- INDUSTRY STRUCTURE AND DEVELOPMENTS
As we stand at the crossroads of unprecedented change, the global
logistics arena has weathered the storms of the pandemic, only to face a new set of
challenges in 2022. From re-globalization and fuel price hikes to the aftershocks of trade
wars, the logistics sector has proven its resilience amid disruptions.
In 2021, the global logistics market soared to USD 4.92 trillion, and
projections indicate a continued ascent, reaching USD 6.55 trillion by 2027. Closer to
home, the Indian logistics sector is on an inspiring trajectory, set to grow from USD 250
billion in FY2021 to an estimated USD 380 billion by 2025, reflecting a robust CAGR of
approximately 11%.
Our nation, recognizing the pivotal role of logistics, is steering
focused efforts towards infrastructure development, exemplified by dedicated freight
corridors, tech-driven warehousing, and multimodal logistics parks. The governments
commitment aligns seamlessly with our vision for a resilient and agile logistics future.
The challenges of the past year have magnified the imperative for a
robust infrastructure capable of withstanding unforeseen disruptions. In response, the
industry is not merely recovering; it is emerging stronger and more adaptable than ever
before.
As we navigate through the challenges and opportunities presented by
the global economic landscape, the macroeconomic outlook for FY23 is marked by both
uncertainty and resilience. The conflict in Ukraine, coupled with sanctions on Russia, a
major energy supplier, has strained global growth and disrupted supply chains.
Additionally, central banks globally have responded to inflationary pressures by
tightening monetary policies, contributing to a projected decline in global economic
growth from 3.5% in 2022 to 3.0% in 2023.
Despite these headwinds, India has exhibited remarkable resilience,
achieving a growth rate of 7.2% in FY23, the highest among major economies. With a GDP of
US$3.4 trillion in 2022, India aims to reach US$5 trillion by 2025. The logistics and
transportation sector is poised to capitalize on this economic upturn.
- Global Logistics Industry Overview:
The global logistics market, valued at US$7.98 trillion in 2022, is
anticipated to reach US$18.23 trillion by 2030, driven by a robust CAGR of 10.7% from 2023
to 2030. The surge in online retail is a primary catalyst for this growth, with the
Asia-Pacific region leading the way, leveraging advancements in technology such as
automated material handling equipment, GPS, and biometrics.
- India Logistics Industry Overview:
In India, the logistics sector constitutes 14.4% of the GDP and
employs over 22 million people. Valued at US$382 billion in 2021, the market is projected
to reach US$531 billion by 2026, growing at a 6-7% y-o-y rate. Notably, India has climbed
six places to 38 out of 139 countries in the Logistics Performance Index (LPI 2023). The
governments goal is to rank among the top 25 countries by 2030.
- Key Sectors in Indian Logistics:
- Domestic Air Express Transportation: Despite being a more expensive option, it remains
preferred for critical shipments such as medical supplies and time-sensitive products.
- Cross-Border Transportation: This includes both air and sea freight, with a
well-organized international air cargo industry.
- Supply Chain Services: Evolving into more sophisticated forms, integrated services cover
warehousing, transportation, and value-added services, driven by factors like GST and
government policies.
- Key Trends Driving Growth:
Economic Growth: India is projected to grow at 6.1% and 6.3% in FY23 and FY24,
respectively, outpacing other Asian economies.
Changing Consumer Dynamics: Rising incomes, changing preferences, and a digitally
native population are fueling online purchases, driving the need for reliable logistics.
B2B and B2C Commerce Models: New business models like social commerce and
direct-to-consumer commerce are reshaping traditional retail, increasing demand for
logistics services.
- Technological Transformations:
ONDC (Open Network for Digital Commerce): Enhances SME participation in e-commerce by
facilitating direct integration with national-scale logistics players.
Technology-led Solutions: From route consolidation to inventory management, technology
is optimizing logistics operations, with a focus on speed, efficiency, and reduced
operational costs.
- Challenges Ahead:
Rising Fuel Prices: Fluctuating international crude oil prices impact transportation
costs, affecting industry margins.
Truck Driver Shortage: Despite improvements in road infrastructure and safety measures,
attracting truck drivers remains a challenge.
Reverse Logistics Cost: The growing e-commerce sector faces challenges in managing
return logistics, impacting operational complexity and costs.
- SWOT ANALYSIS
STRENGTHS:
At the heart of this transformative era stands West East Freight
Carriers Limited (EWFCL), a beacon of reliability and innovation in the logistics realm
for over 45 years. Our strategic affiliations with industry bodies and global partnerships
affirm our commitment to delivering superior logistics and freight forwarding services.
The commitment of our team, coupled with cutting-edge technology adoption, positions us as
a trusted industry player.
RISKS AND CONCERNS:
Acknowledging the risks intrinsic to our operations is paramount. From
transportation challenges and port sector complexities to tax intricacies and the
ever-present specter of competition, we remain vigilant. These challenges, while
formidable, are opportunities for us to showcase our resilience and adaptability.
OPPORTUNITIES:
In the face of challenges lie unprecedented opportunities. The logistic
sector in India is undergoing a metamorphosis, and we are at the forefront of this
transformation. Government initiatives, structural reforms, and technological advancements
pave the way for our continued growth. The digital revolution in logistics, marked by IoT,
automation, blockchain, and AI, is not a distant future but a present reality that we
embrace with open arms.
