allcargo logistics ltd share price Directors report


To,

The Member of

Allcargo Logistics Limited

The Directors present their Thirtieth Annual Report along with the Audited Financial Statements for the financial year ended March 31, 2023.

FINANCIAL HIGHLIGHTS

( in Lakhs)

Particulars

Consolidated

Standalone

2022-23

2021-22

2022-23

2021-22

Continuing Operation
Total Income

18,11,543

19,09,245

2,81,763

3,11,025
Total Expenses

17,27,470

18,11,869

2,59,754

2,85,516
Profit before share of profit from associates, joint ventures, exceptional items and tax

84,073

97,376

22,009

25,509
Share of profits from associates and joint ventures

1,744

8,120

-

-
Profit before exceptional items and tax

85,816

1,05,496

22,009

25,509
Exceptional items

3,717

2,611

3,987

1,321
Profit before tax after exceptional items

89,534

1,08,107

25,996

26,830
Tax expense
- Current tax

25,082

28,033

4,032

5,910
- Deferred tax

(869)

(2,331)

1,701

(1,516)
Profit after tax for the period from continuing operation

65,321

82,405

20,263

22,436
Discontinued Operation
Profit before tax for the period from discontinuing operation

-

16,906

71

15,996
Tax Expenses for the period for discontinued operation

-

2,852

-

1,786
Profit after tax for the period from discontinued operation

-

14,054

71

14,210
Profit / (loss) for the period from continuing and discontinuing operation

65,321

96,459

20,334

36,646
Other comprehensive income
Items that will not be reclassified subsequently to Statement of Profit and Loss:

-

-

-

-
Re-measurement gain/(loss) on defined benefit plans

(716)

(412)

(74)

(37)
Items that will be reclassified subsequently to Profit or Loss:
(i) Exchange gain on translation of foreign operations

8,131

2,128

-

-

Income Tax effect

(296)

(68)

-

-
(ii) Hedge of net investments in foreign operations

-

-

-

-
(iii) Cash flow hedge reserves

-

-

1,318

1,002
Income tax effect

-

-

(340)

(318)
Other comprehensive income for the year, net of tax

7,119

1,648

904

647
Total comprehensive income for the year, net of tax

72,440

98,107

21,238

37,293
Profit attributable to:
- Equity holders of the Parent

62,959

92,527

20,334

36,646
- Non-controlling interests

2,362

3,887

-

-
Other comprehensive income attributable to:
- Equity holders of the Parent

7,681

1,654

904

647
- Non-controlling interests

(561)

(6)

-

-
Total comprehensive income attributable to:
- Equity holders of the Parent

70,641

92,996

21,238

37,293
- Non-controlling interests

1,800

3,881

-

-
Total comprehensive income attributable to owners of the equity at the

beginning of the year

2,55,586

1,69,799

1,39,165

1,09,244
Total comprehensive income for the year

62,803

93,160

21,238

37,293
On account of business combination

-

-

-

-
Non-Controlling interest acquired

-

-

-

-
Others- Debit to reserve on account of net asset transferred pursuant to demerger

(65,035)

-

(68,734)

-
Less: Appropriation
Cash Dividend on equity shares

(7,986)

(7,373)

(7,986)

(7,373)
Tax on Dividend

-

-

-

-
Total comprehensive income attributable to owners of the equity at the end of the year

2,45,369

2,55,586

83,684

1,39,165

Note:

The businesses transferred to Allcargo Terminals Limited and TransIndia Real Estate Limited (Formerly known as TransIndia Realty & Logistics Parks Limited) as a part of Scheme of Arrangement and Demerger ("Scheme"), had been disclosed as discontinued operations. Accordingly, financial statements have been restated to give effect to the said Scheme. Hence, the financial statements are not comparable.

Pursuant to the provisions of the Companies Act, 2013 (the "Act"), the Financial Statements of the Company have been prepared in accordance with the Indian Accounting Standards ("Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time.

DIVIDEND

During the year under review, the Company has declared and paid an Interim Dividend of 3.25 per equity share (162.50%) on the paid-up capital of the Company for the financial year ended March 31, 2023.

In view of outlay on account of Interim Dividend, the Board recommended that the Interim Dividend declared on March 06, 2023, shall be treated as the Final Dividend on the equity shares of the Company for the financial year ended March 31, 2023.

The dividend payout is in accordance with the Companys Dividend Distribution Policy. In accordance with Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the "Listing Regulations"), the ‘Dividend Distribution Policy has been hosted on the Companys website https://www.allcargologistics.com/investors/investorservices/ corporatepolicies.

TRANSFER TO RESERVE

During the year under review, there was no amount transferred to any of reserves by the Company.

PERFORMANCE REVIEW

Consolidated:

The revenue from operations for FY2022-23 decreased from

19,06,206 Lakhs to 18,05,077 Lakhs, a decrease of 5.31% over the previous year, due to decrease in freight rates of ISC division.

The Business Earnings before Interest, Depreciation, Tax and Amortization ("EBIDTA") stood at 1,19,412 Lakhs, a decrease of 8.02% as compared to 1,29,826 Lakhs earned in the previous year.

The Profit for the year attributable to the members and non- controlling interest stood at 65,321 Lakhs, a decrease by 20.73% as compared to 82,405 Lakhs of the previous year.

Consolidated Cash Flow:

The Cash flows from operations post tax were positive 1,58,276 Lakhs (as at March 31, 2022 85,034 Lakhs). Spend on capex was

10,148 Lakhs. The borrowing of the Company as at March 31, 2023 stood at 70,516 Lakhs (as at March 31, 2022 1,84,788 Lakhs). Cash and bank balances including investment in mutual funds stood at

1,47,942 Lakhs (as at March 31, 2022 79,032 Lakhs). The Net Debt to Equity stood at 0.28 times (as at March 31, 2022 0.32 times).

