Management Discussion and Analysis
ANNEXURE-V
GLOBAL ECONOMY
According to the International Monetary Fund (IMF), although the global economy is projected to experience a slight contraction from 3.5% in CY 2022 to 3.0% in CY 2023, the overall outlook remains optimistic as it continues its journey towards stabilisation. However, advanced economies are projected to encounter a notable slowdown in growth, declining from 2.7% in CY 2022 to 1.5% in CY 2023, primarily due to the anticipated restrictive monetary policies worldwide and negative cross-border spillovers. Conversely, emerging markets and developing economies are expected to fare relatively well in CY 2023, registering real GDP growth of 4.0% both in CY 2022 and CY 2023. This display of resilience sets the stage for further growth, as emerging markets are anticipated to expand by 4.1% in CY 2024.
Real GDP Growth (%)
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2022 2023 (F) 2024 (F)
Global Economy Advanced Economies Emerging Markets and Developing Economies F: Forecasted
(Source: World Economic Outlook: July 2023)
INDIAN ECONOMY
In FY 2023, the Indian economy exhibited resilience in the face of global challenges, achieving an impressive growth rate of 7.2%. This growth was driven by several factors, including a favourable business environment, robust industrial production, increased consumer spending, improved GST collections, and the vision of a self-reliant India (‘Aatmanirbhar Bharat). S&P Global predicts that the size of the Indian economy will increase to USD 6.7 Tn from USD 3.4 Tn in FY 2023, potentially leading to a per capita GDP of approximately USD 4,500. The manufacturing sector is expected to benefit from the global shift
towards supply chain diversification, with the Government offering incentives to manufacturers and improving infrastructure. Developing a robust logistics framework will play a pivotal role in Indias transformation from a service- oriented economy to one with a stronger emphasis on manufacturing.
(Source: S&P Global, Press Information Bureau)
INDUSTRY OVERVIEW
The warehousing, industrial, and logistics (WIL) sectors are expected to play a pivotal role in Indias aim of emerging as a USD 5.5 Tn economy by FY 2028. The growth of this industry is anticipated to benefit from a strong economy, Government initiatives to enhance infrastructure, and a favourable business environment.
Furthermore, the industry is witnessing a significant transformation driven by advanced technology solutions. Real-time visibility, predictive analytics, and other advanced capabilities are being increasingly deployed to manage supply chains and meet the demands of customers. This tech-driven approach is adding impetus to the sectors growth. Moreover, the rising adoption of green logistics solutions aligns with the global shift towards sustainability. Additionally, the growing number of trade-related agreements is opening up new avenues for the industry. These agreements facilitate smoother trade flows and enhance the logistics sectors importance in supporting international trade.
The rise in consumerism and a large consumer base is driving the expansion of retail and e-commerce in India. To strengthen the sectors infrastructure, the Government of India has undertaken various measures, including developing dedicated freight corridors and extending road and rail networks to enhance connectivity and reduce transit times. Additionally, the sector is undergoing a digital transformation with initiatives like Digital India, Bharat Net, and the National Logistics Portal.
(Source: IBEF)
BUSINESS OVERVIEW
At AVG Logistics (referred to as ‘We or ‘Our Company), we offer an extensive range of logistics solutions, including road transportation services, warehousing facilities, rail logistics, coastal shipping services, and other value-added solutions. Over the past decade, our Company has established an integrated logistics infrastructure, providing both Full Truck Load (FTL) and Less than Truck Load (LTL) solutions to our clients. We operate numerous dedicated routes, ensuring efficient transportation solutions for distribution across
Management Discussion and Analysis (Contd.)
India, from manufacturers to distribution hubs. With 80+ branches pan-India, we serve various reputed clientele spread across sectors like FMCG, automotive parts and equipment, pharmaceuticals and consumer durables.
ROAD LOGISTICS
We are a leading provider of integrated road cargo solutions with a nationwide network, offering multi-modal transport services across India. Our fleet includes over 2000 vehicles, comprising both owned and hired dry/reefer vehicles. These vehicles are equipped with GPRS systems for cargo and driver safety, and our central command centre monitors them round the clock, ensuring efficient operations.
RAIL LOGISTICS
We provide our customers with a range of rail logistics services, including full rack and partial transportation, container movement and terminal management at all CONCOR Inland Container Depots (ICDs). Currently, the Company operates six rail routes, with a total contract value of INR 5,100 Mn and a revenue potential of INR 6,500 Mn. Our primary focus is on optimising efficiency by improving rail cargo operations, thereby reducing emissions, conserving energy, and saving time.
