Allcargo Gati Ltd Management Discussions

Indian Economy

India continues to demonstrate strong macroeconomic fundamentals amid global economic uncertainties. As per the World Banks Global Economic Prospects (June 2025), Indias GDP is estimated to grow at 6.5% in FY2024 25 and is projected to expand further at 6.3% in FY2025 26, maintaining its position as one of the fastest-growing major economy globally.

This growth is being driven by robust domestic consumption, sustained public infrastructure investment, and resilient services exports.

Headline inflation is projected to average 4.8% in 2025, easing further to 4.5% in 2026, supported by stable global commodity prices and proactive policy interventions. However, upside risks to the inflation outlook persist, including weather-related disruptions, global oil price volatility, and imported inflation due to currency fluctuations.

The economy continues to benefit from structural reforms, policy stability, and increasing digital adoption, which are collectively enhancing productivity and stimulating investment. In addition, government-led capital expenditure, improving credit availability, and strengthening manufacturing momentum are supporting broad-based economic activity.

Key drivers supporting Indias economic outlook include:

- Sustained focus on infrastructure and manufacturing-led growth,

- Steady progress in fiscal consolidation and revenue mobilization,

Rising momentum in private capital formation, and

- A large and growing working-age population, enabling long-term consumption and productivity gains.

While external headwinds such as elevated trade tensions, slowing global growth, and geopolitical uncertainty persist,

Indias domestic growth engine remains resilient. India remains firmly on track to achieve its $5 trillion economy vision, supported by structural reforms and proactive policy measures. Budget 2025 emphasizes a strong infrastructure push through the PM Gati Shakti initiative, with 434 major connectivity projects and digital integration aimed at enhancing logistics efficiency. The Export Promotion Mission, focused on MSMEs, sets sector-specific targets, simplifies export credit, and includes a Rs. 2,250 crore allocation to address trade barriers.

Domestic manufacturing is being bolstered through industrial infrastructure expansion, the National Manufacturing Mission, and support for Industry 4.0 technologies and Global Capability Centres (GCCs) in Tier 2 cities.

Indian Logistics Sector

The Indian logistics market generated USD 228.4 billion in revenue and represented 5.8% of the global logistics market share in 2024. It is projected to reach USD 357.3 billion by 2030, growing at a CAGR of 7.7% from 2025 to 2030. In 2024, transportation services accounted for the largest share of revenue, while warehousing and distribution services emerged as the most lucrative segment, registering the fastest growth during the forecast period.

Indias logistics sector is experiencing rapid progress, driven by increasing investments, digital transformation, and strong policy support. As a key pillar of the countrys economic development, the sectors exceptional growth potential is reflected in a surge in private equity investments and a significant rise in warehouse absorption rates.

The governments push for the sectors growth is evident through various policies and initiatives announced in recent years. The warehousing and logistics sector contributes 13-14% to Indias GDP and is expanding to keep pace with the countrys fast-paced economic growth.

Chennai, Mumbai, Pune, and NCR are set to remain the key logistics hubs in 2025. Logistics Park developers are actively seeking opportunities for land acquisition to build warehouses and fulfillment centers in these regions. Many multi-modal logistics park projects are currently under development through public-private partnerships, which will ultimately help reduce transportation costs.

Few factors that will drive the growth of logistics in India are:

1) Infrastructure development: India is significantly improving its logistics sector through large-scale infrastructure investments aimed at boosting connectivity, efficiency, and reducing costs. The development of Multimodal Logistics Parks (MMLPs) and the National Logistics

Policy with CLAP further support efficient and seamless cargo handling. Major projects like the Noida International

Airport cargo hub and Sagarmala for port development are enhancing multi-modal connectivity. The government is providing a robust physical framework to facilitate smooth goods movement across the country, with the National

Highway network expanding from 91,287 km in 2014 to 1,46,195 km in 2024, according to the Ministry of Road Transport and Highways.

2) Technological Advancements: In 2025, logistics is being revolutionized by IoT, AI, and big data analytics. IoT enables real-time tracking, condition monitoring, and predictive maintenance, enhancing transparency and efficiency.

AI and machine learning support proactive decision-making through route optimization, demand forecasting, and automation. Big data analytics drives smarter, faster decisions with real-time insights for performance, risk, and customer behavior. Together, these technologies are transforming logistics into a proactive, intelligent, and highly efficient ecosystem.