Standalone:

The revenue from operations for FY2022-23 decreased from

2,87,897 Lakhs to 2,72,184 Lakhs, a decrease of 5.46% over the previous year.

EBIDTA stood at 25,712 Lakhs, a decrease of 16.40% as compared to 30,756 Lakhs earned in the previous year.

The Profit after taxes was 20,334 Lakhs, an increase by 44.51% as compared to 36,646 Lakhs of the previous year.

Standalone Cash Flow:

The Cash flows from operations were positive 35,050 Lakhs (as at March 31, 2022 4,070 Lakhs). Spend on capex was 699

Lakhs. The borrowing of the Company as at March 31, 2023 stood at 19,597 Lakhs (as at March 31, 2022 74,285 Lakhs). Cash and bank balances including investment in mutual funds stood at

19,928 Lakhs (as at March 31, 2022 20,473 Lakhs). The Net Debt to Equity stood at 0.19 times (as at March 31, 2022 0.39 times).

BUSINESS OVERVIEW

Pursuant to the Scheme of Arrangement and Demerger between our Company ("Demerged Company"), Allcargo Terminals Limited("Resulting Company 1") and TransIndia Real Estate Limited (Formerly known as TransIndia Realty & Logistics Parks Limited) ("Resulting Company 2") the ("Scheme") having appointed date April 01, 2022 was effective from April 01, 2023.

The Scheme enabled our Company and Resulting Companies to enhance business operations by streamlining operations, cutting costs, more efficient management control and outlining independent growth strategies.

Prior to Demerger, our Company was operating mainly in four segments: (i) International Supply Chain; (ii) Container Freight Stations/Inland Container Depots (iii) Project and Engineering Solutions and (iv) Logistics Park (v) Contract Logistics through ASCPL and (vi) Express Distribution through Gati.

Consequent to the Scheme, our Company is involved in the Business of International Supply Chain, Contract Logistics through ASCPL and Express Distribution through Gati.

International Supply Chain ("ISC")

The Company operates in ISC business segment including Non Vessel Owning Common Carrier ("NVOCC") operations related to Less than Container Load ("LCL") consolidation and Full Container Load ("FCL") forwarding activities. Our NVOCC services are built on the strength of our nationwide and global reach with over 300 offices in 180 countries. With our global network, we serve over 2,400 global trade lanes, including 300 trade lanes that connect India to the world.

Three decades of global expertise and experience has evolved us into the world leader in LCL consolidation and Indias leading integrated logistics solutions provider, offering one-stop- solutions that empower businesses in India and across the world. Our global network, local insights, operational excellence and expertise as the world leaders in LCL, offers customers the edge and peace of mind that they seek.

Our International Supply Chain services offers the benefit of LCL, FCL and Air Freight Services, backed by first and last mile delivery, Our customers benefit from dealing with just one partner from their end-to-end needs. Latest Processes, state-of-the-art systems and an experienced workforce ensure the highest standards of multimodal services. With value added services like inland trucking service and warehousing capabilities, we ensure complete transit with safety. We have successfully eliminated transit time by adding direct lines within the network..

Our digital logistics solutions are enhancing efficiency and convenience for our customers. To gain further operational and functional efficiencies, our teams are working to test and implement the latest tech innovation which will bring in greater agility and transparency in our service offerings. ECU360, our state-of-the-art platform, which was developed in-house, enables customers to effortlessly manage their shipments, with real-time information on their fingertips. In addition, we launched our new API product suite, making ECU Worldwide integration ready for customers, vendors and third-party providers.

Contract Logistics ("CL") Business through Allcargo Supply Chain Private Limited

CL Business of Avvashya CCI Logistics Private Limited ("ACCI") got transferred to Allcargo Supply Chain Private Limited ("ASCPL") (formerly known as Avvashya Supply Chain Private Limited) pursuant to the sanction of the Scheme of Arrangement (Demerger) between ACCI and ASCPL by Honble National Company Law Tribunal, Mumbai vide order dated January 27, 2023.

CL continues to be the fastest growing sub-sectors of logistics in India and with Honorable Prime Ministers announcement of Gati- shakti policy, there is more focus on the logistics sector in India. FY2023 has been a year where the organization has expanded and strengthened its presence in the segment.

Currently, Allcargos CL division manages more than 46 Lakhs sq. ft. of warehousing space across over 60 locations with significant presence in major consumption centres Pan-India, more than 50% of this is in Grade "A" warehouses. While we continue to maintain leadership in the chemical vertical, we have also significantly added in the area of e-Commerce and Auto. One of our key strengths, we pride, is our ability to provide world class solution design to our customers, be it the large industry leaders or fast-growing unicorns. We excel at providing bespoke solutions to our customers to solve their Supply Chain problems and create a value for them that help us to create lasting partnerships. One of the key differentiators of our warehousing services, especially in chemical space, is the stringent safety standards that we adhere to. No storage is allowed unless all safety compliances and certifications are implemented. We deploy full range of safety features that allow us to store different types of hazardous and non-hazardous goods. We consistently receive customer appreciations and awards from various industry bodies in the area of Safety and Operation Management. Our expertise encompasses Automotive manufacturing and Distribution, from Passenger, commercial vehicles to component manufacturers. We offer packaging, kitting, manage and optimize our customers overall supply chain. Our flexible approach and swift turnaround time are our Unique Selling Point (USP). This has resulted in expansion of our e-Commerce vertical with the addition of two major brands i.e. Meesho and Zepto this year in our portfolio. We are planning to expand our presence with them across India.

