Allcargo Logistics Ltd Management Discussions

Global Economy:

Global growth is estimated to be resilient in 2024 at 3.3% with robust expansions in the US, China & other large emerging economies. IMF as per its April 2025 estimates, forecasts a growth of approximately 2.8% & 3.0% in 2025 & 2026. The U.S., a key driver of global economic activity, is anticipated to see its growth slow from a robust 2.8% in 2024 to about 1.8% & 1.7% respectively in 2025 & 2026. In emerging market and developing economies, growth is expected to slow down to 3.7% in 2025 and 3.9% in 2026, with significant downgrades for countries affected most by recent trade measures, such as China.

World output rates for certain developed and developing nations are outlined below:

Source: IMF World Economic Outlook, April 2025;

Note: India data is presented on Fiscal Year basis i.e 2024 represents period from Apr24 to Mar25

The global economic outlook has been affected by subsequent changes in trade policies. We anticipate that rising trade barriers, along with increased policy uncertainty and geopolitical tensions, will hinder growth worldwide. These factors are expected to dampen both business investment and household consumer spending.

Global headline inflation is expected to decline at slower place reaching 4.3% in 2025 and 3.6% in 2026. This includes higher inflation estimates for advanced economies, but slightly lower ones for emerging market and developing economies in 2025.

Source: https://www.imf.org/en/Publications/WEO/ Issues/2025/04/22/world-economic-outlook-april-2025

Indian Economy:

Economic growth in India moderated to 6.5% in 2024, down from 8.2% the previous year, driven by an unexpectedly sharp slowdown in industrial activity.

FY19 FY20 FY21 FY22 FY23 FY24 FY25E FY26P FY27P

Despite this, the agricultural sector remains strong, benefiting from healthy reservoir levels and crop output, which bolsters rural demand. Manufacturing shows signs of revival amid better business confidence, and the services sector continues its resilient performance. Investment is also picking up pace, supported by higher capacity utilization, government infrastructure focus, and strong financial health in the banking and corporate sectors. While service exports are steady, merchandise exports might struggle due to global issues.

The IMF forecasts growth of 6.2% & 6.3% for 2025 and 2026 respectively, alongside easing inflation, although risks remain.

Source: https://www.imf.org/en/Publications/WEO/ Issues/2025/04/22/world-economic-outlook-april-2025

Indian Logistics Sector:

The Indian logistics market , valued at 9 trillion in FY23, is projected to expand to 13.4 trillion by FY28, at a CAGR of 8-9%, driven by structural shifts, technological advancements, and government initiatives. India has 12 major and over 200 notified minor and intermediate ports, there are plans under the National Perspective Plan for Sagarmala to develop six new mega ports. As the sixteenth-largest maritime country with a 7,516.6 km coastline, India relies heavily on maritime transport, which handles around 95% of trading by volume and 70% by value. The government has facilitated 100% FDI under the automatic route for port and harbour construction and maintenance, along with a 10-year tax holiday for enterprises involved in port infrastructure.

The 12 major ports handled 854.858 million tonnes (mt) of cargo in FY25, marking a 4.34% increase over FY24. Container throughput reached 13.541 million TEUs in FY25, up 10% from FY24. Coastal cargo share is estimated to rise from 34% in FY23 to 42% by FY26, driven by eastern coastal coal movement and infrastructure development in key sectors like

steel and cement. Despite expected declines in coal imports, domestic production will support port cargo throughput growth of 2-3% CAGR between FY24 and FY26. Indias ports sector is expected to add 500-550 MTPA of capacity annually from FY2023 to FY2028, led by growth in POL, coal, and containerised cargo. Indias trade via the Suez Canal route, which covers European countries, North Africa, and the Americas, constitutes around 35% of its total foreign trade, predominantly in containers.