3) Sustainability in Logistics:

As environmental awareness rises, sustainability has become a key focus in logistics. Companies are adopting green innovations like electric vehicles, energy-efficient warehousing, and sustainable packaging to reduce their environmental impact. Efforts toward net-zero emissions include carbon offsetting, AI-driven route optimization, and eco-friendly partnerships. These practices lead to cost savings, improved brand image, and regulatory compliance, making sustainability essential for modern, responsible logistics.

4) Government Initiatives:

In 2025, several government initiatives are set to boost Indias logistics sector by improving infrastructure, reducing costs, and promoting digitalization. Key programs include PM Gati Shakti, the National Logistics

Policy, and the Sagarmala project, all aimed at enhancing connectivity, efficiency, and coastal shipping. Initiatives like the e-way bill system, Bharatmala, and Dedicated Freight Corridors improve freight movement, while revamped SEZs and a unified digital platform streamline operations. Increased infrastructure investment and public-private partnerships further support growth.

Together, these efforts aim to make India a global logistics hub efficient, competitive, and sustainable.

Express Logistics

Express Logistics is a time-definite delivery solution designed to add value to customers supply chains by offering convenient pick-up and delivery, reliable and timebound service, secure handling of consignments, real-time tracking, proof of delivery, and dedicated support.

Indias express parcel market is on a rapid growth trajectory, with shipment volumes projected to rise from 8 9 billion in FY 2024 to 24 29 billion by FY 2030, driven by a strong CAGR of 19 23%.

This growth is primarily fueled by the booming e-commerce sector, particularly in non-horizontal segments, along with rising demand for hyperlocal and quick commerce services.

Quick commerce, the fastest-growing segment within hyperlocal delivery, is anticipated to grow at an impressive CAGR of 33 50% through FY 2030. To meet the increasing demand and consumer expectations for rapid delivery, many e-commerce companies are transitioning from in-house logistics to outsourcing with third-party providers. This trend is being driven by accelerated digital adoption and the need for scalable, efficient logistics solutions.

Key demand drivers for growth of organized express logistics players in India:

E-commerce Boom and Last-Mile Connectivity

Indias e-commerce boom is driving rapid growth in express logistics, especially last-mile delivery. To meet rising consumer demand for speed and convenience, companies are heavily investing in advanced last-mile solutions. This trend is also accelerating the rise of quick commerce (Q-commerce), transforming urban logistics with faster delivery innovations.

Digital Transformation and Automation

The integration of digital technologies like AI and IoT is revolutionizing logistics by making operations more efficient and data-driven. AI is enabling real-time tracking, predictive analytics, and automated warehouse management, while automation—through robotics and autonomous vehicles—is boosting speed, accuracy, and overall supply chain efficiency.

Rise of Cold Chain Logistics

Rising demand for high-quality, safe delivery of perishables and pharmaceuticals is boosting the need for cold chain logistics.

This trend is driving investments in cold storage, refrigerated transport, and related technologies, significantly contributing to the growth of the express logistics sector.

Commitment to Sustainability

Sustainability has become a key strategy in Indias logistics sector, driven by environmental goals and consumer demand for eco-friendly practices. Companies are investing in electric vehicles, sustainable packaging, and energy-efficient warehousing to reduce their carbon footprint. These green logistics initiatives not only help cut emissions and costs but also boost brand reputation and attract environmentally conscious customers. Digital tools are also being used to monitor emissions and support transparent, goal-driven sustainability efforts.

Allcargo Gati Financial Performance and Outlook:

Incorporated in 1995, Allcargo Gati Ltd is one of Indias oldest and most prominent B2B express logistics companies. The organization offers a comprehensive range of express logistics services, including surface distribution, air freight, and end-to-end supply chain management solutions. With an extensive pan-India network, the company covers 100% of government-approved PIN codes, enabling seamless operations across the country.

During FY2024 25, the Company achieved a total cargo throughput of 1.25 million metric tons, with annual revenue reaching Rs. 1,510 crore, reflecting a 2% year-on-year growth. Margin expansion remained a key highlight, with gross margin improving by 80 basis points and EBITDA margin improving by 110 basis points, supported by sustained cost-efficiency measures and operational discipline. From a client perspective, Key Enterprise Accounts (KEAs) accounted for 67% of total sales, while MSMEs contributed 14% and retail customers made up the remaining 19%, reflecting a well-balanced customer portfolio.