Allcargos CL division is also making strategic investments in automation & digitization. We have invested in state-of-the-art Warehouse Management System last year with deployment in specific accounts. This year under the leadership of Mr Pirojshaw Sarkari, Managing Director-GKEPL, we will collaborate with Gati for our expansion of service offerings in transportation. Apart from this, we continue to invest in adding capabilities as per our customers needs. We have a multi customer site with Order Management System capabilities at Farukhnagar as well as in Mumbai region and also operate a "Seller Flex model at our Bhiwandi Warehouse. We also offer services like production logistics, engineering, ordering and replenishment services, reusable packaging solutions, tailor made kitting, just-in-time and pull delivery concepts and pre-production services. Key benefits of production logistics include optimisation of part flows from point of delivery to production, Just-In-Time that reduce inventory at line level and lower costs, use of lean management concepts and minimisation of handover points and interfaces. In line with the Group philosophy, we are committed to protect the environment, create a strong governance structure and contribute to the betterment of community. With more focus

on ESG, we have taken quite a few initiatives like 100% electric material handling equipment in the warehouse and also deployment of energy efficient lighting in the warehouse. Also, we are exploring solarising of our key warehouses across India.

Allcargos CL division is one of the predominant players managing activities for key clients in Chemical, Automotive, Engineering & e-Commerce sectors. In line with our goal to expand into other verticals, this year we have forayed into paints, lubricants & agri chemicals business. We are setting up operations for key customers which will enable us to further expand into these sub- verticals of the Chemical vertical. We are also planning to expand into new verticals like Pharma, Retail & Fashion and Consumer Sector.

Along with this, we are planning to expand our service offerings into returns management, refurbishment, customised milk-run planning basis Gatis network presence, etc.

In line with our vision to provide services which enable customer delight, we are in the process of setting up a control tower for warehouse operation, which enables us to have complete visibility of operation including our customers KPIs achievement at the click of button. This will enhance our capability in terms addressing any service failure proactively without impacting the customer. We are looking at doubling our footprint and expand in the next three years across existing as well as new verticals and geographies.

Express Logistics ("EL") Business through Gati Limited

Allcargo Logistics is the promoter and the single largest shareholder of Gati Limited with 50.20% ownership. As an Allcargo Company, Gati can now tap into a Global Network Operating in 180 countries and expand the scope of our services to include the diverse logistics business verticals. Through Gatis domestic reach and network, the Company offers end-to-end logistics solutions to its global and local clients in India.

Gati operates in time sensitive, high value cargo which requires specialised handling. The Company is a pioneer in the express industry and manages Industry leading infrastructure network offering its services across 99% of GoI approved PIN codes. The Company operates complex hub & spoke network through

31 transhipment hubs, distribution centres and warehouses spanning over ~4 mn sq.ft. across multiple locations in India. Its core offerings include surface and air express however it also provides other solutions like supply chain management and e-Commerce solutions.

STATE OF COMPANY AFFAIRS

Scheme of Arrangement and Demerger between Allcargo Logistics Limited ("Demerged Company") and Allcargo Terminals Limited, ("Resulting Company 1" or "ATL") (Formerly known as Allcargo Terminals Private Limited) and TransIndia Real Estate Limited (Formerly known as TransIndia Realty & Logistics Parks Limited), ("Resulting Company 2" or "TREL") ("Scheme")

The Honble National Company Law Tribunal ("NCLT") approved the Scheme between Demerged Company and Resulting Company 1 and Resulting Company 2 on January 5, 2023. The Company received the certified true copy of the order passed by the Honble NCLT on March 10, 2023. The Scheme came into effect from April 01, 2023. Pursuant to said Scheme, the businesses got specifically bifurcated into the Demerged Company and Resulting Companies as follows with effect from Appointed Date

i.e. April 01, 2022:

    1. International Supply Chain, Express Logistics, Contract Logistics and other related Logistics Businesses will continue to be operated by Allcargo Logistics Limited.
    2. Container Freight Station/Inland Container Depots business division and any other related Logistics Businesses of the Company will be operated by Allcargo Terminals Limited.
    3. Engineering and Equipment Leasing and Hiring Solutions, Logistics Park, Warehousing, Real Estate Development and Leasing Activities and other related Businesses of the Company will be operated by TransIndia Real Estate Limited.

Pursuant to the Scheme, the equity shares issued by both the resulting companies will be listed on BSE Limited & National Stock Exchange of India Limited, which will unlock the value for shareholders of the Demerged Company.

Further, the existing shareholders of the Demerged Company are holding shares of 3 (Three) entities as the said Scheme has become effective, giving the investors flexibility in managing their investments in the three businesses having differential dynamics.

Transfer of Contract Logistics Business from Avvashya CCI Logistics Private Limited ("ACCI") to Allcargo Supply Chain Private Limited ("ASCPL") (formerly known as Avvashya Supply Chain Private Limited)

The Honble National Company Law Tribunal, vide order dated January 27, 2023 approved the Scheme of Arrangement (Demerger) between ACCI and ASCPL which became effective on March 01, 2023. Pursuant to said order, the Contract Logistics ("CL") business of ACCI got transferred to ASCPL from appointed date i.e. April 01, 2021.

The Company entered into a Share Purchase Agreement with ACCI and ASCPL on May 17, 2023. Consequent to which 61.13% stake held in ACCI was sold to JKS Finance Limited and its affiliates. Further, the Company acquired an additional 38.87% stake in ASCPL from JKS Finance Limited and its affiliates. As a result of which, ASCPL has now become a wholly owned subsidiary of the Company and hold 100% in CL Business.

Acquisition of 30% stake of Gati-Kintetsu Express Private Limited

Gati Limited, Subsidiary of the Company, holds 70% stake in Gati- Kintetsu Express Private Limited ("GKEPL"). The Company entered into a Share Purchase Agreement between the Company, KWE-Kintetsu World Express (S) Pte Ltd. ("KWE Singapore"), KWE Kintetsu Express (India) Private Limited ("KWE India"), Gati Limited and GKEPL on March 27, 2023, for acquisition of 30% stake in GKEPL from KWE Singapore and KWE India.

