Chartered Logistics Ltd Management Discussions.

The management of Chartered Logistics Limited presents the analysis of the performance of the company for the year 2020-21 and its outlook for the future. The outlook is based on an assessment of the current business environment and expectations of future events. The company assumes no responsibility to publicly amend, modify or revise any forward-looking statements, based on any subsequent developments, information, or events. The day-to-day management of the Company is looked at by the Executive Directors assisted by a team of competent technical & commercial professionals.

Overview of the Economy Global

Global economics GDP grew at a rate contracted by 7.3% during FY21, the year 2020 was marked by crisis, instability, and doubts across the globe because of the pandemic. This shut down the economy and almost side-lined small businesses. The second quarter of 2020 was majorly about debt distress, job loss, pay cuts, supply and demand shocks. Most Governments responded by declaring fiscal stimulus, while central banks around the world started lowering the interest rates to inject liquidity into the economy. Interestingly, Asian countries stood firm compared to their western counterparts because of their inherent resilience, In the third quarter of 2020, economic activities in Asian countries like China, India, Indonesia, Vietnam, and South Korea picked up. It was majorly driven by strong demand for the regions exports. Presently, we are looking at a positive outlook for 2021, and it is estimated that the global economy will grow at the rate of around 5.5%.

Indian Economy

Although the COVID-19 has impacted all countries around the world, the threat to India was much greater due to its large population. The FY 2020-21 was particularly unsteady for the Indian economy because of the lockdowns and therefore they reduced the magnitude of the infected peak and led to a low mortality rate, The Indian economy is showing early signs of a broad V-shaped recovery, owing to larger public stimulus spends, the revival of consumer confidence, robust financial markets and an uptick in manufacturing activity. Unlike the first wave where lockdowns were applied nationwide for several months, the second wave measures are more localized, targeted, and will likely be of shorter duration. It is believed that economic activity in the first half of FY 2021-22 will be clouded by the pandemic, but the second half should see growth, led by increased vaccinations and the public adapting better to lockdowns. India is likely to breach its fiscal deficit target in FY 22 mainly due to revenue shortfall. The government is targeting a deficit between revenue it earns and what it spends at 6.8 percent of the gross domestic product (GDP) in FY 22.

Indian Logistics Industry: Current Scenario and Future Outlook the Indian logistics industry has been on a constant move as demand for essential products pushed the logistics operators to ensure that the goods reach the customers a store. Rail freight replaced roads because of restrictions and this led to a faster movement of cargo. There was an increase in technology adoption by the logistics players to enhance operational efficiencies. Going forward, the technological trends that emerged in FY 2020-21 are expected to gain further traction in FY 2021-22.

We at Chartered believe that benefits of GST and policy simplification will accrue to Indian businesses and the same is likely to reflect in our performances. The Indian logistics industry is expected to derive gains from the recovery and revival of the economy in the industrial sector and also foster the growth of the logistics industry in India. The logistics industry in India is finding many other sectors that are investing heavily, such as aviation, FMCG, and metal & minerals. The Indian logistics industry looks well-poised for a bright future with the entry of many foreign companies and their focus on outsourcing their logistical requirements. The Indian logistics sector is likely to continue growing at over a CAGR of 10% for the next few years, thereby aiding the growth of the Indian economy on a large scale.

Company Business Outlook

For the last two decades, Chartered Group is scaling new heights in the logistics industry. We have created an impressive track record of value addition to our customers. Our basic principles behind the growth are our values i.e., Honesty and Integrity, Commitment, Efficiency, Safety. With our ardent passion and focused vision which we have outlined as "To BE A PREMIUM LOGISTICS COMPANY WITH FOCUS ON BETTER THAN THE BEST" and our mission is to achieve it. It is an unflinching goal of Chartered to become a force to reckon with and the roadmap has been designed to translate our dreams into reality.

We have an exciting future ahead. The actions are taken internally within the company and the improving macro-economic situation in the country, further buoyed by recent policy initiatives and the regulatory changes being pursued by the government, including the much- anticipated introduction of GST framework in this financial year, all point towards a great year in the new fiscal 2021-22. The future holds immense opportunities and we are fully geared, to deliver on our commitments to various stakeholders

CLL Business Strategy

We have introduced several strategic initiatives during the year to spur overall growth and productivity in the Company. The following are some of the broad areas covered by these initiatives:

•Cost optimization: A series of measures have been initiated to yield high levels of cost optimization. These include focusing on location Optimization, deploying people in the right jobs, and eliminating unnecessary costs.

•Enhancing sales productivity: We are focusing on reinvigorating our sales teams and enabling them with better systems, training, and processes. We have made all branches of the company online located at the various locations of the country. This helps us in getting the MIS Report daily from all branches which enable us to focus and improving the sales productivity of all branches thereby winning large revenue for the company

•Improving Service effectiveness: Our delivery services have always been of a high order, and we want to re-focus on strengthening it further.

