Asian Warehousing Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A. INDUSTRYSTRUCTUREAND DEVELOPMENTS:

BUSINESS OVERVIEW

The warehousing industry has grown rapidly in recent years for a variety of reasons. The Make in India campaign, which encouraged businesses to manufacture their products in India, received widespread attention across the country. Indias exports have increased significantly, implying that the volume of goods produced locally has increased as well. As a result, the demand for warehouses has increased. As a result of the relaxed FDI norms, the retail industry expanded at an exponential rate.As a result, both domestic and foreign investment was attracted.

Warehousing has been linked to food security and agricultural growth in India. Warehousing is now recognised as a critical component of the supply chain in which goods are stored for safekeeping, and other value processes are implemented, reducing waste and costs.

The Indian warehousing sector has experienced significant growth and transformation, driven by factors such as the expansion of e-commerce, infrastructure development, and regulatory reforms. The demand for modern warehousing facilities has surged due to the rise of organized retail and ecommerce. The implementation of the Goods and Services Tax (GST) has streamlined supply chains and established centralized warehouses near major consumption centers. Technological adoption, including automation and advanced inventory management systems, has improved operational efficiency.

The warehousing market in India has long been considered as an attractive investment opportunity, given the growing needs of a massive consumption market and the aggressive economic growth targets of the government. The focus on increasing the manufacturing sectors share of GDP to 25% by 2025 and transforming India into a global design and manufacturing hub via the Make in India initiative is also a major driving force behind the interest in the warehousing market. A loss in the farm-to-plate journey negatively impacts farmer incomes by precluding price discovery.

The warehouse sector is a crucial part of business infrastructure, and Indias attempts to become a major global manufacturing hub have bolstered the sectors importance. Indian logistics infrastructure is actively being invested in by foreign businesses to benefit from the nations favourable location and better business environment. Investments in this industry are anticipated to increase in the near future as foreign companies seek to take advantage of Indias expanding logistics market.

GLOBAL SCENARIO

The global warehousing market is expanding growth with a CAGR of approximately 14% during the forecast period (2022 to 2030).

The global Warehousing market size was valued at USD 1055 billion in 2021 and it is projected to reach around USD 3043 billion by2030.

The COVID-19 pandemic, which has outrun and impacted both supply and demand at a faster rate, has disrupted global supply chains. On the other hand, COVID-19 may also have a long-term effect on the market for warehouses. With the surge in coronavirus spread throughout the world, a transit hold-up in one region had a significant impact on the rest of the world, leading to shutdowns because of supply delays or warehouse closures. This resulted in a noteworthy decline in the revenues generated by Warehousing players during 2020. However, with the relaxations in the restriction on trade & travel ban, the Warehousing market has started exhibiting an upward trend, and this trend is anticipated to continue from 2022-2030.

Growth drivers

(i) Rising disposable incomes across India and increasing demand from thee-commerce sector have prompted developers to increase the storage space across the country.

(ii) Shifts in the supply chain due to the increasing prevalence of direct-to-consumer consumption, has generated an entirely new demand-base for industrial space. This has pushed the investors to look for innovative solutions and digital transformation.

(iii) Pandemic has accelerated trends such as increased internet penetration rates, expansion of online grocery, omni-channel retail, and the integration of technology into logistics and warehousing.

The most active sectors during the pandemic have been e-commerce, FMCG (including grocery), pharmaceutical and 3PL players, and they will continue to expand over the long term. These sectors demand for special supply chain models including cold chain and last-mile logistics, which requires significant upgrades and wider investor participation.

B. OPPORTUNITIESANDTHREATS

i. OURSTRENGTHS:

We believe in our competitive strengths including leadership in providing quality services that enable clients in optimizing the efficiency of their business. Our commitment and dedication will eventually take us to the position of a leading competitive player.

ii. HUMAN CAPITAL:

Your company strongly believes that our people are our greatest assets, they give your company its unique competitive edge. The Company has adequate trained professionals to manage the affairs of the Company in the most efficient and prudent manner.