The cumulative exports (merchandise & services) during FY 2024-25 (April-March) is estimated to grow by 5.50% at US$ 820.93 Billion, as compared to US$ 778.13 Billion in FY 202324 (April-March).The cumulative value of merchandise exports during FY 2024-25 (April-March) was US$ 437.42 Billion, registering a positive growth of 0.08%, as compared to US$ 437.07 Billion during FY 2023-24 (April-March).

The National Logistics Policy (2022) aims to optimise logistics efficiency by enhancing the share of railways in freight movement, developing dedicated freight corridors, and expanding road and inland waterway infrastructure, the Dedicated Freight Corridors (DFCs), is close to realization, with 96% of the Western DFC completed as of April 2024. Once fully commissioned, the DFCs are expected to significantly enhance rail freight efficiency and reduce logistics costs.

The Production Linked Incentive (PLI) Scheme , with Rs1.97 lakh crore investment, has been pivotal. Covering 14 sectors such as electronics, pharmaceuticals, and textiles, it attracted Rs1.46 lakh crore in investments, generated over Rs12.5 lakh crore in incremental production, and created 9.5 lakh jobs. The scheme strengthens Indias position as a global manufacturing hub under the Atmanirbhar Bharat initiative. PLI

Indias limited gains from the China Plus One strategy underline the need for stronger logistics infrastructure. To attract global supply chains, improving connectivity, reducing logistics costs, and accelerating projects like Dedicated Freight Corridors and multimodal hubs are crucial. Efficient logistics will be key to positioning India as a viable manufacturing alternative to China.

Global Maritime Trade:

Ocean trade facilitates cross border movement of goods via sea. It is a formidable pillar of global trade. At a time when there is an increasing interdependence of global economies, ocean trade acts as a backbone, transporting about 90% of global cargo. The volume of trade happening through sea has been growing since the 1990s. Goods transported through sea were estimated to be around 12.3 billion tons in 2023 as compared to only about four billion tons in 1990. According to the United Nations Conference on Trade and Development (UNCTAD) seaborne trade volume is expected to increase by 2 percent in 2024 while containerized trade is expected to grow by 3.5 percent. It also projects that the total trade by sea between 2025 - 2029 will grow by 2.4 percent and containerized trade will grow by 2.7 percent.

The global ocean trade has played a pivotal role in the growth of global trade thus contributing to the growth of global GDP.

It supports global manufacturing which enables companies to manufacture goods in one part of the world and sell them across the globe, taking advantage of low manufacturing cost and resources. Ocean trade also supports the global supply

chain by enabling timely movement of raw materials and finished goods. This enables smooth functioning of supply chains avoiding delays, shortages and increased costs. It is an environmentally friendly option as compared to air and road when transporting goods over long distances. The global maritime trade is expected to continue to grow driven by export performance of Asian economies.

Out of the total goods transported by ocean about 90% of it is done through containers. Containerized trade offers flexibility to transport goods via a full container load (FCL) or less than container load (LCL). FCL offers entire containers for shipment while LCL gives flexibility to send out smaller quantities where the container space is shared by various businesses. LCL allows small and medium sized businesses to participate in global trade by enabling a cost-effective and flexible option and also eliminates the need for filling an entire container. LCL trade makes up roughly 6-7 percent of total containerized ocean trade in terms of freight revenue while the rest is FCL. Allcargo Logistics is a global leader in Less than container load shipping with industry leading to market share.

LCL market was valued at USD 9.41 billion in 2023 and is projected to reach USD 13.21 billion by 2030, representing a CAGR of 5.06% from 2024 to 2030.

Whereas FCL shipping market was valued at USD 122.75 billion in 2023 and is projected to reach USD 143.50 billion by 2030, representing a CAGR of 4.10% from 2024 to 2030.

Over the past couple of years maritime trade has been impacted on account of the unfavorable geopolitical environment leading to wars in Europe and the Middle East.