Sale and acquisition of certain Subsidiaries in Blackstone Deal:

In FY 2020, the Company had entered into the definitive agreements with BRE Asia Urban Holdings Ltd., an entity controlled by funds managed or advised by affiliates of The Blackstone Group Inc. ("Blackstone"), which is a globally renowned real estate private equity investor. Pursuant to the said agreement and extended transaction agreements entered during the year, the controlling stake in certain subsidiaries got transferred to Blackstone and the Company, post satisfaction of customary closing conditions and achievement of certain milestones as prescribed in the transaction documents executed by and among Blackstone, the Company and subsidiaries of the Company. The said transaction was carried out in following manner:

  1. Sold 90% equity stake held by the Company in Venkatapura Logistics and Industrial Parks Private Limited to Blackstone on February 01, 2023.
  2. Sold 90% equity stake held by the Company in Malur Logistics and Industrial Parks Private Limited to Blackstone on February 01, 2023.
  3. Allotted 90,000 equity shares to Blackstone upon conversion of 90,000 Compulsory Convertible Debentures of Kalina Warehousing Private Limited and Panvel Warehousing Private Limited on February 01, 2023. As a result, Blackstone is now holding 90% stake in both the entities.
  4. Pursuant to the Scheme of Arrangement and Demerger between the Company and Allcargo Terminals Limited (Formerly known as Allcargo Terminals Private Limited) and TransIndia Real Estate Limited ("TREL") (Formerly known as TransIndia Realty & Logistics Parks Limited), balance 10% equity stake held in the above mentioned Cos. were transferred TREL.

  5. Acquired 90% equity stake held in Madanahatti Logistics and Industrial Parks Private Limited by the Company from Blackstone on February 21, 2023 and subsequently 90% stake was transferred to TREL pursuant to the Scheme.

Increase in shareholding of the Company in Gati Limited consequent to conversion of Share Warrants

The Company subscribed 71,61,120 Equity Warrants of Gati Limited at a price of 97.75 per equity warrants, which was convertible into equity shares within period of 18 months from the date of allotment of share warrants i.e. June 17, 2021 and upon payment of balance 75% subscription money.

On November 26, 2022, the Board of Directors of Gati Limited allotted 71,61,120 equity shares of 2/- each to the Company pursuant to the exercise of the options attached to the warrants. As a result, the shareholding of the Company has increased from 47.30% to 50.20% in Gati Limited.

CHANGES IN THE NATURE OF BUSINESS

The Company continued to provide integrated logistics services to its customers and hence, there was no change in the nature of business or operations of the Company, which materially impacted the financial position of the Company during the year under review.

MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION OF THE COMPANY

Except the Scheme, there is no material changes and commitments which may affect the financial position of the Company, subsequent to close of FY2022-23 till the date of this Report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

During the year under review, no significant and material orders has been passed by any regulator or court or tribunal which would impact going concern status of the Company and its future operations.

CREDIT RATING

The Company continues to have credit rating which denotes high degree of safety regarding timely servicing of financial obligation. The Company has received the following credit

ratings for its long term and short term Bank/Financial Institution Loan facilities and Non-Convertible Debentures from various rating agencies:

Rating Agency Rating Instrument / Facility
CRISIL CRISIL AA/Stable (Reaffirmed) Long Term Bank Loan
CRISIL A1+ (Reaffirmed) Short Term Bank Loan
CRISIL AA-/ Watch Developing Long Term Bank Loan
CRISIL CRISIL AA/Stable Non- Convertible Debenture

PUBLIC DEPOSITS

During the year under review, the Company has not accepted any deposits from the public falling within the meaning of Sections 73 and 76 of the Act and the Rules framed thereunder.

SHARE CAPITAL

During the year under review, there is no change in the Issued, Subscribed and Paid-up Share Capital of the Company.

As at March 31, 2023, the Authorized Share Capital of the Company is 64,40,00,000/- divided into 29,47,25,000 Equity Shares of 2/- each and 500 4% Cumulative Redeemable Preference Shares of 100/- each and 5,45,000 Redeemable Preference shares of

100/- each.

Issued, Subscribed and Paid-up Share Capital of the Company as at March 31, 2023 is 49,13,91,048/- divided into 24,56,95,524 equity shares of 2/- each.

CORPORATE GOVERNANCE REPORT

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out by the Securities and Exchange Board of India ("SEBI").

A separate section on the Corporate Governance together with requisite certificate obtained from the Practicing Company Secretary, confirming compliance with the provisions of Corporate Governance as stipulated in Regulation 34 read along with Schedule V of the Listing Regulations, is included in the Annual Report.

BOARD OF DIRECTORS

Number of meetings of the Board of Directors

During the year under review, 9 (Nine) Board meetings were convened and held, the details of which are provided in the ‘Corporate Governance Report.

Committee Position

The details of the composition of the Committees, meetings held, attendance of Committee members at such meetings and other relevant details are provided in the ‘Corporate Governance Report.

Recommendation of Audit Committee

During the year under review, there is no instance of non- acceptance of any recommendation of the Audit Committee of the Company by the Board of Directors.

Directors

Appointment of Director

Based on the recommendation of the Governance and Nomination & Remuneration Committee ("GNRC") and in accordance with provisions of the Act and the Listing Regulations;

  1. Mr Parthasarathy Vankipuram Srinivasa (DIN:00125299) was appointed as a Non-Executive Non-Independent Director of the Company by the Members vide Ordinary Resolution passed through Postal Ballot on April 21, 2022.
  2. Mr Mahendra Kumar Chouhan (DIN: 00187253) and Radha Ahluwalia (DIN: 00936412) were appointed as Additional Non-Executive Independent Directors of the Company w.e.f. February 11, 2022 and their appointment was approved by the shareholders vide special resolutions passed through Postal Ballot dated April 21, 2022.
  3. Mr Martin M?ller (DIN:09117683) was appointed as an Independent Director of the Company for a tenure of 2 years by the members of the Company at the 28th Annual General Meeting (28th AGM) held on September 29, 2021. Further, he has been re-appointed as an Independent Director of the Company, for a second term of 3 (Three) consecutive years commencing from March 31, 2023 to March 30, 2026 by the members vide Special Resolution passed through postal ballot on March 25, 2023.
  4. Mr Sivaraman Narayanaswami (DIN:00001747) was appointed as an Additional Non-Executive Independent Director of the Company for a tenure of 3 (Three) consecutive years commencing from May 04, 2023 to May 03, 2026 by the Board of Directors of the Company, subject to the approval of the members.

