monitoring of vehicle performance, which helps to optimize maintenance costs and increase efficiency.

Increased use of Automation

Automation plays a vital role in accelerating shorting operations and increasing accuracy in Indias logistics industry. The use of automated sorting systems has greatly reduced the time required for sorting, resulting in significant time savings. The implementation of automation technologies has led to faster processes, improved efficiency, and overall enhanced performance and accuracy in logistics operations.

Artificial Intelligence (AI) and Machine Learning (ML)

AI and ML are being used to optimise logistics operations in India. Predictive analytics, for example, is being used to forecast demand and optimise routing and scheduling, minimizing costs and improving delivery times.

Blockchain

Blockchain technology is used to increase the transparency and security of supply chains in India. By creating a tamper-proof record of all transactions, blockchain technology is helping to improve trust between parties and reduce the risk of fraud.

1.2.4) Growth Drivers for Indian Logistics Industry: Indias Manufacturing Sector Gears Up for Growth

The Indian manufacturing industry is transforming to increase reliability and resilience by setting up more locations. The countrys competitive wage edge over other countries positions it well to succeed in the "Make in India" policy. Additionally, Indias young and inexpensive labour pool has profound implications for global manufacturing, while the emergence of middle-class consumers is anticipated to coincide with the Indian wage dynamic.

According to the World Economic Forum, India is projected to become the global manufacturing hub by 2030, it has the capacity to export goods worth US$ 1 trillion by 2030. Furthermore, India aims to generate more than 100 million jobs by 2030, focusing on manufacturing. Looking ahead to 2047, Indias manufacturing capacity is anticipated to grow to $20 trillion. These ambitious goals reflect the countrys commitment to fostering economic growth, creating employment opportunities, and positioning itself as a key player in the global market.

India has robust manufacturing capabilities in crucial pharmaceuticals, chemicals, textiles, apparel, and automotive sectors. However, the countrys ambitions extend beyond these domains as it aims to establish a stronghold in next-generation industries. Opportunities are emerging in sectors like renewables, aerospace, and hi-tech semiconductors, aligning with the global shift toward a green and connected future. To build a strong foundation in these areas, India must focus on research and development, technology transfers, international collaborations, and incentivising private investments while promoting collaboration.

Indias impressive technology stack serves as a testament to its capacity for digital disruption on a large scale, showcasing the nations potential for innovative solutions. A similar leap in manufacturing, with a focus on next-generation smart industrial clusters, connected factories, high-productivity assets, end-to-end value chain transparency, and real-time technology-enabled interventions, can be a significant differentiator.

The growth of the Indian manufacturing sector will profoundly impact the logistics industry, including companies like TCI Express. The demand for efficient and reliable logistics services will aid as the manufacturing sector expands and diversifies into new industries. TCI Express, a leading express logistics company in India, is well-positioned to capitalise on these opportunities. With its extensive network, industry expertise, and commitment to technological advancements, TCI Express can play a pivotal role in facilitating the seamless movement of goods across the manufacturing value chain.

The strong emphasis on reforms and aligned efforts from the public and private sectors provide a favourable environment for Indias manufacturing sector to thrive. By navigating geopolitical risks and executing strategies effectively, the next 25 years have the potential to become Indias golden age of manufacturing. TCI Express, with its strong market presence, adaptability, and focus on customer satisfaction, is poised to contribute significantly to this manufacturing revolution, solidifying its position as a critical player in the Indian logistics industry.

Domestic Demand, Skilled Manpower and Technology:

The logistics industry in India is currently benefiting from the phenomenon known as the "demographic dividend." With a large and youthful population, India is experiencing economic advantages derived from a significant proportion of the population being of working age, composed primarily of young individuals. This demographic advantage presents a multitude of opportunities for the countrys economic growth and progress, including within the logistics sector. As the working-age population expands, there is a heightened demand for goods and services, resulting in increased logistics requirements. The logistics industry plays a crucial role in connecting producers and consumers, ensuring efficient supply chains, and facilitating economic activities. Additionally, Indias significant presence in disruptive technologies like Machine Learning, AI, Cloud Computing, the Internet of Things, and Blockchain empowers its youth, enabling them to embrace higher consumption, investment, and entrepreneurship. This favorable environment creates conducive conditions for businesses and industries, including logistics, to thrive and contribute to Indias economic development.

Infrastructure development and adoption of green/ renewable energy:

According to the Economic Survey of 2023, the National Infrastructure Pipeline (NIP) encompasses many ongoing projects totalling over Rs. 108 lakh crore in investment.Theseprojectsareinvariousimplementation stages, reflecting the NIPs comprehensive nature. The survey emphasises the importance of consistent infrastructure investment in a developing economy like India, as it is crucial for sustaining a high growth rate and achieving social objectives. The transport sector is a focal point within the NIP, with an estimated

Rs. 108 lakh crore assigned to multiple infrastructure projects. Finance Minister Nirmala Sitharaman further demonstrated the Governments commitment to infrastructure development by announcing a 33 percent increase in capital expenditure, amounting to Rs. 10 lakh crore, for the fiscal year 2023-24. This investment constitutes 3.3 per cent of the countrys GDP. The

finance minister also highlighted the identification of one hundred critical transport infrastructure projects aimed at improving connectivity for sectors such as ports, coal, steel, fertilisers, and food grains. These proactive measures underscore the Governments determination to prioritise and enhance infrastructure development in India. Furthermore, as reflected in initiatives like Green India for All, Indias focus on green and renewable energy will significantly impact every industry, including the logistics sector.

1.2.5) Consistent Government Initiatives for the Upliftment of the Sector:

• Gati Shakti Scheme: A national master plan for multi-modal connectivity to lower down logistics costs, increase cargo handling capacity, and reduce port turnaround time. It aims to have 11 industrial corridors and two new defence corridors and extend 4G connectivity to all villages.