WAREHOUSING
We offer various types of warehousing services, including industrial and retail warehousing, liquid storage, cold storage, agri-warehousing, and container storage services, to clients on a short-, medium- and long-term basis.
With 7 fully operational warehouses across 6 states, our warehousing solutions cater to the distinct needs of our diverse clientele. With a dedicated team of professional experts and cutting-edge technology, we position ourselves as a trusted partner for clients seeking efficient and reliable warehousing solutions.
VALUE-ADDED SERVICES
We offer a range of extra services to complement our core offerings. These services include custom clearing, port logistics, and equipment rental like forklifts and containers. Our coastal logistics services encompass a wide range of options to suit our clients needs, including port-to-port, door-to-port, port-to-door, and door-to-door services. We also provide warehouse management services to help efficient handling of inventory. These value-added services enhance our ability to meet the logistics needs of our clients effectively and professionally.
INTERNAL CONTROLS
We have implemented robust internal control policies and procedures that align with the size, extent, and intricacy of our operations. In order to ensure the effectiveness of internal controls spanning business processes and systems, we have established a robust framework. This framework is meticulously crafted to deliver dependable, high-quality assurance business and operational performance. Regular assessments are conducted to gauge the sufficiency and efficiency of these controls, ensuring adherence to relevant laws and protecting our assets.
RISK MANAGEMENT
Risk management plays an integral role in the business operations at AVG Logistics. Over the years, we have identified key risks that could impact our ability to deliver value to stakeholders. Our focus lies in the early detection of potential risks and their management through suitable mitigation methods. The table below highlights some of the key risks we have identified:
Management Discussion and Analysis (Contd.)
Key Risks | Mitigation Strategy |
Global Economic Slowdown Risk Slowdown in the global and Indian economy has the potential to affect the growth trajectory within our sector negatively. |
Despite persistent challenges, the global economy is expected to sustain a moderate growth trajectory, while the Indian economy is poised to emerge as one of the fastest-growing economies. According to IMF, India is forecasted to register a real GDP growth rate of 6.1% in FY2024. |
Concentration Risk We derive a significant proportion of our revenues from marquee clientele. This exposes us to a high risk of client concentration. |
We continue to take steps to create a larger base of customers. In addition, we are leveraging technology and innovation to achieve cost efficiencies for customers, which results in long- term relationships with them. |
Competition Risk We operate in a competitive industry with various players, including unorganised ones. Rising competition from both organised and unorganised third-party logistics or transport providers may adversely impact our revenue, profit margin and market share. |
To mitigate this, we create value through integrated technology- based solutions, transport network-based solutions, and skill development of employees. |
Infrastructure Risk Infrastructure inadequacies can lead to supply delays, reputational damage, and impact profitability. |
This risk is managed by leveraging the improved national transportation infrastructure under the Governments ongoing National Infrastructure Pipeline (NIP) programme. Additionally, we prioritise the construction of state-of-the-art warehouses and storage facilities at strategic nodal locations. |
People Risk The people risk we face includes staffing shortages, loss of essential employees, negative publicity, and potential disruptions in our operations. |
We employ innovative staff retention strategies like health insurance policies and frequent recognition programmes to manage these risks. |
TECHNOLOGY
At AVG Logistics, we have strategically integrated Information Technology (IT) into the core of our business model. This integration enables us to improve our operations, enhance customer service, and strengthen our competitive position. Our technological initiatives centre on harnessing emerging technologies like the Internet of Things (IoT) to boost efficiency across our business areas. Furthermore, technology enables us to closely monitor operational processes, ultimately leading to higher client satisfaction and enduring relationships with stakeholders throughout the value chain.
HUMAN RESOURCE
We have successfully included 407 employees in our workforce. Despite the macroeconomic challenges experienced, our employees have been a pillar of support, enabling us to navigate through the turbulent environment and emerge stronger. Furthermore, we have a robust
framework to prevent discrimination and harassment, extending our human rights protection to all employees and business associates. We uphold a zero-tolerance policy for harassment and offer multiple channels for employees to report concerns.