Further, the Members vide Special Resolution passed in the AGM held on September 20, 2022, approved the appointment of Mr Nilesh Vikamsey (DIN: 00031213) as an Independent Director of the Company from June 30, 2022 to June 29, 2024 for tenure of 2 years.

In the opinion of the Board, the above Directors appointed during the year have integrity, relevant expertise and experience (including the proficiency) to act as an Independent Directors of the Company.

Cessation of Director

Ms Cynthia Dsouza (DIN: 00420046) ceased as an Independent Director from the Board of the Company with effect from June 29, 2022 due to completion of her tenure.

Reappointment of Directors

In accordance with the Section 152 of the Act and the Articles of Association of the Company, Mr Shashi Kiran Shetty (DIN: 00012754) and Mr Kaiwan Kalyaniwalla (DIN: 00060776) of the Company, retires by rotation at ensuing AGM and being eligible, offers themselves for re-appointment.

Attention of the members is invited to the relevant items in the Notice of the 30th AGM and the explanatory statements thereto.

Re-designation of Mr Shashi Kiran Shetty as Founder & Executive Chairman and Mr Adarsh Hegde as Managing Director of the Company

Considering the transformation in Organization Structure of the Company, the Board considered and redesignated Mr Shashi

Kiran Shetty as Founder & Executive Chairman with effect from May 29, 2023. Also, the Board considered and recommended the redesignation of Mr Adarsh Hegde as Managing Director of the Company with effect from June 01, 2023, on such terms and conditions that are to be approved by the shareholders at the 30th Annual General Meeting.

Declaration from Independent Directors

The Company has received declarations from all Independent Directors confirming that they meet the criteria of independence as prescribed under Section 149(6) and (7) of the Act and Regulations 16 and 25 of the Listing Regulations. There has been no change in the circumstances affecting their status as Independent Directors of the Company.

The Company has received confirmation from the Independent Directors regarding their registration in the Independent Directors databank maintained by the Indian Institute of Corporate Affairs.

BOARD EVALUATION

Pursuant to Sections 134 and 178 of the Companies Act, 2013 and Regulations 17 and 19 of the Listing Regulations, GNRC has set the criteria for performance evaluation of the Board, its Committees, individual Directors including the Chairman of the Company and the same are given in detail in the ‘Corporate Governance Report.

Based on the criteria set by GNRC, the Board has carried out annual evaluation of its own performance, its Committees and individual Directors for FY2022-23. The questionnaires on performance evaluation were prepared in line with the Guidance Note on Board Evaluation dated January 5, 2017, issued by SEBI as amended from time to time. An online platform has been provided to each Director for their feedback and evaluation.

The parameters for performance evaluation of the Board includes the roles and responsibilities of the Board, timeliness for circulating the board papers, content and the quality of information provided to the Board, attention to the Companys long term strategic issues, risk management, overseeing and guiding major plans of action, acquisitions etc.

The performance of the Board and individual Director was evaluated by the Board seeking inputs from all the Directors. The performance of the Committees was evaluated by the Board seeking inputs from the Committee members. GNRC reviewed the performance of individual Director and separate meeting of the Independent Directors was also held to review the performance of Non-Independent Directors, performance of the Board as a whole and performance of the Chairman of the Company taking into account the views of Managing Director and Non-Executive Directors. Thereafter, at the Board meeting, the performance of the Board, its Committees and individual Directors was discussed and deliberated. The Board of Directors expressed their satisfaction towards the process followed by the Company for evaluating the performance of the Directors, Board and its Committees.

KEY MANAGERIAL PERSONNEL ("KMP")

The following are the KMPs of the Company as at March 31, 2023:

  • Mr Shashi Kiran Shetty, Founder & Executive Chairman;
  • Mr Adarsh Hegde, Managing Director;
  • Mr Ravi Jakhar, Chief Strategy Officer & Chief of Staff;
  • Mr Deepal Shah, Group Chief Financial Officer;
  • Capt. Sandeep R Anand, Chief Executive Officer - Marketing;

– Mr Devanand Mojidra, Company Secretary & Compliance Officer

During the year under review, Mr Suresh Kumar Ramiah, resigned from the position of Chief Executive Officer of the Company with effect from March 31, 2023.

REMUNERATION POLICY

GNRC has framed a policy on Directors, KMP and other Senior Management Personnel appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other related matters in accordance with Section 178 of the Act and the Rules framed thereunder and Regulation 19 of the Listing Regulations. The criteria as aforesaid is given in the ‘Corporate Governance Report. The Remuneration Policy of the Company has been hosted on the Companys website https://www.allcargologistics. com/investors/investorservices/corporatepolicies.

WHISTLE BLOWER POLICY/ VIGIL MECHANISM

The Company has adopted a Whistle Blower Policy and established the necessary Vigil Mechanism, which is in line with the Regulation 22 of the Listing Regulations and Section 177 of the Act. According to the Policy, the Whistle Blower can raise concerns relating to Reportable Matters (as defined in the Policy) such as unethical behaviour, breach of Code of Conduct or Ethics Policy, actual or suspected fraud, any other malpractice, impropriety or wrongdoings, illegality, non-compliance of legal and regulatory requirements, retaliation against the Directors & Employees and instances of leakage of/suspected leakage of Unpublished Price Sensitive Information of the Company, etc. Further, the mechanism adopted by the Company encourages the Whistle Blower to report genuine concerns or grievances to the Audit Committee and provides for adequate safeguards against the victimization of Whistle Blower, who avail of such mechanism and provides for direct access to the Chairman of the Audit Committee, in appropriate or exceptional cases. The Audit Committee oversees the functioning of the same.