Recent Scenario

In the recent scenario, the logistics industry is largely dominated by transportation. The prevailing trend towards omnichannel distribution, technology adoption, and proliferation of e-commerce, among others, have proved beneficial for the logistics market growth. However, a shortage of container availability is expected to create a problem in supply chains and it is likely to keep rates high through the first half of2021. This situation is likely to be back to the pre-COVID-19 level once trade flow rebalances across geographies

Challenges Faced by The Recent Logistics Industry In India

COVID-19 pandemic and subsequent measures including lockdown have badly hit end-user consumption. The surface transport industry suffers from an acute driver shortage issue and the said problem also affects your Company. The management opines that this is the single most important factor that affects all the transporters across the country.

The biggest challenge faced by the industry today is poor integration of transport networks, information technology, and warehouse & distribution facilities. Regulations existing at different tiers are imposed by national, regional, and local authorities. However, the regulations differ from city to city, hindering the creation of national networks. Trained manpower is essential for the third-party logistics sector and the manufacturing and retailing sectors. It is lacking at the IT, driving, and warehouse as well as at the higher strategic level. The sector is in a disorganized state in India. The general perception of logistics being a manpower-driven industry and lack of adequate training institutions have created a crisis of skilled management and client service personnel. Poor facilities and management are reasons behind high levels of loss, damage of stock, mainly in the perishable sector. The problem arises mainly because of the absence of specialist equipment, like proper refrigerators. Lack of quality training is another reason. Though practitioners and academicians are slowly becoming aware of the importance of logistics and supply chain, however, the field is still not adequately explored as far as research is concerned. It is essential to prioritize research and development so that the weaknesses in the industry can be taken care of and improved.

There are fluctuations in fuel prices that result in diesel de-regulation, lorry hire charges to third party vehicles and input costs, etc. The cost of fuel has increased in recent years and fluctuates significantly due to various factors beyond control. There are many unorganized players so many segments within the logistics industry are Covid-19 is being harped upon by one and all as one of the biggest threats to every business worldwide and the same is true, albeit only in the near short and medium term. Human beings have lived through several such catastrophes as also pandemics and the facilities, technology as also infrastructure would place todays world in a much better position to cope up and overcome the aftereffects of this pandemic in the days to come. One of the positives emanating out of this occurrence is that people would be more aware and sensitive to their health and well-being and this would ensure that the human resources, in general, would contribute more to their respective organizations in a much better manner in the days to come highly commoditized and have low barriers to entry or exit, leading to market with a high degree of fragmentation.

Solutions To Some of The Challenges

After GST is implemented, the determining factors of planning logistics will be fundamental principles of logistics-demand, supply, near- to-customer, sourcing, transportation costs, and inventory costs. This will ensure a major shift and/or consolidation in warehousing locations, transportation costs, and inventory costs. This will ensure a major shift and consolidation in transportation costs and will also impact the trends of commercial vehicle classes. We believe that there would be a marked shift in the operating model of surface transporters in the country and the hub-and-spoke- model which would find a lot of followers in the Indian context.

The consumption in remote locations, rural areas, and difficult terrain are expected to increase. Lack of rail or port connectivity will increase dependence on road transport to fulfil the spurt in consumption, which is the only mode of transport that can reach these destinations.

Emerging opportunities and Trends

Grant of infrastructure status to logistics, the introduction of the E-Way Bill, and GST implementation are set to streamline the logistics sector in India. Setting up a logistics division under the Department of Commerce, technology upgrades, and the development of dedicated freight corridors and logistics parks are also major moves to upgrade the logistics landscape.

Logistics start-ups in India gained a substantial foothold after the onset of e-Commerce, and several new companies are gaining traction in the industry. Online platforms have increased competition and lowered freight costs with real-time data availability and a transparent value chain. This will help the Air cargo service ‘providers to innovate and adapt to the transforming logistics landscape and increase the Volumes

Going forward, it is felt that the focus on improvement in the Ease of Doing Business in India coupled with landmark Government of India initiatives like ‘Make in India, and ‘Digital India, and new norms of "LOCAL TO GLOBAL" coupled with suitable policy, logistics, regulatory, and skills regime will all contribute to facilitating accelerated growth in air cargo.

Review of the business of CLL

Established in the year 1995 A trademark logistics company Chartered Logistics Limited (CLL) offers world-class services like road transport services, special warehousing services, cost & freight services, etc. right from the point of origin till the final point of destination, to meet the exacting requirements of consumers satisfactorily.

CLL is a renowned service provider, offering cost-effective and highly trusted Road Transportation Services, Cost & Freight Services, Special Warehousing Services, etc. Some of the key features of our road transportation services comprise door-to-door services, project works, and options of the customized carrier as per customers needs.