• Multimodal Logistics Park: The first of its kind in India, developed under the Bharatmala Pariyojana, which aims to reduce congestion on economic corridors, enhance logistic efficiency and optimize logistics costs. It will have all facilities, including a custom clearance house, truck parking, and a water treatment plant. It will reduce trade costs by 10% with a cargo capacity of 13 million metric tonnes annually.

• Sagarmala Programme: A port-led development programme to modernise ports, enhance port connectivity,andimproveport-linkedindustrialisation. It also aims to promote coastal shipping and inland waterways transport.

• Dedicated Freight Corridors: Two corridors dedicated to freight transportation - Eastern and Western - will cover a distance of about 3,300 km and pass through several states. The aim is to optimize transit time and transportation costs for exim and commodities.

• Bharatmala Pariyojana is a highways sector programme aimed at optimising the efficiency of freight and passenger movement across the country. It will involve the construction of 66,100 km of highways, including economic corridors, inter-corridors, and feeder routes. Under Bharatmala Phase-I, the Government has already planned 35 MMLPs, of which the first ones will come up in Nagpur (Maharashtra), Chennai (Tamil Nadu), and Bengaluru (Karnataka).

1.2.6) Key challenges faced by the logistics industry in India:

The logistics industry in India faces several key challenges that impact its operations and overall efficiency:

• Transportation costs and unstable fuel prices:

Transportation costs, including fuel expenses, have a significant impact on logistics operations. Fluctuating fuel prices can make it challenging to predict and manage costs effectively, leading to increased operational expenses for logistics providers.

• Workforce management and shortage of skilled workers: The logistics industry requires a skilled workforce to handle various tasks, including warehouse operations, transportation, and supply chain management. However, there is often a shortage of skilled workers, leading to difficulties in managing and optimizing the workforce, which can impact overall efficiency.

• Customer experience and assisting at every touchpoint: Meeting customer expectations and providing a seamless experience at every touchpoint is crucial in the logistics industry. However, it can be challenging to maintain consistent service levels, address customer queries promptly, and ensure timely deliveries, especially in a diverse and vast country like India.

• Visibility and lack of complete control and transparency of the supply chain: Achieving end-to-end visibility and transparency in the supply chain is a challenge for the logistics industry in India. Limited visibility can lead to inefficiencies, delays, and difficulties in identifying and addressing potential bottlenecks or disruptions in the supply chain.

• Regulations and constant changes in rules enforced by authorities: The logistics industry operates in a regulatory environment, and compliance with various rules and regulations is necessary. However, the industry often faces challenges due to frequent changes in regulations, which can create uncertainty and impact operational planning and execution.

• Technology adaptation and the inability to implement shipment tracking systems and data analytics tools: The logistics industry can benefit greatly from technology adoption, such as implementing shipment tracking systems and data analytics tools. However, there may be challenges in terms of infrastructure limitations, lack of awareness, or resource constraints, preventing widespread adoption of such technologies.

• Deteriorating conditions of roads in the interiors of the country: While India has made significant progress in developing its road infrastructure, there are still areas, particularly in the interiors of the country, where road conditions are poor. This poses challenges for logistics operations, including increased transit times, higher maintenance costs, and potential risks to the safety of goods and personnel.

1.3) Indian Express Logistics Industry:

The express sector in India offers time-sensitive logistics services through door-to-door connections and advanced shipment tracking systems. It is a rapidly growing industry that utilises surface and air transportation for efficient delivery. The Indian express industry is highly competitive, well-organised, and technology-driven, providing value in time and product safety. Various factors such as time sensitivity, cost, security, and lot size determine the mode of transport used. Key customers of express logistics services include industries like apparel, pharmaceuticals, automotive, and electronics. The industry exhibits a clear trend in utilising different modes of transport based on the type of material being transported, such as raw materials, finished goods, or spares.

Indias express industry is one of the fastest-growing sectors in the country. While most domestic express businesses are homegrown, some have been acquired by international logistics players. Despite the express industry being more organized when compared to the Full Truck Load and Part Truck Load sectors, it is noteworthy that about 80% of the express industry remains unorganized.

Despite its promising future, the Indian express logistics industry faces significant barriers to entry. Establishing a nationwide network with efficient operations requires substantial investments in infrastructure, vehicles, technology systems, and trained personnel, posing a financial challenge for potential new entrants. Additionally, building strong customer relationships and a reliable reputation takes time, making it difficult for newcomers to compete with established companies. Regulatory compliance and licensing requirements add complexity and costs to entering the industry, further hindering entry. Moreover, the presence of well-established players with extensive networks and market dominance creates intense competition, making it challenging for new entrants to compete on price, quality, and market share.

TCI Express holds a competitive edge in the express sector for several reasons. The Company has a longstanding presence and an extensive, reliable network throughout India. By employing advanced technology and efficient operations, TCI Express ensures seamless delivery services. The Company has also fostered valuable relationships with major customers across high-value segments, contributing to its sustained growth. Its versatility is demonstrated by serving diverse industries such as textile, pharmaceuticals, automotive, engineering, and electronics. Moreover, TCI Express demonstrates its support for the advancement of the manufacturing, SME sector and startups, actively engaging in operations spanning the entire value chain. We underscore our commitment to fostering entrepreneurship and exemplifying adaptability within the sector.

1.3.1) Express Industry Divisions: Surface B2B segment

The dominant force behind domestic surface express transportation in the express industry is the Business-to-Business (B2B) segment. The B2B surface express market is projected to experience remarkable growth with an impressive compound annual growth rate (CAGR) of 15%. As the business landscape becomes more competitive, customers are increasingly seeking value-added services alongside punctual and comprehensive delivery.