The Whistle Blower Policy is hosted on the Companys website https://www.allcargologistics.com/investors/investorservices/ corporatepolicies.

During the year under review, the Company has not received any complaints through Vigil Mechanism. It is affirmed that no personnel of the Company has been denied access to the Chairman of the Audit Committee.

RISK MANAGEMENT

Our ability to accomplish sustainable business growth, secure the companys assets, protect shareholder investments, ensure compliance with relevant laws and regulations, and prevent significant surprises of risks is made possible by implementing effective and appropriate risk management systems and structures.

As Allcargo Group is a logistics company that provides integrated business solutions for national and international trade, warehousing, transportation, and handles different kinds of cargo, the company is exposed to inherent business risks. To identify, evaluate, monitor, control, manage, minimize, and mitigate these risks, the Board of Directors has formulated and implemented an Enterprise Risk Management Policy. The Enterprise Risk Management Policy is intended to ensure that an effective risk management framework is established and implemented within the Company.

Setting up a robust organisational structure for the implementation of risk management systems and structures

ensures that they are effectively governed. The roles and responsibilities defined for each group identified in the organisational structure are governed in the Enterprise Risk Management Policy, and the Risk Management, Finance, Strategy and Legal Committee oversees potential negative impacts from the risk management process. During the reporting period, the Risk Management, Finance, Strategy, and Legal Committee met four times to discuss and review the Companys risk management practices.

In order to ensure that we have a deep understanding of our risk landscape and are better positioned to mitigate and prevent the same, we work towards making risk management an integral part of the day-to-day operations of our businesses. All our employees are responsible for promoting sound risk management methods in their respective fields and are actively engaged in risk management within their own areas of responsibility.

We have in place a broad risk management framework which is formulated in line with the ISO 31000 Risk Management – Principles and Guidelines. The risks are identified, classified, and managed in a timely and accurate manner, and information about risks is escalated to all management levels so that informed decisions can be made. The below illustration depicts how the ISO 31000 are integrated into both our risk management framework and the process adopted to manage the identified risks.

Under the guidance of the Board, the Risk & Compliance Head facilitates dedicated risk workshops for each business vertical and key support function. In these workshops, risks are identified, assessed, analyzed, and accepted or mitigated to an acceptable level within the organizations risk appetite. The Risk Management Committee monitors the risk management activities of each business vertical and key support function. The Risk Management Committee also ensures that fraud risk assessment is an integral part of the overall risk assessment process.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Board has laid down Internal Financial Controls and believes that the same are commensurate with the nature and size of its business. Based on the framework of internal financial controls, work performed by the internal, statutory, and external consultants, including audit of internal financial controls over financial reporting by the Statutory Auditors, and the reviews performed by the Management and the Audit Committee, the Board is of the opinion that the Companys internal financial controls were adequate and effective during FY2022-23 for ensuring the orderly and efficient conduct of its business including

SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES

adherence to the Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of accounting records and timely preparation of reliable financial disclosures.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report on the business outlook and performance review for the year ended March 31, 2023, as stipulated in Regulation 34 read with Schedule V of the Listing Regulations, is available as a separate section which forms part of the Annual Report.

BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT

Pursuant to Regulation 34 of the Listing Regulations, the Business responsibility and sustainability initiatives taken on environmental, social and governance perspective, in the prescribed format is available as a separate section which forms part of the Annual Report.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The brief outline of the Corporate Social Responsibility ("CSR") Policy of the Company and initiatives undertaken by the Company on CSR activities during the year are set out in Annexure 1 of this Report in the format prescribed under the Companies (Corporate Social Responsibility Policy) Rules, 2014 as amended from time to time.

The CSR Policy is hosted on the Companys website https:// www.allcargologistics.com/investors/investorservices/ corporatepolicies.

CONSOLIDATED FINANCIAL STATEMENTS

A statement containing the salient features of the Financial Statements including the performance and financial position of each Subsidiaries, Joint Ventures and Associate Companies as per the provisions of the Act, is provided in the prescribed Form AOC-1 which is annexed as Annexure 2.

Pursuant to Section 129 of the Act and Regulation 33 of the Listing Regulations, the attached Consolidated Financial Statements of the Company and all its Subsidiaries, Joint Ventures and Associate Companies have been prepared in accordance with the applicable Ind AS provisions.

The Company will make available the said Financial Statements and related detailed information of the subsidiary companies upon the request by any Member of the Company. Members seeking inspection to inspect these Financial Statements can send e-mail to investor.relations@allcargologistics.com.

During the year under review, the following companies have become or ceased to be Subsidiaries, Joint Ventures and/or Associates of the Company:

Sr. No.

Name of Company Relationship Nature of Change Effective Date
1. AGL Warehousing Private Limited WOS Ceased April 01, 2023*
2. Allcargo Inland Park Private Limited WOS Ceased April 01, 2023*
3. Allcargo Multimodal Private Limited WOS Ceased April 01, 2023*
4. Bhiwandi Multimodal Private Limited WOS Ceased April 01, 2023*
5. Koproli Warehousing Private Limited WOS Ceased November 09, 2022
6. Koproli Warehousing Private Limited WOS Ceased April 01, 2023*
7. Marasandra Logistics and Industrial Parks Private Limited WOS Ceased April 01, 2023*

 

Sr. No.

