ABC India Ltd Management Discussions

Industry structure and development

The business of transportation is in the hands of operators both in organized as well as in unorganized sector. A large portion of the transportation business is undertaken conventionally by operators in unorganized sector. Our Company being an operator in organized sector has to compete with operators in unorganized sector. In the process of the transportation business we also offer logistics and specialized project transportation services. The project transportation services involve logistics of Over Dimensional/Over Weight Consignments where also several new operators have started offering the same services, thereby increasing competition.

Opportunities and Threats

Performance, growth and development of transport and logistics service business is directly linked with and related to performance, growth and development of industry in our country. The specialized project logistics business is linked with setting up of new projects requiring Over Dimensional Plant & Machinery. Road transportation & Logistics solutions are one of the most important prerequisites for development of trade and industry and setting up of new industrial projects. The project transportation also suffers from ambiguous government regulations. In cycles of economic growth and development of Indian Industry, our Company finds opportunities, whereas in cycles of economic slowdowns in Indian industry our Company faces challenges and threats of fierce competition from operators in unorganized sector.

Segment-wise or product-wise performance

The Company has two primary business segments namely, Freight & Services and Petrol Pump. Out of the total earnings for these two segments amounting to 14517.19 lakhs, the Freight & Services Segments earning was 7655.51 lakhs, Petrol Pump Segments share was 6861.68 lakhs.

Outlook

The Company has presence all over India and especially in North Eastern States. The Company has proven capabilities and competency to offer domestic road transportation, complex logistics solutions for Over Dimensional Consignments by multi modal routes and international freight forwarding services to its customers. The Company is also providing innovative logistics solutions to its customers with value addition in its services. With these advantages, we have good prospects of demand for Companys services.

The Company is making sustained marketing efforts for its services in infrastructure sector & power sector which is expected to see revival, over the next few years. Besides, to improve the profitability, the Company has reduced its work force and other cost reduction measures are underway to sustain in the business.

The Company has received an Letter of Acceptance on 29.10.2021 from Numaligarh refinery Limited to the tune of 69.39 Crores for Project Management, Transportation Engineering and Multimodal Transportation of Over Dimensional/Over weight Consignments (ODC/OWCs) for NREP from Haldia Port/Kolkata Port to NRL site including crossing of Kaliyani River (part-A)- Transportation & Other Services. The Company had started execution of work against the above letter of acceptance. The time period by which this contract is to be executed is 29^th February, 2024. This will help the Company to improve its revenue and profitability in the coming years.

Full Truck Load (FTL) Business of the Company is growing rapidly since the last few years. The yearly sales in FY 2021-22 was 42.64 Cr and in FY 2022-23 was 55.72 Cr registering a growth of 31%.

Presently the Company is catering to prestigious FTL clients like : Parle Agro Pvt Ltd, Nestle India Ltd, Skipper Limited, Keventar Agro Limited, Patanjali, Century Plyboards, Polycab India Ltd, Godrej, Boyce, Nilkamal Ltd & VIP Industries etc.

With other eminent clients being added regularly, the Company expects to achieve Sales of 70-75 Cr in this Financial Year (2023-24).

Accordingly, the performance of the Company in current year as well as coming years shall continue to be highly dependent upon revival of infrastructure sector, power sector, industrial project and procurement of orders.

Risks and concerns

Our Company, as in case of any other body corporate, is exposed to specific risks that are particular to its business and the environment within which it operates. These include credit risks, market risks and operational risks. We have established policies and procedures to manage these risks. Such policies and procedures are continuously bench marked with best practices in Indian Road Transport Sector.

Internal control system and their adequacy

The Company has a well-defined organization structure, authority levels and internal policies and procedures for conducting business transactions. The Company has an internal audit system, and the audit plans. The Audit Committee periodically reviews internal audit reports and adequacy of internal controls.

Discussion on financial performance with respect to operational performance

The Companys total earnings including other income for the year amounting to 14589.32 lakhs as compared with previous years total earnings of 13547.15 lakhs. For the year the profit before exceptional items, finance cost, depreciation & amortization expenses and taxation is 547.90 lakhs. Finance cost for the year amounted to 210.33 lakhs, Depreciation & Amortisation expenses amounted to 114.48 lakhs. The Profit after taxation for the year is 425.79 lakhs.

Material developments in Human Resources/Industrial Relations front, including number of people employed

The key resource for the Company is its employees, which is giving the Company a competitive edge in the business environment. The Company has been able to create a favourable work environment that encourages innovation and meritocracy.

For this purpose, we have a practice of rigorous job rotation, training in new age skills and multi-functional exposure and responsibilities.

The Company had 97 permanent employees at the end of the year. As in the past, the industrial relations continued to remain cordial at all the locations of the Company.

Significant changes in Key Financial Ratios & Return on Net Worth Key Financial ratios

Pursuant to Schedule V (B) to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015

Sl No. Ratio	2022-23	2021-22	% Change
(i) Debtor Turnover	4.72	3.29	44.47
(ii) Inventory Turnover	76.62	67.67	16.67
(iii) Interest Coverage Ratio	2.60	2.83	8.13
(iv) Current Ratio	1.85	1.68	10.20
(v) Debt Equity Ratio	0.47	0.49	4.40
(vi) Operating Profit Margin (%)	3.70	4.26	13.15
(vii) Net Profit Margin (%)	2.90	2.03	42.86
(viii) Return on net worth (%)	7.68	8.00	4.00

Net Profit Margin and Return on Net worth ratios have been computed based on Profit After Tax (before Exceptional Items).

Cautionary Statement

Statements in this management discussion and analysis describing the Companys objectives, projections, estimates and expectations may be forward looking statements within the meaning of applicable laws and regulations. Actual results may differ substantially or materially from those expressed or implied. Important developments that could affect the Companys operations include a downtrend in the industry-global or domestic or both, significant changes in political and economic environment in India, applicable statues, litigations etc.