The Company aims to develop, motivate and retain diverse talent. The Company seeks to maximize the potential of every employee by creating a purpose-driven, inclusive, stimulating, and rewarding work environment.

The Company has been broadening and deepening employees relationships by continually looking for new opportunities and newer areas in the businesses to add value, proactively investing in building newer capabilities and reskilling the workforce.

The Company appreciates the participation and contribution of employees, commitment, effective deployment of knowledge and expertise, integrity and maintenance of confidentiality and looks forward for their continuous participation in years to come.

iii. OURSTRATEGY:

Any business that stores items in a warehouse knows that effective management is the difference between fulfilling customer orders quickly and accurately while keeping costs down versus hearing complaints about delayed or inaccurate shipments and higher operating costs.

We seek to further strengthen our march towards a leading warehousing business by:

• Strengthening our strategic partnership with our clients

• Increasing our relevance to clients by being able to work in the entire spectrum of their business

• Delivering higher business value to clients through the alignment of our structure and offerings to their business objectives.

• To achieve these goals, we seek to increase business from existing and new clients, to provide safety, security, modern product handling machines, data management of stock etc. and continue to invest in infrastructure and employees.

iv. OPPORTUNITIES:

Demand from 3PL Logistics Players:

The size of individual warehouses is growing, and they are now becoming cargo hubs to store goods for multiple clients. The warehousing and distribution strategy has changed with the introduction of Goods and

Services Tax (GST) in 2017 and warehouses are built on supply chain efficiency since then rather than considering the benefits from tax saving. Subsequently, the trend moved towards consolidation from multiple smaller warehouses to larger fulfilment centres.

• Logistics companies have seized this opportunity and switched from management of single company warehouses to a multi-client and multi-product model;

• The small e-commerce players take advantage of these multi-client, multi-product facilities as they need flexibility in terms of seasonal space requirement;

• Through consolidation of operations in large warehouses, the companies can also benefit with cutting down on cost;

• Warehousing in India is currently in the process of transformation due to improved quality of warehousing spaces (primarily Grade A space), demand for larger boxes and positioning of warehouse location;

• Major global funds have invested with warehousing developers and operators in order to expand their reach and regional footprint, being the key differentiators in the sector

Potential for multi-storey warehousing

Indian warehousing market has the potential to shift towards the multi-storey warehousing on back of the increasing demand from the e-commerce sector to be located close to their consumer base and to efficiently utilize the land area. This can kick-start the demand for tech-enabled multi-storey warehousing, which can facilitate maximum land utilization in cities having limited land supply as well as help companies to reduce transportation costs and time. Cities such as Mumbai, Bengaluru and Kolkata have the potential to attract Multi-Storey Warehouses as they have constrained land supply and higher land rates.

v. THREATS:

The permissible FSI for warehousing is lower than the desired FSI for multi-storey warehousing in Indian cities. Lower permissible FSI restricts warehouses from going higher which does not allow cost optimization. But, with growing population, space constraints and increasing land prices, multi-storey warehousing system can emerge in the Indian warehousing market in the nearfuture.

C. SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE:

The Honble National Company Law Tribunal (NCLT), Bombay Bench sanctioned the Scheme of Arrangement between RT Exports Limited (Demerged Company)and Asian Warehousing Limited and their respective Shareholders and Creditors vide its Order dated 10th April, 2015.The BSE Ltd., on application for listing of Shares filed by the Company approved the Listing of 34,87,200 Equity shares of Rs.10/- each with effect from 27thJune, 2023.

During the financial year 2023-24, your Companys revenue was Rs.163.26 Lakh whereas revenue for the previous year was Rs.183.16 Lakh.