Name of Company Relationship Nature of Change Effective Date
8. Malur Logistics and Industrial Parks Private Limited WOS Ceased February 01, 2023
9. Venkatapura Logistics and Industrial Parks Private Limited WOS Ceased February 01, 2023
10. Kalina Warehousing Private Limited WOS Ceased February 01, 2023
11. Panvel Warehousing Private Limited WOS Ceased February 01, 2023
12. Jhajjar Warehousing Private Limited WOS Ceased April 01, 2023*
13. Allcargo Warehousing Management Private Limited WOS Ceased April 01, 2023*
14. Allcargo Terminals Limited WOS Ceased April 01, 2023*
15. Avvashya Inland Park Private Limited WOS Ceased April 01, 2023*
16. Avvashya Projects Private Limited WOS Ceased April 01, 2023*
17. Dankuni Industrial Parks Private Limited WOS Ceased April 01, 2023*
18. Hoskote Warehousing Private Limited WOS Ceased April 01, 2023*
19. Speedy Multimodes Limited Subsidiary Ceased April 01, 2023*
20. TransIndia Real Estate Limited WOS Ceased April 01, 2023*
21. Altcargo Oil & Gas Private Limited WOS Under process of Strike off Application for strike off on March 31, 2023
22. Madanahatti Logistics and Industrial Parks Private Limited WOS Acquired February 21, 2023
23. Madanahatti Logistics and Industrial Parks Private Limited WOS Ceased April 01, 2023*
24. Transnepal Freight Station Services Joint Venture Ceased April 01, 2023*
25. Allcargo Logistics Park Private Limited Joint Venture Ceased April 01, 2023*
26. Fair Trade GMBH Sheffard handle Subsidiary Acquired December 31, 2022
27. Asia Express Line GMBH Subsidiary Acquired December 31, 2022
28. Asiapac Equity Investment Limited WOS Acquired December 31, 2022
29. Allcargo Tanzania WOS Acquired January 30, 2023
30. Asiapac Logistics Salvador WOS Acquired February 27, 2023
31. Asiapac Turkey Tasimacilik Anonim Sirketi WOS Acquired December 31, 2022

WOS-Wholly owned subsidiary

* Pursuant to the Scheme of Arrangement and Demerger between the Company, Allcargo Terminals Limited and TransIndia Real Estate Limited

The Policy for determining "Material" Subsidiary" as approved by the Board, from time to time, is hosted on the Companys website https://www.allcargologistics.com/investors/investorservices/corporatepolicies.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All related party transactions/contracts/arrangements that were entered into by the Company during the year under review were on an arms length basis and in the ordinary course of business and were in compliance with the applicable provisions of the Act and the Listing Regulations. There are no material significant related party transactions entered into by the Company with its Promoters, Directors or KMP which may have a potential conflict with the interest of the Company at large.

Certain transactions/contracts/arrangements with related parties fall under the scope of Section 188(1) of the Act. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Act in Form AOC-2 is annexed as Annexure 3 to this report.

All related party transactions were placed before the Audit Committee for its approval and review on quarterly basis. Prior omnibus approval of the Audit Committee is obtained for the transactions which are foreseen and of a repetitive nature. The

transactions entered into with related parties are certified by the Management and the Independent Chartered Accountants stating that the same are in the ordinary course of business and at arms length basis.

The Policy on materiality of Related Party Transactions and also on dealing with Related Party Transactions as approved by the Board, from time to time, is hosted on the Companys website https://www.allcargologistics.com/investors/investorservices/ corporatepolicies.

The details of related party transactions that were entered during FY2022-23 are given in the notes to the Financial Statements as per Ind AS24, which forms part of the Annual Report.

PARTICULARS OF LOANS, GUARANTEES, SECURITIES AND INVESTMENTS

The Company is engaged in the business of providing integrated logistics services which falls under the infrastructural facilities as categorized under Schedule VI of the Act. Hence, the provisions of Section 186 of the Act are not applicable to the Company to the extent of loans given, guarantees or securities provided

or any investment made. However, as a good governance practice of the Company, the details of loans given, guarantees and securities provided are annexed as Annexure 4. Details of investments made are provided in the Notes to the Financial Statements.

AUDITORS

Statutory Auditors and their Report

M/s S R Batliboi & Associates LLP, Chartered Accountants ("SRBA"), were re-appointed as Statutory Auditors of the Company by the Members at the 27th AGM held on September 09, 2020 to hold office upto the conclusion of 32nd AGM of the Company to be held in the year 2025.

SRBA have under Sections 139 and 141 of the Act and Rules framed thereunder confirmed that they are not disqualified from continuing as Statutory Auditors of the Company and furnished a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India as required under Regulation 33 of the Listing Regulations.

Further, the report of the Statutory Auditors along with the notes on the Financial Statements is enclosed to this Report. The Auditors Reports do not contain any qualification, reservation, adverse remarks, observations or disclaimer on Standalone and Consolidated Audited Financial Statements for the year ended March 31, 2023.

The other observations made in the Auditors Report are self-explanatory and therefore do not call for any further comments.

There was no instance of fraud during the year under review, which was required by the Statutory Auditors to report to the Audit Committee and/or Board under Section 143(12) of the Act and Rules framed thereunder

Secretarial Auditor

Pursuant to Section 204 of the Act and Rules framed thereunder, the Company has appointed M/s Parikh & Associates, Company Secretaries in practice, to undertake the Secretarial Audit of the Company for FY2022-23. The Report of Secretarial Auditor in Form MR-3 for FY2022-23 is annexed as Annexure 5.

The Company has also obtained Secretarial Compliance Report for FY2022-23 from M/s Parikh & Associates, Company Secretaries in Practice in relation to compliance of all applicable SEBI Regulations / circulars / guidelines issued thereunder, pursuant to requirement of Regulation 24A of the Listing Regulations.

The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer and observations made in the Auditors Report are self-explanatory and therefore do not call for any further comments.

