The management of Chartered Logistics Limited presents the analysis of performance of
the company for the year 2022-23 and its outlook for the future. The outlook is based on
assessment of current business environment and on expectations of future events. The
company assumes no responsibility to publicly amend, modify or revise any forward looking
statements, on the basis of any subsequent developments, information or events. The day to
day management of the Company is looked by the Executive Directors assisted by a team of
competent technical & commercial professionals.
GLOBAL ECONOMY
Countries across the globe focused on vaccination coverage and implemented various
economic stimuli to minimise the impact of COVID-19 and hasten economic recovery. The
growth momentum started slowing towards the end of 2021, as the effects of fiscal and
monetary stimuli dissipated along with the onset of the Omicron variant of COVID-19. The
recent geo-political tensions and conflict in Ukraine has weigh on global growth
projections and also lead to high inflation in the short term. The conflict has been a
major blow to the global economy that will hurt growth and raise prices. As per IMF World
Economic Outlook, Global growth is projected to slow from an estimated 6.1 percent in 2021
to 3.6 percent in 2022 and 2023. This is 0.8 and 0.2 percentage points lower for 2022 and
2023 than projected in before. Beyond 2023, global growth is forecast to decline to about
3.3 percent over the medium term. War-induced commodity price increases and broadening
price pressures have led to 2022 inflation projections of 5.7 percent in advanced
economies and 8.7 percent in emerging market and developing economies 1.8 and 2.8
percentage points higher than projected before.
INDIAN ECONOMY
Indias economy has now become the fifth-largest in the world on nominal GDP (US
dollars) and is set to become the second-fastest growing economy in FY 2023, despite the
slower global demand and tightening of monetary policy to manage inflationary pressures.
The Indian economy is projected to record a relatively healthy Gross Domestic Product
(GDP) growth of 6.1% (Source: IMF) in FY 2023 and is showing signs of moderation. GDP
growth is expected to decline to 5.7% in FY 2024, as exports and domestic demand growth
moderate. Inflation will slow private consumption but moderate along with improved global
conditions, to accelerate growth to 6.9% in FY 2025. The key drivers for medium-term
growth are increasing public sector expenditure on infrastructure, supply-side and
financial reforms (GST and better tax compliance, bankruptcy court, bad bank, etc.),
Indias digital architecture that includes the universal payment systems, nationwide
identification framework, distribution of welfare schemes, healthcare official data stack
intended to solve social, inclusion needs, and logistics and favourable demographics are
expected to set the economy on the path of recovery. Retail inflation prints peaked in
September 2022 and have since begun to ease, helped by favourable base effects. Inflation
is expected to remain sticky in the coming months before gradually rolling off in 2023-24
as growth slows and input price pressure abates. The USD/Rs. expected to consolidate
between 80 and 84 over the next two years.
INDUSTRY STRUCTURE AND DEVELOPMENTS
The logistics industry in India, considered to be the lifeline of the country, holds
unprecedented importance as it connects various markets, suppliers and customers dotted
across the country, and has now been firmly embedded as an integral part of the national
GDP value chain. The Indian logistics sector provides livelihood to more than 22 million
people. The logistics industry is highly fragmented and consists of multiple active
players which include large scale domestic players, leading global players and emerging
start-ups specializing in e-commerce deliveries.
Infrastructure readiness and technology are expected to be the key drivers of growth
for the Indian logistics industry. The growth in logistics sector is expected to be driven
by increasing penetration of products into more cities and towns, as well as the growth of
economic activity and manufacturing moving to these towns. In addition, the demand for
value-added services from consumers provides opportunities for the Industry players to
elevate themselves from an operational role to a more strategic one.
The logistics sector has witnessed robust growth with the highest share in the freight
forwarding market, followed by the warehousing, courier parcel, and express and
value-added services markets. The Indian freight and logistics market is evolving, keeping
in line with the technological and infrastructural developments and various policy reforms
taken by the government, including the introduction of e-way bills, fast-tag, e-invoicing,
and GPS-based toll collection. The National Logistics Policy (NLP) is aimed at
streamlining and strengthening Indias logistics sector, promoting the seamless movement
of goods across the country, and increase the ease of doing business for players in the
sector.
The traditional logistics industry in India is witnessing a significant shift toward
digitization and contactless operations due to the COVID-19 pandemic. The robust growth in
manufacturing envisioned through the "Make in India" initiative will demand high
levels of logistical efficiency, which means that goods must be produced and efficiently
transported to markets at reasonable prices.
The deeper penetration into Bharat (Tier II, III & IV towns), economy enhancing
initiatives, GST implementation and other initiatives such as Make in India, Digital India
and the National Logistics Policy, all hold a promise for an efficient and integrated
logistics industry in the days ahead.