Particulars	2023-24	2022-23
1 Income
(a) Revenue from operations	163.26	183.16
(b) Other income	7.26	1.24
Total Income	170.52	184.40
2 Earnings Before Interest, Taxes Depreciation and Amortization	121.90	133.38
(c) Less: Finance costs	90.83	95.15
(d) Less: Depreciation	22.17	22.44
3 Profit before taxes	8.90	15.79
4 Less: Tax expense	(5.71)	(1.41)
5 Profit/(Loss) for the year (3 - 4)	14.61	17.20
6 Add: Other Comprehensive Income	(0.41)	-
Total Comprehensive Income	14.20	17.20

D. OUTLOOK:

Change in warehouse trends

In 2023-2024, warehouse operators and fulfillment service providers continued to adapt and implement strategies in response to ongoing supply chain challenges and evolving market demands. The e-commerce fulfillment market saw significant growth, driven by increased direct-to-consumer (DTC) activities and the need for hybrid warehouse models that serve both B2B and DTC clients

On the whole, many of the things learned over the last year will continue to play a role in how 3PLs and DTCs operate going forward, and the tools being implemented—such as warehouse and inventory management systems and automation tools—will become more important.

But some newfulfillment trends may surprise third-party logistics (3PL) and direct-to-consumer (DTC) operators.

Running a warehouse is a costly enterprise with many moving parts. From inventory management to shipping to managing customer relationships.The management of the Company is planning to implement Warehouse management systems (WMS) for successful warehouse and fulfillment operations, reducing the complexity of warehouse operations, including tracking, storing and transporting inventory.

Software tools will allow the management to streamline processes, integrate with ecommerce marketplaces, shippers, accounting and customer relationship tools, and warehouse robotics to optimize our warehouse—without hiring additional employees—and reduce your operational costs overtime.

Within warehouse and fulfilment operations, the management of the Company will improve the sustainability in several ways, including:

• Providing new shipping options, such as ship together in fewer boxes, which can reduce the amount of packaging used and reduce carbon emissions from delivery vehicles.

• Using packaging made from greener, recyclable or compostable materials and reducing the amount of air in each shipment (using appropriately sized boxes or mailers for the items you ship).

• Working with shipping companies that use electric vans and trucks for deliveries.

• Making our warehouse eco-friendlierwith timers and gauges to monitor electricity, heat, water, and gas use.

WMS and fulfillment execution software will support warehousing our business across all aspects of operations, from labor planning to integrating automation and robotics to working with DTC brands and improving shipping processes

E. RISK AND CONCERNS:

• Tenant vacancy and oversupply, which can reduce rental income and property value;

F. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has effectively and efficiently laid down policies, guidelines and procedures keeping in mind the nature, size and complexity of Companys business objectives. The Company maintains proper and adequate system of internal controls with well-defined policies, systems, process guidelines and operating procedures. The Company positively ensures strict adherence to various procedures, laws, rules and statutes. All transactions are recorded and reported in accordance with the applicable Indian Accounting Standards and within the terms of accounting policies.

The Company will ensure the periodical Internal Audit by an independent auditor whose report is submitted to the Audit Committee and Board of Directors for consideration.

G. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Overview

The financial statements of the Company have been prepared in accordance with Ind AS as per the Companies (Indian Accounting Standard) Rules, 2015 as amended and notified under Section 133 of the Companies Act, 2013 (the Act) and other relevant provisions of theAct.

Income

Of the total revenues for the financial year ended 31st March, 2024, 95.74% were derived from providing warehousing services and the remaining 4.26% from other income i.e. Interest Income and Other Miscellaneous Income.

Expenditure

Employee benefit expense relates to Salaries and wages and Staff welfare expenses. Finance cost relates to interest expense. Other expenses primarily represent repairs and maintenance, insurance, rate and taxes, travelling & conveyance expenses, telephone expenses, advertising expenses, legal and professional charges, etc.

Depreciation and amortization

We have provided Rs.22.17 Lakhs and Rs.22.44 Lakhs towards depreciation and amortization, for the financial years ended 31st March, 2024 and 31st March, 2023 respectively.

Provision for tax

The Company has not provided for tax liability.

Net profit aftertax and exceptional item

Net profit after tax stood at Rs.14.61 Lakh for the financial year ended 31st March, 2024 in comparison with Rs.17.20 Lakh in the previous year.

Earnings PerShare (EPS) after exceptional item

During the year, basic EPS after exceptional item reduced to Rs.0.42 per share from Rs.0.49 per share in the previous year.