Within the B2B segment, the selection of suppliers is influenced by various factors, including lead time, service levels, and cost. While the average delivery time for goods in the surface mode is typically longer than that of the air mode, the price difference is substantial. To bridge the time gap, some companies have introduced surface express products that offer reduced transit time compared to standard services. The specific transit time depends on the distance involved, but it generally averages around three days on a national level.

Air B2B segment

Corporations rely on the domestic air express business-to-business segment to transport time-sensitive or perishable materials. The delivery of goods in this segment typically takes 1-2 days, depending on the location or sector. According to data released by the Airport Authority, the total domestic lodgement in FY 20 amounted to 13.25 lakh tonnes. However, in the domestic express segment, the volume of air-mode shipments is relatively small compared to surface transportation.

Air express services are primarily utilised by specific industries that deal with high-value and time-sensitive products. These industries include consumer electronics, cold chain pharmaceuticals, medical equipment, e-commerce, auto spare parts, lifestyle products, perishables, and IT hardware. The current worth of the domestic B2B air express segment is projected to grow at a compound annual growth rate (CAGR) of 7-8%.

B2C Segment

Express logistics services play a pivotal role in connecting businesses with consumers by enabling them to outsource their logistics operations. In the current business landscape, companies are increasingly relying on logistics experts to efficiently manage their supply chains, allowing them to concentrate on their core business areas. This growing trend of outsourcing logistics functions is a crucial driver for the expansion of express logistics services.

Documents Express

The document segment, previously the largest segment in domestic express services, catered primarily to industries like BFSI (Banking, Financial Services, and Insurance), telecom, and others for dispatching crucial documents. However, with the widespread adoption of email and increased internet penetration, the reliance on express services for document delivery has significantly decreased. Companies now prefer to transmit necessary information digitally to their customers. This trend of reduced usage for document delivery is expected to continue.

1.3.2) Sectors Contributing to the Growth of Express Industry The Auto Component Industry:

The Auto Component Industry in India plays a crucial role in driving macroeconomic growth and employment. It encompasses a diverse range of players, including large corporations and micro entities, spread across various clusters in the country. With its significant contribution, the auto components sector accounted for 2.3% of Indias GDP and provided direct employment to 1.5 million individuals. It is projected that by 2026, the automobile component industry will contribute 5-7% of Indias GDP.

The Indian used car market, valued at USD 32.14 billion, is expected to reach USD 74.70 billion with a CAGR of 15.1%. Demand for pre-owned luxury cars has grown by 35-40% annually. This expansion has positively impacted the auto component industry, significantly boosting its growth. According to research conducted by Aviral Consulting, the auto component industry is estimated to contribute approximately 15% to the domestic B2B express market. This highlights the significant role played by the auto component sector in the express industry. The growth of the auto and auto component market will positively impact the overall development of the express industry.

Source: https://www.ibef.org/industry/autocomponents-india Express-Logistics-Industry-Report-2022

Pharmaceutical Industry:

The pharmaceutical industry in India has experienced remarkable growth in recent years and is poised for further expansion. Currently valued at $50 billion, the industry is projected to reach $65 billion by 2024 and a staggering $130 billion by 2030.

India has established itself as a prominent exporter of pharmaceuticals, serving more than 200 countries worldwide. It dominates the global vaccine market, accounting for approximately 60% of global vaccine demand. Indian pharmaceutical companies are major suppliers of essential vaccines such as DPT, BCG, and Measles, with 70% of WHOs vaccines sourced from India per the essential Immunization schedule.

The pharmaceutical industry in India not only plays a crucial role in healthcare but also contributes significantly to the domestic and international B2B express logistics sector. The pharmaceutical industry is estimated to account for approximately 16% of the express logistics services in India, encompassing domestic and international operations.

Two significant segments driving movement by surface transportation are Physician Samples and Active Pharmaceutical Ingredients (API) within the domestic express logistics landscape. These segments require efficient and timely transportation to healthcare professionals and pharmaceutical manufacturers nationwide.

On the other hand, when it comes to movement by air, the pharmaceutical industry relies heavily on express logistics for transporting devices, clinical samples, and cold-chain products. These products often have specific temperature requirements and must be delivered quickly and securely to maintain efficacy. The collaboration between the pharmaceutical industry and the express logistics sector is mutually beneficial. The pharmaceutical industry relies on express logistics speed, reliability, and advanced tracking capabilities to meet healthcare providers and patients urgent and time-sensitive demands. At the same time, the pharmaceutical industry contributes significantly to the growth and revenue of the express logistics sector. The reliance on express logistics will only increase as the pharmaceutical industry innovates and introduces new therapies and treatments. The efficient movement of pharmaceutical products, samples, and devices is essential for the industrys success and patients overall well-being. The partnership between the pharmaceutical industry and the express logistics sector will play a crucial role in driving advancements in healthcare delivery and meeting the evolving needs of the healthcare ecosystem.

Source: https://www.investindia.gov.in/sector/ pharmaceuticals#:~:text=The%20pharmaceutical%20 industry%20in%20India,served%20by%20Indian%20 pharma%20exports. Express-Logistics-Industry-Report

Consumer Durables:

India is poised to become the worlds fifth-largest market for consumer durables, demonstrating its rapid growth in the electronics sector. With significant potential for expansion, the market is projected to double in size, reaching US$ 21.18 billion by 2025. The Indian Government is actively fostering the growth of this sector through initiatives like "Make in India." It has also implemented policies to attract foreign investment, including allowing 100% Foreign Direct Investment (FDI) under the automatic route in the Electronics Systems Design and Manufacturing sector. Furthermore, FDI in single-brand retail has been increased from 51% to 100%, promoting investments in the consumer electronics industry.

According to industry estimates, consumer durables, electronics, and appliances contribute approximately 14% to the express Business-to-Business (B2B) logistics sector. This indicates the significant role of express logistics in supporting the efficient movement of goods within this industry.