Allcargo Gati Ltd, part of the global logistics leader Allcargo

Group, is undergoing a major restructuring as part of a Composite Scheme of Arrangement. The contract logistics and express logistics businesses, currently managed by Allcargo Supply Chain Pvt. Ltd and Gati Express & Supply Chain Pvt. Ltd, are set to be merged into Allcargo Gati which then is going to be amalgamated into the resulting Allcargo Logistics Ltd (The international supply chain business of Allcargo logistics will be demerged into a separate listed entity), creating a domestic logistics powerhouse.

Key approvals have been received BSE and NSE issued no-objection letters in October 2024, On February 18, 2025, shareholders approved the scheme. The scheme is now pending final review by the NCLT.

Upon completion, the company will be positioned as one of Indias pioneers in offering integrated supply chain and express distribution solutions to businesses.

As part of its strategic growth plan, the company is sharpening its focus on core business areas to boost operational efficiency, drive innovation, and create long-term value. To support this streamlined approach, it has approved the divestment of non-core assets, including fuel stations located in Belagavi

(Karnataka), Lasudia Mori (Indore), and Madanayahalli (Bengaluru).

With a focus on growing yield, the management announced price hikes across all clients. Another initiative undertaken for yield improvement was refocusing on MSME and retail clients.

On the infrastructure front, Allcargo Gati boasts of state-of-the-art infrastructure which has helped in streamlining operations.

Also, there is continuous assessment across key markets for further development.

On the technology front, the company launched HubEye and GateEye which are very innovative applications, that allow 24/7 real-time visibility on trucks that come into the large Logistics

Park. Last-mile operations through channel partners have also been strengthened on the tech platform with a new pickup and delivery app thats been under development.

Going forward, the company is going to begin its new journey as a domestic logistics powerhouse and the endeavor is to ensure growth at a faster pace than the market while maintaining profitability with cost control measures and operational efficiency.

Financial Ratios:

Particulars	FY2024-25	FY2023-24
Debtors Turnover	4.45	4.42
Interest Coverage	4.26	2.11
Current Ratio	1.84	1.20
Debt Equity Ratio	0.02	0.21
Operating Profit Margin (%)	5.77	3.73
Net Profit Margin (%)	0.7	0.36
Return on Equity (%)	0.03	0.02

Note: The above ratios are calculated by taking into account the income/ balances from discontinued operations also.

Debtors Turnover: The increase in debtors turnover ratio is due to decrease in average debtors as well as decline in overall credit sales.

Interest Coverage Ratio: Increase in the Interest coverage ratio is mainly due to increase in EBITDA margins and decrease in

Finance cost compared to previous year.

Current Ratio: The improvement in the current ratio is due to the increase in cash equivalents position with proceeds from QIP & repayment of Borrowings

Debt Equity Ratio: Reduction of debt equity ratio is primarily driven by repayment of external Debt, increase in total Equity on account of QIP issued & profits added during the year.

Operating Profit Margin: The improvement in EBITDA margin resulted from increase in revenue, decrease in operating costs with cost savings initiatives taken during the year. Net Profit Margin: Higher net profit margins are mainly driven by Interest income on Tax Refund, increase in revenue from operations & decrease in costs with cost savings initiatives taken during the year.

Return on Equity: The improved return on equity is due to higher net income generated during the year.

Human Resource:

At Allcargo Gati, human capital is given utmost importance.

The focus is on creating an enriching environment for the employees, where there are opportunities for growth and inclusive development. During the financial year, initiatives like customer service program, operations training program, sales training program and business specific need-based program was carried out. HR is a key enabler for organizational growth and continues to engage with employees and address their grievances, if any.

Risks and Concerns:

The financial and related risks have been comprehensively covered in the Annual Accounts of the company together with the mitigation strategy of the same. The present and anticipated future risks are reviewed by the management of the company at regular intervals. The management takes suitable preventive steps and measures to adequately safeguard the companys resources of tangible and intangible assets. For more detailed information regarding Financial Performance of the company you may refer Directors Report forming part of this Annual Report.