No instance of fraud has been reported by the Secretarial Auditor.

Compliance of Secretarial Standards

The Company is in compliance with all mandatory applicable Secretarial Standards issued by the Institute of Company Secretaries of India.

PARTICULARS OF EMPLOYEES

The details of employees remuneration as required under Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed as Annexure 6.

The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report. Further, in terms of Section 136 of the Act, the Annual Report and the Audited Financial Statements are being sent to the Members and others entitled thereto, excluding the aforesaid statement. The said statement is available for inspection by the Members at the Registered Office of the Company during business hours i.e. 11:00

a.m. to 2:00 p.m. on working days excluding saturdays, sundays and public holidays up to the date of the AGM. If any Member is interested in obtaining a copy thereof, such Member can send e-mail to investor.relations@allcargologistics.com.

None of the employees who are posted and working in a country outside India, not being Directors or their relatives, draw remuneration more than the limits prescribed under Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

During the year under review, none of Directors of the Company has received any remuneration from the Subsidiary Companies except as disclosed in the report.

SAFETY, HEALTH AND ENVIRONMENT

The Company is committed towards bringing Safety, Health and Environment awareness among its employees. It also believes in safety and health enrichment of its employees and committed to provide a healthy and safe workplace for all its employees. Successfully managing Health and Safety risks is an essential component of our business strategy. The Company has identified Health and Safety risk arising from its activities and has put proper systems, processes and controls mechanism to mitigate them.

The Company has been taking various initiatives and participating in programs of safety and welfare measures to protect its employees, equipment and other assets from any possible loss and/or damages.

Also company is monitoring disclosures as per Global Reporting Initiative 403, Occupational Health and Safety.

The following safety related measures are taken at various locations:

  • Fire and Safety drills are conducted for all employees and security personnel and all Fire hydrants are monitored strictly as the preparedness for emergency.
  • Safety Awareness Campaign like Road Safety Week, National Safety week, Fire Safety Week, Environment Day is held/ celebrated at major locations to improve the awareness of Health, Safety & Environment of employees.
  • Each equipment is put through comprehensive Quality Audit and Testing to ensure strong compliance to Maintenance, Safety and Reliability aspects as per the specifications by various Original Equipment Manufacturer. All equipment are mandatorily ensured with PUC. Fitness certificates are issued based on the compliance of the safety norms.
  • Regular training/skills to staff and contractors to inculcate importance of safety amongst them. Further, handling of Hazardous Material training and Terrorist Threat Awareness Training are provided to all employees.
  • Created checks and awareness among drivers about negatives of alcohol and drug consumptions and impact on their families.

    • Accident prone routes identified and supervisors allocated

to have control over the vehicle movement.

    • Occupational Health & Safety audits and Fire & Electrical Safety audits are conducted by competent agencies at regular intervals.
    • Fortnightly visit by Doctors to office for medical counselling of employees. Further, Medical Health check-up of all employees are conducted at regular intervals.
    • CCTV and Safety alarms are installed at major locations.
    • Green initiatives are taken at various locations to protect

the environment.

    • Oxygen and temperature checks were mandatory for all

staff members and visitors at all office locations.

    • Operations have been modified and optimized to adhere to social distancing requirements and work with minimal staff on-site.
    • All Locations undergo third party surveillance audit annually for Health, Safety and Environment and Biannual Fire & Electrical Safety audits are conducted. All observations, Suggestions for improvements during audit are implemented on priority with target dates.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo as stipulated under Section 134(3)(m) of the Act and Rules framed thereunder, is annexed as Annexure 7.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013 (the "POSH Act"). The Internal Complaints Committee ("ICC") redresses the complaint received regarding sexual harassment of women at workplace. All employees (permanent, contractual, temporary, trainees) are covered under this Policy.

During the year under review, two complaints with allegation of sexual harassment was filed with ICC, detailed investigation was carried out and same was disposed-off as per the provisions of POSH Act. Twelve Awareness Program about Sexual Harassment Policy were conducted and held at workplace.

The Company has submitted its Annual Report on the cases of sexual harassment at workplace to District Officer, Mumbai, pursuant to Section 21 of the POSH Act and Rules framed thereunder.

ANNUAL RETURN

Pursuant to Section 92(3) of the Act and Rules framed thereunder, an Annual Return is hosted on the website of the Company https://www.allcargologistics.com/investors/financials/ downloads/annualreports

MAINTENANCE OF COST RECORDS

Pursuant to Section 148(1) of the Act and Rules framed thereunder related to maintenance of cost records is not applicable to the Company being in to service industry.

INSOLVENCY AND BANKRUPTCY

No application made or processing is pending against the Company under the Insolvency and Bankruptcy Code, 2016 during the year under the review.

DISCLOSURE OF ONE TIME SETTLEMENT OF LOAN

There is no incidence of one-time settlement in respect of any loan taken from Banks or Financial Institutions during the year. Hence, disclosure pertaining to difference between amount of the valuation done at the time of one-time settlement and the valuation done while taking loan is not applicable.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(c) read with Section 134(5) of the Act, the Board to the best of their knowledge and ability confirm that –

  1. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
  2. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2023 and of the profit for that period;
  3. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
  4. they have prepared the annual accounts on a going concern basis;
  5. they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
  6. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
  7. ACKNOWLEDGEMENTS

    The Directors wish to place on record their appreciation for the continued co-operation and support extended to the Company by government authorities, customers, vendors, regulators, banks, financial institutions, rating agencies, stock exchanges, depositories, auditors, legal advisors, consultants, business associates, members and other stakeholders during the year. The Directors also convey their appreciation to employees at all levels for their contribution, dedicated services and confidence in the management.

    For and on behalf of the Board of Directors

    Sd/- Shashi Kiran Shetty

    Founder & Executive Chairman

    DIN: 00012754

    Place: Mumbai Date: May 30, 2023