The synergy between the consumer durables, electronics, and appliance sectors and the express logistics industry is mutually beneficial. The consumer electronics industry relies on the timely and secure transportation of products to meet customers demands. Express logistics services enable efficient supply chain management, ensuring the swift delivery of goods to retailers and end consumers.

As Indias consumer electronics market expands, the demand for express logistics services will increase. This presents a growth opportunity for the express logistics industry to provide seamless and reliable services to cater to the needs of the consumer durables and electronics sectors.

Source: https://timesofindia.indiatimes.com/blogs/voices/ consumer-durable-market-in-india-and-growth-opportunities/ Express-Logistics-Industry-Report

Lifestyle and textile:

The lifestyle industry in India holds significant prominence, encompassing textiles, garments, home goods, and technical products. As the worlds second-largest producer of textiles and garments, India also ranks as the sixth-largest exporter in this sector. The Indian apparel market is expected to expand to US$ 135 billion by 2025.

While logistics expenditure accounts for around 2% of revenue in the textile industry, the utilization of express cargo varies across sub-categories. However, in the apparel segment, the use of express logistics is relatively high, especially for seasonal fashion clothing, where time-sensitive demands necessitate reliance on express modes of transport. Collectively, the textile, apparel, and non-apparel sectors contribute approximately 13% to B2B express logistics.

The growth of organized retail and increased disposable incomes are expected to further enhance the textile industrys reliance on express logistics. As organized retail expands and consumer spending power rises, timely and efficient delivery of textile and apparel products becomes crucial to meet customer expectations and stay competitive.

The increasing dependence of the textile industry on express logistics aligns with the evolving dynamics of the market. Express logistics plays a pivotal role in supporting the industrys growth by providing swift and reliable transportation solutions tailored to its specific needs. This collaboration between the textile industry and express logistics facilitates seamless operations and enhances customer satisfaction throughout the journey of textile and apparel products from manufacturers to end consumers, contributing to the overall expansion of the sector.

Source: //www.ciiblog.in/textile-manufacturing-industry-in-india/ Express-Logistics-Industry-Report-2022

Engineering Sector:

The engineering sector plays a crucial role in the express logistics industry, showcasing its significance and impact. As the largest industrial sector in India, the engineering industry contributes significantly to the countrys GDP, accounting for 3.53%. This sector has witnessed remarkable growth, driven by increased investments in infrastructure and industrial production. The demand for express logistics services in the engineering industry is closely tied to investments and capacity creation in core sectors such as power, infrastructure development, mining, and oil. Additionally, the general manufacturing sector, automotive and process industries, and consumer goods industry also contribute to the demand for express logistics services. The engineering sectors importance in the express logistics industry is evident, as it drives the need for efficient transportation solutions to support the movement of goods and materials across various engineering sub-sectors, fostering economic growth and development.

2) Global Economic Overview:

In 2022, the global economy was met with high expectations for a robust recovery from the impacts of COVID-19, building upon the impressive rebound witnessed in 2021 following the initial contraction caused by the pandemic. However, these aspirations were dampened by the Russian invasion of Ukraine, which resulted in escalated geopolitical tensions and a clear divide among nations. These uncertainties have compelled central banks across the globe to pursue monetary tightening to control the skyrocketing inflation. However, despite the stringent measures, inflation has persisted at high levels. The US Federal Reserve, for instance, has implemented interest rate hikes at an unprecedented pace, reaching approximately 5%, which marks the fastest increase observed in the last 40 years. Such sudden interest rate shocks have exposed vulnerabilities within the US economy, leading to the failures of prominent banks such as Silicon Valley Bank, Signature Bank, and First Republic Bank. Consequently, these bank failures have shaken depositor confidence, necessitating the Federal Deposit Insurance Corporation (FDIC) to reassure depositors by increasing the coverage limit.

Another significant concern that arose in 2022 was the mounting global debt. While Sri Lanka faced an acute economic crisis, other countries such as Pakistan, Egypt, Lebanon, and Zambia struggled to meet their loan repayment obligations. Notably, even economic superpowers like the United States faced challenges regarding debt issues. However, Congress approved a deal to raise the Governments borrowing limit and prevent a potentially catastrophic default on US debt repayments. The burden of debt on countries has cast a shadow on global sentiments.

Turning to the Global Economic Prospects report released by the International Monetary Fund (IMF) in June 2023 suggests that the global economy is anticipated to experience a substantial slowdown in 2023, with projected growth at 2.1%. This deceleration is primarily attributed to ongoing monetary policy tightening measures aimed at reining in high inflation. However, the report does offer a glimmer of hope, predicting a modest recovery in 2024, with global growth estimated to reach 2.4%. It is worth noting that this outlook is contingent upon the absence of further banking sector stress and tighter-than-expected monetary policy due to persistent inflationary pressures.

In terms of global inflation, projections indicate a gradual decline as growth slows down, labour demand softens in many economies, and commodity prices stabilise. Nevertheless, the slow pace of improvement implies that core inflation is expected to remain above central bank targets in numerous countries throughout 2024. The persistence of inflationary pressures poses an ongoing challenge that will need to be addressed by policymakers to foster sustainable and balanced economic growth. Amidst these challenging times, India has demonstrated commendable prudence in managing its debt situation and implementing sound fiscal policies. This proactive approach has helped mitigate the risks of rising global debt levels. While several nations grappled with economic crises and struggled to repay their loans, Indias responsible debt management practices have set it apart and earned the global communitys confidence. As a result, Indias economic stability has become a source of positive sentiment worldwide.