CLL is having a large fleet (approximately 600) of owned and attached vehicles. CLL is having its clients from industry sectors such as Pharma, FMCG, Cement, Heavy metals & tubes, power transmission, petroleum, chemicals, etc.

CLL provides a comprehensive supply chain expertise and logistics infrastructure that work seamlessly to ensure highly cost-effective solutions.

Review of CLLs Preparedness against emerging opportunities and future outlook

With the implementation of the GST and related E-way bill implementation, we expect good things for the entire domestic road freight transport industry. One of the key achievements of the e-way bill will surely be the effective dissolution of state borders. The amount of time wasted at state borders to validate documents with regards to inter-state movements of goods was a hindrance to any business which dared to spread its wings, beyond its home state. Organized players will stand to benefit and smaller and unorganized players need to step up and meet the compliance requirements which appears very difficult given the present-day scenario.

The Company has availed the option to postpone the repayment of the principal amounts due on its outstanding loans. We believe that we need to live through with the Coronavirus and find ways and means to overcome the challenges and expect the resumption of healthy financial growth from the next fiscal onwards.

Review of Operational and Financial Performance of the y ear 2020-21 Financial summary orhighlights/Performance of the Company

(Rs. In lakhs)

Particulars 31/03/2021 31/03/2020
Gross Income 13326.94 14490.64
Profit Before Interest and Depreciation 731.51 981.72
Interest & Finance Charges 663.21 662.75
Depreciation 307.17 309.38
Profit Before Tax -238.87 9.59
Less: Provision for Tax 0 0
Deferred Tax Credit 2.23 41.73
Add: MAT Credit entitlement 0 0
Profit/Lo ss After T ax -236.33 51.33
Other Comprehensive income 13.99 -0.18
Excess/Short Provision of earlier year 0 0
Net Profit -222.63 51.14

During the financial year, 2020-21, as compared to the previous year during the year company, has reported a total income of Rs. 13326.94Lakhs as against a total income of Rs. 14490.64 lakhs in the previous year. The interest and financial expenses have been increased this year as compared to the previous year. Profit before tax (PBT) has been reported at Rs. -238.87 Lakhs in the current year as against Profit before tax (PBT) of Rs. 9.59 Lakh in the previous year. The net profit after tax for the current year 2020-21 is Rs. - Lakhs as compared to Rs.51.33 Lakhs in the previous year.

Risks in Logistics Sector

It will become necessary for the operators to adapt to how the new normal unfolds. Planning for these operational changes and remaining agile to changes in procedure will be vital when operating in these challenging times and building a strong foundation for the future. Fluctuations in fuel prices resulting from diesel de-regulation, lorry hire charges payable to third party vehicles, and input costs especially those related to tolls as also others like rent, salary, etc. have a significant bearing on the Companys profitability margins.

The logistics sector is married by many inherent risks which are specific to its functioning, like fragmented ownership of vehicles, poor infrastructure of roads, bureaucratic delays at the borders, poor vehicles maintenance, en-route levies, probability of criminal acts has been heightened, etc. These may be categorized as operational risks. It is also exposed to market risks and financial risks to which all the operations are exposed. These include risks like fluctuations in the economy and sudden changes in the Government policies and

The Board takes responsibility for the overall process of risk management throughout the organization. During the financial year ending March 31,2021, your company has conducted an assessment of the effectiveness of the internal financial control over financial reporting and it has in place, adequate internal financial controls concerning financial statements, commensurate with the size, scale, and complexity of its operations. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.

Human Resources

The Company believes that the employees are central as well as critical to the Company as they are the real assets of the organization. It recognizes people as its most valuable asset and therefore it lays due emphasis on its overall training and development. The Companys HR policy aims to establish and build a high-performing organization, where each individual is motivated to perform at the fullest capacity to contribute towards self-development and thereby achieve individual excellence along with achieving the departmental objectives. The employee relationship with the company remained harmonious throughout the year.

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:

Description 2020-21 2019-20 Reason if Material Variance
Debtors Turnover 3.32 times 3.11 times No significant variance
Interest Coverage Ratio 1.1 times 1.5 times No significant variance
Current Ratio 1.4 times 1.3 times No significant variance
Debt Equity Ratio 0.5 times 0.6 times No significant variance
OperationProfit Margin(%) 3.2 % 4.7 % Decrease in sales with fixed expenses
Net Profit Margin (%) -1.8 % 0.4 % Decrease in sales with fixed expenses

Cautionary Statement

Some of the statements in the report describing the Companys objectives, projections, estimates, and expectations may be a ‘forwardlooking statement within the meaning of applicable securities laws and regulations. The forward-looking statement has as their basic certain assumptions and expectations about behavior or outcome of future events and/or economic variables. Actual results may vary from those expressed or implied depending on these economic conditions, demand/supply scenario, price conditions in which the Company operates changes in the Government Policies, changes in fiscal laws, and other incidental factors. Readers are cautioned not to place undue reliance on forward-looking statements.