CAUTIONARY STATEMENT
Statements in this Management Discussion and Analysis and the Annual Report describing our objectives, projections, estimates, expectations, plans or predictions and industry conditions or events are ‘forward-looking statements within the meaning of applicable securities, laws, and regulations. Actual results, performance or achievements could differ materially from those expressed or implied. Several factors could make a significant difference to our operations. These include economic conditions affecting demand and supply, Government regulations and taxation, natural calamities and so on, over which we do not exercise any direct control.
S. No. |
Name of Director | Designation | Ratio of the remuneration of each director to the median remuneration of employees |
1. | Mr Sanjay Gupta | Managing Director and CEO | 18.07 |
2. | Mrs Asha Gupta | Whole Time Director | 14.02 |
3. | Mr Pawan Kant | Non Executive Independent Director | Not Applicable |
4. | Mr Susheel Kumar Tyagi | Non Executive Independent Director | Not Applicable |
5. | Mr Shyam Sunder Soni | Non Executive Independent Director | Not Applicable |
S . No. |
Name of Director | Designation | % increase in Remuneration in the financial year 2022-23 |
1. | Mr Sanjay Gupta | Managing Director and CEO | Nil |
2. | Mrs Asha Gupta | Whole Time Director | Nil |
3. | Mr Pawan Kant | Non Executive Independent Director | Nil |
4. | Mr Susheel Kumar Tyagi | Non Executive Independent Director | Nil |
5. | Mr Shyam Sunder Soni | Non Executive Director | Nil |
6. | Mr. Gurpreet Singh Luthra | Chief Financial Officer | Nil |
7. | Mr. Mukesh Kumar | Company Secretary | 12.5 |
During the financial year 2022-23, the median remuneration of employees of the Company was increased by 10%.
As on March 31, 2023, there were 407 permanent employees on the rolls of the Company.
V. Average percentile of increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:
Average percentile increase in salary of the Companys employee (other than the managerial personnel) during the
financial year 2022-23 was approximately 10%.
During the financial year 2022-23, there was no increase in the remuneration of Mr. Sanjay Gupta, Managing Director
& CEO and Mrs Asha Gupta, Whole-time Director of the Company i.e. Executive Directors of the Company.
Non-Executive Directors including Independent Directors were paid remuneration by way of sitting fees for attending the Board and Committee Meetings held during the financial year 2022-23, there is no change in the sitting fee paid to Non-Executive Directors from previous year.
Vi. Affirmation that the remuneration is as per the Remuneration Policy of the Company:
It is hereby affirmed that the remuneration paid during the year ended March 31, 2023 is as per the Remuneration
Policy of the Company.
ANNEXURE-VI (Contd.)
S. No. |
Name of the Employee | Age (years) |
Designation | Remuneration Received |
Qualification | Experience in Years |
Date of Commencement of Employment | Last Employment |
1 | Sanjay Gupta | 54 | Director | 53,33,803 | Graduate | 30 | January 01, 2018 | Indo Arya Transport |
2 | Asha Gupta | 53 | Director | 41,36,999 | Graduate | NA | January 01, 2018 | None |
3 | Gurpreet S. Luthra | 51 | CFO | 33,91,549 | Chartered Accountant | 30 | August 01, 2019 | Fuji Films |
4 | Vinayak Gupta | 29 | VP Operations |
29,91,325 | MBA | 5 | December 01, 2020 | None |
5 | ARUN KOHLI | 56 | Director- Sales and Operations | 28,47,283 | BBA | 25 | June 27, 2022 | Varuna Intergrated Pvt Limited |
6 | Narender Prakash Gupta | 54 | VP Finance | 19,65,436 | MBA | 33 | December 01, 2021 | Varuna Intergrated Pvt Limited |
7 | Praveen Kumar | 33 | Sr General Manager – Finance |
19,15,374 | Chartered Accountant | 11 | January 16, 2018 | CRWC |
8 | Pardeep Kumar Goel | 33 | DGM- Finance & Accounts |
17,95,349 | CA | 11 | May 09, 2022 | Varuna Intergrated Pvt Limited |
9 | Ajay Kumar | 45 | Head – Operations | 14,69,789 | BSC | 25 | July 20, 2015 | Indo Arya Transport |
10 | Nagendra Sharma | 43 | Chief operating officer | 13,71,597 | MBA | 25 | February 19, 2021 | Asian Paints Limited |
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www.indiainfoline.com is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others.
Copyright © IIFL Securities Ltd. All rights Reserved.
Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213, IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248
This certificate demonstrates that IIFL as an organization has defined and put in place best-practice information security processes.