In addition to its resilience and prudent fiscal measures, India has capitalised on the "China plus one or two" strategies, enhancing its advantageous position during these uncertain times. As businesses across the globe seek to diversify their supply chains and reduce reliance on a single country, India has emerged as a favoured destination for manufacturing and investment. The countrys large consumer market, skilled workforce, and improving business environment make it an attractive alternative to China for global companies. Consequently, India has experienced a significant influx of foreign direct investment (FDI), substantially boosting its manufacturing sector. The diversification of supply chains has not only bolstered Indias manufacturing capabilities but has also created new opportunities across various sectors of the economy.

Indias ability to navigate these turbulent times while effectively managing its debt and seizing growth opportunities has showcased its resilience and adaptability. The countrys strategic initiatives and favourable business environment have positioned it as a critical player in the global economy, attracting the attention and investment of international businesses seeking stability and diversification.

2.1) Global Logistics Industry Landscape:

According to Expert Market Research, the global logistics market has grown significantly and reached nearly USD 9.96 trillion in 2022. The market is projected to expand at a compound annual growth rate (CAGR) of 6.3% from 2023 to 2028, with an estimated value of around USD 14.37 trillion by 2028.

Several key factors are driving the growth of the logistics industry. Firstly, the flourishing retail sector, significantly drives the demand for logistics services.

The convenience of online shopping and the increasing internet users have fuelled the need for efficient and reliable delivery systems worldwide. Additionally, rising disposable incomes among consumers have led to increased consumption and higher demand for logistics services across various industries.

Urbanisation has also contributed to the growth of the logistics market. Rapid urban development and the concentration of population in urban areas have led to increased demand for efficient transportation, warehousing, and distribution systems to cater to the needs of densely populated cities.

Technological advancements have been instrumental in shaping the logistics industry. The increased deployment of automated material handling equipment, such as robotics and autonomous vehicles, has improved efficiency. These technologies streamline the supply chain processes, enhance inventory management, and optimise transportation routes.

The logistics industry is experiencing a notable trend towards adopting environment friendly practices, emphasizing sustainability and ecological consciousness. Companies are increasingly opting for green solutions in their logistics operations, driven by a growing focus on reducing environmental impact. This entails the utilization of electric vehicles, renewable energy sources, and efficient packaging methods to minimize carbon emissions and mitigate the ecological consequences of transportation. The preference for green logistics solutions is a significant development in the industry, reflecting a commitment to sustainable practices and addressing environmental concerns. Furthermore, the logistics industry has witnessed the rising popularity of drone delivery as a viable solution for last-mile delivery. Drones offer faster and more cost-effective delivery options, particularly in remote or congested areas. Using drones in logistics has the potential to revolutionise the delivery process, making it more efficient and convenient for both businesses and consumers.

2.2) Key Trends in the Global Logistics Industry

The logistics industry is witnessing several significant trends expected to shape its future. These trends include:

• Digital Transformation: The industry is experiencing a significant digital transformation by adopting technologies such as artificial intelligence (AI), blockchain, Internet of Things (IoT), and big data analytics. These technologies improve efficiency, transparency, and visibility in supply chain operations.

• Sustainability and Green Logistics: There is a growing emphasis on sustainability and environmental responsibility in the logistics industry. Companies are adopting green practices such as using eco-friendly packaging materials, optimising transportation routes to reduce emissions, and investing in electric vehicles and renewable energy sources.

• Supply Chain Resilience: The COVID-19 pandemic highlighted the importance of supply chain resilience. Companies are now re-evaluating their supply chain strategies, diversifying suppliers, implementing risk management measures, and improving agility to handle disruptions effectively.

• Automation and Robotics: Automation and robotics are transforming logistics operations, particularly in warehousing and order fulfilment areas. Robotic process automation, autonomous vehicles, and warehouse robotics are deployed to enhance logistics processes speed, accuracy, and efficiency.

• Last-Mile Delivery Innovations: Last-mile delivery remains a critical focus area for logistics providers. Innovations such as delivery drones, autonomous delivery vehicles, locker systems, and crowd-shipping are being explored to improve the efficiency and convenience of last-mile logistics.

• Data Analytics and Predictive Analytics: Data analytics and predictive analytics are helping companies optimise their supply chain operations, forecast demand, improve inventory management, and enhance overall operational efficiency.

• Collaboration and Partnerships: Collaboration between logistics providers, manufacturers, retailers, and technology companies is becoming increasingly important. Partnerships enable sharing of resources, expertise, and infrastructure, leading to improved supply chain visibility, cost optimization, and enhanced service levels.

• Global Trade and Trade Compliance: Evolving trade policies, regulations, and compliance requirements influence logistics operations. Logistics providers must stay updated with international trade regulations, customs procedures, and cross-border documentation to ensure goods smooth and compliant movement.

• Customer Experience Focus: Logistics providers are placing a greater emphasis on customer experience, aiming to provide end-to-end visibility, real-time tracking, proactive communication, and personalised services to meet customer expectations and differentiate themselves in the market.

TCI Express, a leading logistics company, is well-positioned to leverage key industry trends. It focuses on B2B express logistics, adopting technology advancements, implementing green initiatives, innovating last-mile delivery solutions, and prioritising a customer-centric approach. By investing in infrastructure, embracing automation, and optimising operations, TCI Express aims to provide efficient and reliable logistics services to meet customers evolving needs in the rapidly changing industry.

3) Industry Outlook

The outlook for the future of the logistics industry in India is quite promising, given the Governments efforts to optimize logistics costs and improve efficiency through integrated infrastructure development for multimodal connectivity. The Governments initiatives, such as the PM GatiShakti State Master Plan, the framing of the State Logistics Policy, and the Logistics Performance Monitoring Framework, will help create a resilient and sustainable logistics system. Developing the e-Logs system for grievance redressal and preparing city logistics plans will also contribute to the industrys growth.