This should have a medium-term impact, leading to shipping lines taking longer routes. Another challenge is the current tariff announcements, these may have an adverse impact on global ocean trade. This may convert FCL into LCL, leading to LCL declining less than FCL. Furthermore, the maritime industry also faces a challenge of decarbonizing and transitioning to cleaner energy. While there are medium term challenges that persist, the future of maritime trade can be shaped by the use of technology. It is transforming global maritime trade.

Digitalization through use of Blockchain, Artificial Intelligence (AI), IOT is key to improving efficiency and bring in more transparency. Blockchain can enable secured tracking of cargo and payments. IOT devices can share real-time information on containers and ships. Automation will play an important role in handling cargo. Data-science along with AI will help identify trends that will be used for route optimization and improving cargo handling. Technology adoption will enable maritime trade to become more efficient thus enabling it to meet the needs of a global economy.

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Consolidated Financial Overview:

Allcargo Logistics has delivered a resilient performance despite persistent aeopolitical uncertainties and a challenaina global demand environment. The ongoing war between Russia and Ukraine, tensions in the Middle East and renewed tariff structure are impacting the global trade environment. Nevertheless, the companys diversified global presence and agile operating model have enabled it to navigate these headwinds effectively.

Revenue for the year increased by 24% YoY from 12,969 Cr in financial year 2024 to 16,022 Cr in financial year 2025. Correspondingly EBITDA for financial year 2025 stood at 518 Cr as compared 464 Cr during financial year 2024. Profitability was impacted due to costs incurred on account of organizational restructuring which is non-recurring in nature and the benefits of this will be visible in forthcoming years.

LCL volume stood at 8.9 million cbm during financial year 2025 as compared to 8.8 million cbm during the previous financial year. fCl volume for financial year 2025 stood at 6,485 (00) TEUs as compared to 6,044 (00) TEUs during financial year 2024.

International Supply Chain Business Overview

International Supply Chain segment is the largest segment in terms of its revenue contribution to the company. Key offerings under this segment are Non - Vessel Owning Common Carrier (NVQCC) operations related to Less than Container Load (LCL) consolidation, Full Container Load (FCL) forwarding and related services. Apart from this, the offerings also include movement of cargo through air and rail. Being a pioneer in less LCL consolidation business, Allcargo takes pride in having a strong network which can help cater varied customer needs. This network is also its biggest strength which is difficult to replicate. The Company enjoys a market share of 15% in the LCL consolidation business. It operates across 2,400 trade lanes. Another moat to this business is that it is an asset light digital play. The company offers a unique combination of traditional strengths with excellent network and modern technology through ECU 360 platform. Close to 50 percent of ECU worldwide bookings are being done through the ECU 360 platform.

The financial year gone by was marked by geopolitical issues and a subdued trade environment. Yet the company was able to manage volume growth in FCL and Air on the back of prude management decisions and superior service. FCL and Air recorded a growth of 7.3 percent and 29.6 percent respectively during the financial year as compared to the previous year.

LCL reported a marginal volume growth of 1 percent. During the year the management initiatives were focussed on internal restructuring and identifying opportunities to keep costs in control through use of technology. Apart from this the management focus was also on growing Air as a product. The management has undertaken initiatives like hiring new talent, training existing sales resources (LCL/FCL) on air freight to enhance cross-selling opportunities, expanding network sales

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through focussed trade lane development and developing & implementing the right digital system.

Another key update during the year was the inauguration of new container freight station (CFS) in Busan, South Korea.

The port of Busan is one of the busiest ports in the world, it is ranked sixth in the world in terms of container throughput handling and serves as a major gateway connecting the Pacific Ocean and Eurasian continent. The new CFS will accelerate cargo turnaround times and support the increasing demand for efficient logistics solutions in the region. It will also enable to transport cargo at more competitive rates and with improved efficiency. The facility also includes a dangerous goods warehouse enabling safe import and devanning of hazardous cargo.