The Multi-Modal Logistics Parks (MMLPs) policy is a key policy initiative of the
Government of India to improve the countrys logistics sector. This initiative will lower
freight costs, reduce vehicular pollution and congestion, and cut warehouse costs to
promote domestic and global trade. The government is also focusing on strengthening the
market in terms of competition, reduced freight rates and barriers, and technological
developments. The agricultural, retail, and manufacturing sectors are boosting the
countrys freight and logistics industry
With the aforementioned efforts it is hoped that in the next 5 years the targets set by
the National Logistics policy to improve Indias ranking in Logistics Performance Index to
25 will ensure that the Logistics sector serves as an engine of growth and a key driver
for transforming India to a 5 trillion dollar economy
Road transportation is highly fragmented: The approximately $ 110 billion market in
India can be divided into full truck load (FTL) and less than a truck load (LTL-which is
35 percent of the road transportation market). Owners of fewer than five trucks provide
more than half of all goods vehicles on the road. Platformization provides the optimal
means to aggregate such a fragmented market and better utilize trucks.
Significant issues plague the transportation value chain: The market depends heavily on
regional brokers and struggles with financing issues. Shippers face issues such as
low-price power, low efficiency and transparency, and the limited visibility of vehicles
and shipment in the value chain. Carriers lack skilled drivers, technology, struggle with
unpredictable backhaul availability and face long detention times. Middlemen (one or many)
bridge the distance between the shipper (load provider) and truck/fleet owner resulting in
additional costs in the system. A network and greater scale could help to organize this
highly fragmented market, streamline costs for customers/shipment providers, convert large
LTL to FTL by combining load and ensure steady load and profits to carriers/truck owners.
This could help logistics players to double margins and resolve key issues.
The way companies use FTLs, LTLs, and milk runs, for example, is changing. In the
supply chains of fast-moving consumer goods and some other products, milk runs are more
efficient because they can effectively aggregate demand across several different Stock
Keeping Units (SKUs) and companies. To become more responsive to changing demand,
companies are also increasing their use of LTLs. Strategically choosing when to use LTLs,
FTLs, and milk runs to meet demand is one of the key decisions that must be made, and the
principles that guided them before the pandemic have been overtaken by events.
(https://www.mckinsey.com/industries/travel-logistics-and-infrastructure/our-insights/indias-postpandemic-logistics-sectorthe-need-for-technological-change)
Already, logistics players are attempting to create a network at scale through one of
three approaches: Line haul (FTL/ LTL) focused network (asset-backed/"asset
right"): This model requires the right mix of asset ownership and service provider
partnership to be cost competitive. The load needs to hit a critical mass on the network
to ensure maximum utilization of trucks resulting in cost leadership.
Last-mile delivery network: While this model helps to reduce costs by consolidating
loads to convert LTL into FTL movement, it can also use the same network for only FTL
services. Offerings include same-day delivery, time-window/slotted delivery, multiple
payment options, streamlined return logistics and 24x7 visibility. The fulfilment centres
also function as warehouses.
Hyperlocal services: This model requires high utilization to address skewed demand
during peak time periods. For this model, load consolidation and route planning are
critical to reduce costs. Key success factors also include expanding the network to
multiple cities across India as well as deep pin-code level coverage within the city.
Logistics players could choose a mix of different models to offer integrated,
"one-stop shop" services to their customers.
REVIEW OF THE BUSINESS OF CHARTERED LOGISTICS LIMITED
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, in order 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 comprises of door-to-door
services, project works, and options of customized carrier as per customers need.
CLL is having a large fleet (approximately 300) of owned and attached vehicles. With a
whopping turnover of more than 140 crore. 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 CHARTRED LOGISTICS LIMITEDS PREPAREDNESS AGAINST EMERGING OPPORTUNITIES AND
FUTURE OUTLOOK
With implementation of the GST and related E-way bill implementation we expect good
things for entire domestic road freight transport industry. One of the key achievements of
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 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 Corona
virus 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 YEAR 2022-23
The Total Income for the year ended 31 March, 2023 has been 8487.40 Lakhs compared to
Rs. 12889.48 Lakhs of the previous year. The company has incurred profit after tax of
Rs.16.97 Lakhs as against the profit of Rs. 58.96 Lakhs in the previous year.
The Capital Structure of the Company as at 31 March, 2023 is Rs. 9,93,40,000/-
comprising of 9,93,40,000 Equity shares of Rs. 1/- each.
RISKS IN LOGISTICS SECTOR
It will become necessary for the operators to adapt to the 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 includes risks like fluctuations in the economy and sudden
changes in the Government policies and laws at macro level and risks like increase in the
prices of component parts and fuel, increase in the hiring charges of vehicle etc. at
macro level. Besides these, the Road Transport Sector is also saddled by natural
calamities and events like Bandhs and riots in various parts of the Countries.