The future outlook of the Indian logistics industry is promising, with significant growth opportunities. Factors such as rising disposable incomes, rapid urbanisation, and technological advancements are expected to drive the market forward. As the industry evolves, TCI Express, a leading logistics company in India, is well-positioned to benefit from these trends. With its extensive network, efficient operations, and customer-centric approach, TCI Express is poised to capitalise on the growing demand for logistics services. The Companys focus on adopting advanced technologies, such as automation and digitisation, will enhance its operational efficiency and enable it to provide innovative solutions to its customers. By leveraging its strengths and staying at the forefront of industry developments, TCI Express is set to thrive in the evolving Indian logistics landscape.

4) Internal Control

At TCI Express, a robust internal control system is at the heart of our operations, designed to ensure effective operational efficiency, reliable financial reporting, statutory compliance, and asset protection. These systems help deter inaccuracies, ensuring accurate financial reporting, legal compliance, and effective resource deployment. An internal audit function consistently reviews and recommends improvements, and the Audit Committee of the Board guides to fortify the control environment.

The Board and the Audit Committee, comprised of Independent Directors, periodically evaluate the effectiveness of the companys internal controls and risk management systems. This comprehensive review ensures the internal control environments adequacy and the successful implementation of audit recommendations. We passionately believe that our internal control systems provide a reasonable assurance in recording transactions and protecting company assets, and are continually adapted to meet our dynamic business environments needs.

5) Risk Management

Risk Management is an integral part of our business operations at TCI Express. Over the years, we have implemented numerous risk assessments, identification, and mitigation measures as part of our overarching Risk Management strategy. As a market leader in the Indian express logistics arena, with a growing footprint in the international markets, were optimally positioned to tackle various market risks within a dynamic business environment. Risk management strategies are employed at all levels of management and across all functional areas. We emphasise early detection of potential risks and managing exposure through suitable mitigation methods. Below are the key risks we face and our strategies to mitigate them.

Transitional Damage Risk	The potential impacts include the threat of destruction, cargo loss due to common transit dangers such as pilferage, shrinkage, and unpredictable circumstances like accidents or truck hijackings. To mitigate these, all our trucks are insured against loss or damage caused by accidents or other transit hazards. We have implemented a cutting-edge surveillance and tracking system to prevent theft. Regular training is provided to our drivers to maintain awareness and avoid any transit damages.
Fluctuating Fuel Price Risk	Fuel price fluctuations can significantly influence our profitability and operations. We mitigate this risk by implementing a fuel surcharge system to ensure revenue certainty and adopting a policy of frequent freight rate revisions to account for variations. Additionally, we operate on contractual transportation arrangements to reduce the impact of fluctuating fuel prices.
People Risk	The risks we face include staffing shortages, loss of essential employees, negative publicity, and potential disruptions in operations. We employ innovative staff retention strategies like health insurance policies and frequent recognition programmes to manage these risks. We maintain a balanced mix of experienced and enthusiastic workforce while ensuring a safe and healthy workplace.
I T Technology and IT Risk	Potential impacts include the loss of sensitive customer and company data, cyber threats, inefficient tracking, and network instability. We mitigate these risks by adopting cutting-edge technology and suitable information security policies. Moreover, we have a robust backup and business contingency planning system in place, with a focus on business intelligence and implementing an integrated IT platform.
Infrastructure Risk	Infrastructure inadequacies can lead to supply delays, reputational damage, and impact profitability. This risk is managed by leveraging the improved national transportation infrastructure under the Governments ongoing National Infrastructure Pipeline (NIP) programme. We also focus on constructing advanced warehouses and storage facilities at key nodal sites.
Competition Risk	The threats of business loss, reputational damage, and reduced market share are mitigated through a strong brand image and high customer recall. Our decades of experience in the Express Logistics Industry and delivering consistent domestic and international transport and delivery services add to our competitive edge. We cover 95% of pin codes in India, reaching over 60,000 locations.
Business Continuity	Business continuity risk involves financial and non-financial losses, threats or risks that disrupt the functioning of a business. These threats maybe any untoward incidents or disasters that negatively impact an organization. Our organization has put into place a robust Business Continuity Management (BCM) Plan, a comprehensive strategy that ensures organizational resilience in the face of unforeseen incidents that could disrupt our critical business operations. This plan not only gives our organization the structure needed to craft, control, and deploy efficient plans, but it also takes into consideration the unique contingencies, capabilities, and requirements of our business.
ESG & Sustainability Risk	Environmental, social, and governance (ESG) issues can present risks including non-compliance with environmental regulations, negative impacts on communities, and governance failures. Furthermore, unsustainable business practices can lead to resource depletion, environmental degradation, and ultimately, operational and reputational risks. To mitigate these risks, we are firmly committed to operating sustainably and responsibly. Our ESG roadmap outlines key initiatives such as transitioning to fuel- efficient vehicles compliant with BS-VI standards and investing in solar panels for our sorting centres, moving towards energy self-sufficiency. In line with sustainability priorities, our GIGA sorting centres at Tajnagar and Pune have been awarded prestigious recognitions, including the LEED Gold certification and the GEM 5 Certification, underlining our dedication to environmentally sustainable practices.

6) Information Technology

At TCI Express, the strategic use of Information Technology (IT) forms a core component of our business model, enabling us to streamline operations, enhance customer service, and strengthen our competitive position in the market. Our sophisticated IT infrastructure supports the efficient handling of our complex logistics operations and aids in maintaining a high level of transparency in our processes. From real-time tracking of shipments to automation of key business operations, our IT systems are designed to ensure an efficient, accurate, and customer-centric service.

Investing in cutting-edge technology, we continue to leverage advances in IT to drive digital transformation across all business units. We have implemented robust cybersecurity measures to safeguard our data and network systems, and we maintain a strong focus on IT risk management to counter potential threats. As we strive to stay at the forefront of technological advancements, we are committed to integrating the latest IT solutions into our business model to enhance operational efficiency, drive innovation, and provide superior value to our customers and stakeholders.