THREAT:
As we navigate this transformative journey, we are not blind to the
challenges that lay ahead. Fluctuating fuel costs, ocean freight rate volatility, and
external geopolitical factors demand our attention. Yet, they are challenges we are
well-equipped to address, ensuring our sustainability in an ever-changing environment.
In conclusion, as we stand on the precipice of industry shifts and
global dynamics, our vision remains unwavering. We are not just adapting; we are shaping
the future of logistics. Our commitment to excellence, coupled with technological prowess,
ensures that we not only endure challenges but thrive amid them.
Thank you for your steadfast support on this journey. Together, we
continue to chart the course for a future where challenges are not roadblocks but stepping
stones to success.
SEGMENT-WISE PERFORMANCE:
The Company operates in one segment i.e Transportation, Logistic
and allied activities.
Discussion on financial performance with respect to operational
performance
| Particulars |
2022-2023 |
2021-2022
|
| Revenue from Operations |
1658.67 |
1,354.40
|
| Other Income |
4.67 |
61.58 |
| Total |
1663.34 |
1,415.98
|
| Profit/loss before Depreciation, Finance Costs, Exceptional
items and Tax Expense |
(67.63) |
8.67 |
| Finance Costs |
- |
- |
| Profit /loss before Tax Expense |
(67.77) |
8.55 |
| Less: Tax Expense |
|
|
| -Current Tax |
- |
2.20 |
| -Deferred Tax |
- |
- |
| -Prior Period Tax |
- |
- |
| Profit /loss for the year (1) |
(67.77) |
6.30 |
The Revenue from operations for FY 2022-2023 has increase by 22%
approx. to Rs. 1658.67/- lakhs as compared to Rs. 1,354.40/- lakhs in the previous year.
However the Company has incurred loss of Rs. 67.77/- lakhs as compared to profit of Rs.
8.55/- lakhs in the previous year due to increase in operational expenses.
OUTLOOK & ROAD AHEAD:
The Company is gearing for an optimal juncture for its structure and
scalability. We are planing to leverage our legacy into delivering performance-driven
logistics solutions, powered by globally-integrated backend and ecosystems. The changes we
are continuing to make are expected to accelerate the business9s operational model. We
will continue to grow our value-added offerings in both India and globally to serve our
stakeholders=. The company has forayed into turnkey projects as well as dangerous and
hazardous goods as key verticals among more significant announcements in the pipeline.
Looking at the business performing in the year under review the Management is confident
that it has a great future prospect and will continues to grow in the coming year.
INTERNAL CONTROL SYSTEMS AND ADEQUACY:
For the purposes of effective internal financial control, the Company
has adopted various policies and procedures for ensuring the orderly and efficient conduct
of its business, including adherence to company9s policies, the safeguarding of its
assets, the prevention and detection of frauds and errors, the accuracy and completeness
of the accounting records, and the timely preparation of reliable financial information.
There has not been any significant change in such control systems. The control systems are
reviewed by the management regularly. The same are also reviewed by the Statutory Auditors
and Internal Auditors from time to time. The Company has also adopted various policies and
procedures to safeguard the interest of the Company. These policies and procedures are
reviewed from time to time. There has also been proper reporting mechanism implemented in
the organization for reporting any deviation from the policies and procedures. Compliance
audit is also conducted from time to time by external agencies on various areas of
operations.
HUMAN RESOURCES:
Success of a service company largely depends on its human resources. We
have necessary policies and processes in place for performance management of our employees
to help us to identify training needs, etc. We have taken measures to empower and
incentivize our employees to enable them to contribute towards our organizational goals.
The total Strength of the Company is 230+ employees and your management feels proud to
state that the employer 3 employee relations remained extremely cordial throughout the
year. There were no instances of strikes, lockouts or any other action on part of the
employees that affected the functioning of the Company. It is noteworthy that there is no
Employee Union / Trade Union / Union within the organization.
Details of significant changes (i.e. change of 25% or more as
compared to the immediately previous financial year) in key financial ratios, along with
detailed explanations therefore, including
| Ratio |
Current year |
Previous year |
% variance |
| Revenue |
1,354.40 |
583.81 |
132% |
| Current ratio (in times) |
4.26 |
2.64 |
61% |
| Debt-Equity ratio (in times) |
- |
- |
|
| Debt service coverage ratio (in times) |
- |
|
|
| Return on equity ratio (in %) |
0.10% |
0.47% |
-78% |
| Gross profit ratio (in%) |
0.88% |
1.90% |
-54% |
| Trade receivable turnover ratio (in times) |
8.76 |
6.39 |
37% |
| Trade payable turnover ratio (in times) |
5.80 |
2.27 |
156% |
| Net capital turnover ratio (in times) |
1.95 |
1.39 |
40% |
| Net profit ratio (in%) |
0.47% |
4.30% |
-89% |
| Return on capital employed (in %) |
0.14% |
0.65% |
-79% |
| Return on investments (in %) |
NA |
NA |
NA |
CAUTIONARY STATEMENT:
Statements in the Management Discussion and Analysis describing the
Company9s objectives, projections, estimates and expectations may be 8forward looking
statements9 within the meaning of applicable securities laws and regulations. Actual
results could differ materially from those expressed or implied. Important factors that
could make a difference to the Company9s operations include economic conditions affecting
demand/supply and price conditions in the domestic and overseas markets in which the
Company operates changes in the Government regulations, tax laws, and other statutes and
other incidental factors.
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