Flaky assessment of transportation costs that leads to corruption on part of agents in
control & total lack of awareness on part of recipients involved. The Companys
business operations are totally dependent on the road network in India. There are various
factors that affect the road network such as political unrest, bad weather conditions,
natural calamities, regional disturbances or even third party negligence that can affect
the condition of vehicles and cargo / passengers. Even though the Company undertakes
various measures to avoid or mitigate such factors to the extent possible, some of these
have the potential of causing extensive impact on operations and assets.
RISK MITIGATION STRATEGY OF THE COMPANY
1. Your Company offers services in all aspects of logistics and supply chain management
to a diverse range of industries. Your company keeps a close watch on the economic
environment and timely actions are taken accordingly. These measures help us to mitigate
the industry risks. Also, our internal control systems and processes are constantly
reviewed and revamped as per industry best practices.
2. Your company continuously efforts to enhance the brand image by focusing on R&D,
quality, Cost, timely delivery and customer service. By introducing new services
commensurate with customer demands, your company plans to mitigate the risks so involved.
3. We have well defined appraisal system in place. All high-performance employees are
given periodical trainings and duly rewarded for their performance.
4. All vehicles are insured against loss or damage due to accident. We have installed
Vehicle tracking System devices for monitoring all our vehicles 24/7 to ensure safety of
cargo & vehicles.
5. We constantly keeps their eyes on the Money market to ensure no opportunity of low
cost finance is lost and bring down the cost of finance to lowest possible level.
INDIAN LOGISTICS INDUSTRY: OUTLOOK AND OPPORTUNITIES
The Logistics industry in India is evolving rapidly and it is the interplay of
infrastructure, technology and new types of service providers. Transportation industry
contributed roughly 6.3% of GDP. The growth of the logistics sector is critically linked
to the growth of trade and economic activities in the country.
Another challenge faced by the sector is rising diesel price and related inflationary
scenario. Rising fuel prices have become a critical part of everyday logistics and it has
adversely impacted the prospects of the Indian Logistics Sector.
Freight volumes Operations however increasing and are bound to surpass pre-Covid-19
days in the near short term. Your Company expected to benefit out of the GST
implementation. The same however could not happen due to several causes. The existing
provisions of E-way Bill and GST Law needs to be further strengthened and monitoring of
the compliances level needs to be improved further to mitigate the transactions with
non-compliances in the existing system.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Your company has an adequate system of internal controls commensurate with its size
& nature of operations, along with well-defined organisation structure &
documented policy guidelines & procedures, predefined delegation of authority covering
all corporate functions and all operating units. These internal controls are designed to
provide reasonable assurance regarding the effectiveness and efficiency of operations, the
adequacy of protecting your Companies assets from unauthorized use or losses, the
reliability of financial controls and compliance with applicable laws and regulations.
Adequate internal control measures are in the form of various policies & procedures
issued by the Management covering all critical and important activities viz., Contract
Management, Operations, Procurement, Finance, Human Resources, Safety, etc. These policies
& procedures are updated from time to time and compliance is monitored by Internal
Audit Function. Your Company has continued its efforts to align all its processes and
controls with global and industry best practices.
The Audit Committee of the Board oversees the adequacy of the internal control
environment through regular reviews of the audit findings and monitoring implementations
of internal audit recommendations through the action taken reports submitted to them. A
gist of the significant features of the internal controls are:
Your Company has established and maintained a framework of internal financial controls,
implemented adequate procedures and compliance systems, which provide reasonable assurance
regarding reliability of financial reporting and preparation of financial statements.
The Audit Committee of the Board of Directors, comprising of independent directors and
functional, regularly reviews the audit plans, significant audit findings, adequacy of
internal financial control frame work and test reports, implementations of internal audit
recommendations, compliance with accounting standards as well as reasons for changes in
accounting policies and practices, if any;
A well-established and independent Internal Audit team consisting of professionally
qualified accountants and functional specialists who are empowered to examine/audit the
adequacy, relevance and effectiveness of the control systems, test the key controls as per
Internal financial controls, compliance with policies, plans and statutory requirements;
Continual programmes to reinforce the Code of Business Conduct & Ethics is done
regularly across the organisation.
Anti-fraud programmes including whistle blower mechanisms are operative across the
Company.
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
through the year.
CAUTIONARY STATEMENT
Some of the statement in the report describing the Companys objectives, projections,
estimates and expectations may be ‘forward-looking statement within the meaning of
applicable securities laws and regulations. The forward-looking statement have as their
basic certain assumptions and expectations about behaviour 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 the forward
looking statements.
+91-9892691696