7) Human Resources

At TCI Express, our most valuable resource is our people. We have remained committed to creating a supportive and inclusive work environment that fosters their well-being, safety, and professional growth. This aligns with our goal of delivering top-quality services, generating profitable business, and ensuring long-term success. We continuously focus on ensuring the safety of our workforce, talent development, offering equal opportunities, supporting communities, maintaining compliance and governance, and embedding safety and ethics into our culture.

We have successfully included 3,296 employees in our workforce, with the majority being permanent employees. However, we acknowledge the need for better representation and diversity, particularly in terms of gender balance and differently abled representation. Despite men comprising the majority of our workforce, we are actively working towards promoting gender equality, with women making up 12% of our permanent employees and 18% of our non-permanent employees. In terms of turnover, we recorded a total rate of 9.3% for permanent employees in FY2023, showing a slight improvement from the previous year. While our retention rates have been steady, we acknowledge the need for further efforts to reduce turnover rates among our female employees.

Our commitment to fostering a culture of learning is evident in the number of training and awareness programs we conducted in FY2023. These programs covered diverse topics, ensuring our workforce is knowledgeable and equipped to handle the challenges and opportunities associated with our business.

Our performance review coverage remained relatively high, with 100% of our total employees receiving performance and career development reviews in FY2023. Our occupational health and safety management system, comprehensive insurance, and benefits coverage reflect our firm commitment to health and safety. We take pride in implementing procedures that identify work-related hazards and routinely assess risks.

Furthermore, we have a robust framework to prevent discrimination and harassment, extending our human rights protection to all employees and business associates. We uphold a zero-tolerance policy for harassment and offer multiple channels for employees to report concerns. All employees of TCI Express, across all categories, received wages equal to or higher than the minimum wage in FY2022 and FY2023, in line with our compliance with minimum wage regulations.

Cautionary Statement

The statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, and expectations may be "forward-looking" within the meaning of applicable securities laws & regulations. Actual results could differ from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand, supply and price conditions in the domestic & overseas markets in which the Company operates, changes in the government regulations, tax laws & other statutes & other incidental factors.

8) Corporate Overview:

At TCI Express, we are proud to be recognised as one of Indias leading players in the express logistics industry. We are committed to delivering value beyond expectations, providing first and last-mile delivery services tailored to various sectors needs. Our extensive and Pan India network enables us to reach more than 95% of Indias pin codes, with a strong foundation of 28 state-of-the-art sorting centres, 500 express routes, 2,500 feeder routes, 950+ branches, 50,000 pick up and 60,000 delivery points, and 5,000+ containerised trucks as part of our network. We recently introduced three new services to our existing bouquet: Cold chain express service, Rail Express, and C2C express service. As a company, we focus on expedited freight delivery, particularly emphasising the booming B2B industry. We are proud to have become the industrys premier delivery service provider, with our infrastructure and services available on Sundays, holidays and facilities for late pickups. Our long-term success is built on a solid network advantage and industry-leading supply chain knowledge. Our network strength is composed of our service centre network and the strength of our client connections in across the world.. At TCI Express, we have the ability to work in a volatile environment, with the ability to manage uncertain and complex situations while responding to client demands effectively.

Our core competencies include a diversified business model catering to all major manufacturing industries, being the fastest B2B Express Delivery Company in India, an asset-light strategy that enables us to retain better utilisation while driving good cash flows, use of innovative technology to improve cargo visibility and data communication, resulting in cost savings, and all branches being company-owned, which ensures adoption of best standards and operating procedures.

Our Core Competencies

• Diversified business model catering to all major manufacturing industries

• Fastest B2B express delivery company in India

• Serving all the pin codes of India

• All branches are company-owned to ensure the best standards and operating procedures are adopted.

• Asset-light strategy for better resource utilisation and good cash flows

• Use of innovative technology to improve cargo visibility and data communication, resulting in cost savings.

• Commissioned Indias first automated Sorting Centre ‘GIGA in Gurugram

• Nationwide express delivery service across 60,000 locations in over 710 districts

• Extensive cargo pickup network at 50,000+ locations

Key operational highlights of FY2023

• We expanded our footprint by opening 35 new branches in significant business geographies, particularly in the South and West regions in FY23.

• The Company spent Rs. 125 crore on constructing and automating new sorting centres during the year.

• Our newly developed Gurgaon sorting centre will implement a fully automated loop sorting system for oversized freight, making us the first B2B express delivery operator in India to do so.

• The sorting centre in Pune has become operational, strengthening our services in Western India with 1.5 lakh sq. ft. of space.

• We have established Rail Express, a unique service that provides high-value services at a lower cost, resulting in faster transit times and optimisation of economies of scale at branches and routes.

• We appointed dedicated teams to handle new business offerings and ensure the effective execution of business strategies to achieve long-term Company growth.

• Our outsourced fleet achieved 85% capacity utilisation during the year.

• We are decreasing our conventional power usage in sorting centres and increasing our use of solar renewable energy in adherence to our environmental footprint commitments

Financial Review and Performance

The Companys financial statements (standalone basis) were prepared in compliance with Indian generally accepted accounting standards (GAAP).

(Rs. in crores except as stated)

Particulars	FY 23	FY 22	Y-o-Y growth
Operating Revenue (Rs.)	1241.01	1081.47	14.75
Profit Before Tax (Rs.)	184.53	172.01	7.28
Profit After Tax (Rs.)	139.28	128.84	8.10
Cash Profit (Rs.)	157.70	141.61	11.36
EPS (Rs.)	36.24	33.48	8.24
Receivable (days)	50	51	-1.96
Net Working Capital Cycle (days)	12	14	-14.29
Cash Conversion Ratio (%)	72.90	70.00	4.14
EBIDTA Margin (%)	16.16	16.79	-3.75
PAT Margin (%)	11.16	11.82	-5.58
Retrun on Equity (%)	24.59	26.55	-7.38
Debtors Turnover Ratio (times)	7.30	7.11	2.67
Interest Coverage Ratio (times)	102.95	190.00	-45.82
Current Ratio (times)	2.41	2.93	-17.75
Debt Equity Ratio (times)	0.001	0.002	-50.00
Operating Profit Margin (%)	31.53	32.22	-2.14

Total revenue: The Total Income from Operations for the company has increased by 14.75% from Rs. 1081.47 crores in 2021-22 to Rs. 1241.01 crores in 2022-23.