Financial condition Sources of Funds

1. Share capital

The Authorised Share Capital of your Company comprises of 35,00,000equity shares having a face value Rs.10/-each aggregating to Rs.3,50,00,000/-.

The issued, subscribed and paid up capital stood at Rs.3,48,72,000 as at March 31, 2024, divided into 34,87,200 equity shares of Rs.10/- each.

2. Fixed assets Additions to gross block

During the year under review, no fixed assets have been purchased.

Trade Receivables

Trade receivables amounted to Rs.52.72 Lakh as at March 31, 2024, compared to Rs. 61.16 Lakhs as at March 31, 2023. These debts are considered good and realizable.

Cash and cash equivalents

Cash and cash equivalents include balance with Banks and cash in hand.

Financial Assets and other non-current assets

The following tables give the details of our Financial Assets and other non-current assets.

Financial Assets and other non-current assets.

		(Rs.in Lakh)
Particulars	31.03.2024	31.03.2023
Security Deposits	5.30	5.30
Loans & Advances	-	0.25
Advance Income Tax & TDS	13.55	29.73
Trade Receivables	52.72	61.16
Others	1.45	9.74
Cash and cash equivalents	34.48	0.03
TOTAL	107.50	106.21

Liabilities

Current Liabilities and Trade Payables

		(Rs.in Lakh)
Particulars	31.03.2024	31.03.2023
Secured Loans (Bank O/d)	160.65	160.70
Unsecured Loans from Directors and / or shareholders	244.64	177.09
Trade Payables	9.10	11.50
Others (Statutory Payments)	1.51	1.72
Others	4.73	5.95
TOTAL	420.62	356.96

RESULTS OF OPERATIONS SALESAND MARKETING

During the year under review, the revenue from operations decreased by 10.86% from Rs.183.16 lakhs in F. Y 2022-23 to Rs.163.26 lakhs inF.Y. 2023-24.

H. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBEROF PEOPLEEMPLOYED

There were no material developments in Human Resources / Industrial Relations front, including number of people employed during the financial year under review.

I. DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIONS, ALONG WITH DETAILED EXPLANATIONS THEREFOR:

Key financial ratios

Sr. No. Particulars	20223-24	2022-23	% of change	Reason for change
1 Current Ratio	0.21	0.2	6.10%	Increase in current ratio is due to Increase in current Assets
2 Debt Equity Ratio	0.29	0.29	0%	NA
3 Debt Service Coverage Ratio (DSCR)	0.71	0.64	10.23%	Decrease in ratio due to decrease in debt.
4 Return on Equity Ratio	0.56%	0.66%	-16%	Due to decrease in profit in the current year.
5 Trade receivable turnover ratio	2.87	2.87	0%	NA
6 Trade payable turnover ratio	2.89	2.27	27%	Decrease in ratio due to Increase in other Cost and Decrease in average Trade Payables.
7 Net capital turnover	-0.53	-0.72	-27.10%	Decrease in ratio due to decrease in average working capital and decrease in revenue.
8 Net Profit	8.95%	9.39%	-5%	Decrease due to decrease in Net profit.
9 Return on capital employed	2.84%	3.15%	-9.63%	Increase in ratio is due to decrease in net profit before interest & tax.

J. DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIALYEARALONG WITH ADETAILED EXPLANATION THEREOF:

Return on Net Worth stood at 0.56%for the financial year ended 31st March, 2024 which is lower by 16% as compared to 0.66% for the financial year ended 31st March, 2023 and the same was mainly because of increase in operational and administrative expenses.

K. DISCLOSURE OFACCOUNTING TREATMENT:

The financial statements of the Company have been prepared in accordance with Ind AS as per the Companies (Indian Accounting Standard) Rules, 2015 as amended and notified under Section 133 of the Companies Act, 2013 (the Act) and other relevant provisions of the Act and that no treatment different from that prescribed in an Accounting Standard has been followed.

L. CAUTIONARYSTATEMENT

Statements made in the Management Discussion and Analysis describing the Companys projection, estimates and expectations may be interpreted as "forward looking statements" within the meaning of applicable securities, laws and regulations. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements on basis of any subsequent information or event.