During the year, there was the roll out of a common financial system which allowed to centralize the finance functions. Another measure taken was to outsource the operational functions from high-cost economies to low-cost economies, the impact of this should be visible in the coming years. Apart from cost saving initiatives the company has ventured into new products. These new products include special movement of e-commerce products via Air and LCL from origin countries into United States e-commerce fulfilment centres and movement of return cargo for companies like Temu and Shien from Latin America to China. While these are gaining momentum, the company is also exploring other new products.

While there is uncertainty in the short term due to geopolitical and economic events, medium to long term impact on a business of our scale is negated due to our presence across geographies.

Allcargo Logistics had announced a scheme of restructuring under which the international supply chain business will be demerged into a separate company, Allcargo Worldwide Limited (Formerly known as Allcargo ECU Limited). The contract logistics and express logistics business, which is currently managed by Allcargo Supply Chain Pvt. Ltd and Gati Express & Supply Chain Pvt. Ltd, will be merged into Allcargo Gati Limited (Formerly known as Gati Limited) which then is going to be amalgamated into the resulting Allcargo Logistics Ltd.

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

International Supply Chain Financial Overview

Revenue during financial year 2025 stood at 14,077 Cr as compared to 11,259 Cr during financial year 2024. EBITDA for the same period stood at 313 Cr as compared to 301 Cr.

Express Distribution and Contract Logistics Business Overview

Allcargo Gati operates the express distribution business and is one of Indias oldest and most respected B2B express logistics companies. It offers a comprehensive suite of services including surface express distribution, air freight, and integrated end-to- end supply chain solutions. With a robust pan-India network covering 99% of government-approved PIN codes, the company ensures seamless connectivity and efficient service delivery across the country.

The management has laid out a vision to grow faster than the industry. To support the same management has taken initiatives to improve the yield for which it announced price hikes across clients and approached the MSME and retail clients with a renewed focus.

On the technology front, the company has introduced innovative digital tools such as HubEye and GateEye, which provide 24/7 real-time visibility of truck movements at its large surface transshipment centers, enhancing operational transparency and efficiency. Additionally, last-mile operations managed through channel partners have been further strengthened with the rollout of a new pickup and delivery application, aimed at improving service reliability and customer experience.

As part of the announced restructuring scheme, Allcargo Gati (Express and contract logistics businesses) will be merged into Allcargo Logistics, creating a formidable domestic logistics powerhouse. Post-merger, Allcargo Logistics will operate with two strong domestic verticals — the express logistics business and the contract logistics business — enabling sharper focus, operational synergies, and an integrated approach to serving Indias evolving logistics needs.

The contract logistics business is currently managed under Allcargos wholly owned subsidiary Allcargo Supply Chain Private Limited. The contract logistics business is a market leader in chemical warehousing and has strategically diversified into high-growth sectors such as e-commerce, automotive, consumer durables, and fashion. It offers end-to-end solutions

encompassing warehousing and transportation. The growth strategy focuses on expanding the chemical warehousing customer base by tapping into new geographies, particularly in the southern and northern regions of India. Additionally, the business aims to capture opportunities in fast-growing segments like e-commerce and automotive. Post-merger, the integrated platform will enable the company to offer comprehensive fulfillment solutions, delivering significant value to customers by simplifying logistics management through a single-vendor partnership, allowing them to focus entirely on their core business.

Express Distribution Financial Overview

For the financial year ended as on 31 st March 2025 express business volumes stood at 1,247 MT as compared to 1,249 MT during the previous financial year. Express business revenue stood at 1,510 Cr during financial year 2025 as compared to 1,479 Cr during last year. Gross profit during the same period stood at 382 Cr as compared to 364 Cr. EBITDA for financial year 2025 stood at 72 Cr as compared to 54 Cr during financial year 2024.

Contract Logistics Financial Overview

The contract logistics business has been consistent and performed steadily over the last few years. Revenue for the year ended March 31, 2025, was 458 Cr. as against 309 Cr for the corresponding previous period. EBITDA stood at 138 Cr for the year ended March 31, 2025, compared to 135 Cr for the corresponding previous period.