Other income: Other income decreased from Rs. 8.17 crores for 2021-22 to Rs. 7.17 crores in 2022-23, an decrease of 12.19%.

EBIDTA (including other income) for 2022-23 stood

Rs. 201.65 crores as compared to 2021-22 was Rs. 182.90 crores, an increase of 10.25%. The operating margins decreased to 31.53% in 2022-23 due to inflationary pressure.

Costs & Expenses

Employee costs: Manpower cost for 2022-23 stood at

Rs. 124.29 crores compared to Rs. 109.94 crores in 2021-22. In terms of percentage of turnover, it decreased to 9.96% as compared to 10.09% in the previous year.

Other expenses: Other expenses for 2022-23 stood Rs. 72.54 crores compared to Rs. 63.83 crores in 2021-22. As a percentage of turnover, it decreased to 5.81% in 2022-23 as compared to 5.86% in 2021-22. Other expenses mainly include general and administrative expenses such as rent, travelling and conveyance, among others. Though these expenses are still below pre-covid levels.

Interest expenses: Interest expenses for the year 2022-23 increased to Rs. 1.81 crores from Rs. 0.91 crores in 2021-22, a rise of 99.12% in interest cost. The Company has taken temporarily credits to support the working capital requirements.

Depreciation: Depreciation cost as a percentage of turnover has decreased to 1.23% in 2022-23 from 0.92% in 2021-212.

Analysis of Balance Sheet

Net worth: The net worth of the Company has increased from

Rs. 536.19 crores as on March 31, 2022 to Rs. 596.37 crores in March 31, 2023. The increase in amount of net worth is on account of profit addition made during the year.

Borrowings: The total borrowing has decreased from

Rs. 0.98 crores as on March 31, 2022 to Rs. 0.73 crores as on March 31, 2023.

Cash and bank balance: Cash and bank balance decreased from Rs. 15.74 crores as of 31 March 2022 to Rs. 13.49 crores as on March 31, 2023.

Capital expenditure: During 2022-23, the Company has capitalized additional fixed assets of Rs. 125.74 crores. All capital expenditure have been funded from internal accruals only.

Current assets & liabilities: The Companys current assets primarily consist of debtors, short term investments, cash and bank balances loans and advances. Total current assets as on March 31, 2023 stood 299.30 crores as against March 31, 2022 were Rs. 330.09 crores. The Companys current liabilities primarily consist of trade payables, short term provisions and other current liabilities. Total current liabilities as on March 31, 2023 stood Rs. 124.24 crores as against Rs. 112.65 crores as on March 31, 2022.

Current ratio: The current ratio stood at 2.41 as of March 31, 2023, compared to 2.93 as on March 31, 2022. The decrease in the current ratio due to decrease in short term investment of the Company. Total current investment of the Company as on March 31, 2023 stood at Rs. 32.11 crores compared to Rs. 87 crores on March 31, 2022.

6 Year Financials Highlights

(Rs. in crores except as stated)

Particulars	2022-23	2021-22	2020-21	2019-20	2018-19	2017-18
Total Income	1,248.18	1089.64	851.64	1036.33	1026.98	887.16
Operating Margin (%)	31.53	32.22	32.85	28.86	26.41	24.93
EBIDTA	201.65	182.90	141.97	125.67	122.18	92.73
Finance Cost	1.81	0.91	0.78	0.90	3.78	3.76
Depreciation & Amortisation	15.31	9.98	8.97	7.79	6.53	5.21
Profit Before Tax & Exceptional Items	184.53	172.01	132.22	116.98	111.87	83.76
Taxes	45.25	43.17	31.62	27.90	39.03	25.37
Net Profit	139.28	128.84	100.60	89.08	72.84	58.40
Cash Profit	157.70	141.61	110.78	95.80	79.37	64.56
Dividend Per Share	8.00	8.00	2.00	4.60	3.00	2.50
Earning Per Share	36.24	33.48	26.19	23.23	19.02	15.25
Gross Block Assets	488.79	371.84	293.29	225.89	199.27	181.44
Net Block Assets	435.22	325.89	256.13	195.53	174.43	162.01
Receivables (Net)	211.47	189.54	169.46	165.77	163.14	154.38
Equity Share Capital (FV Rs. 2 per share)	7.66	7.70	7.69	7.67	7.66	7.66
Net Worth	596.37	536.19	433.87	337.27	267.19	206.81
Total Debts	0.73	0.98	1.98	2.84	8.68	39.82
Capital Employed	610.71	544.38	440.37	343.43	275.49	212.77
Avg. Capital Employed	577.55	492.37	391.90	309.21	244.13	188.70
Return on Net Worth	24.60%	26.55%	26.10%	29.48%	30.73%	31.77%
Return on Capital Employed	32.26%	35.11%	34.32%	38.27%	44.27%	39.92%
Current Ratio (in times)	2.41	2.93	2.64	2.52	1.86	1.35
Receivable Days	50	51	48	43	49	54
Payable Days	38	37	37	33	33	28
Net Working Capital Cycle (Days)	12	14	11	10	16	26
Cash Conversion Ratio	72.90%	70.00%	72.00%	64.50%	63.50%	79.70%
Book Value Per Share (in Rs.)	155.17	139.51	112.89	88.09	69.78	54.01