Coastal Roadways Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS

The Indian logistics sector continued its transformation during FY 2024 25, driven by the National Logistics Policy (NLP), digitalization initiatives, and strong infrastructure investments under Gati Shakti. Warehousing demand saw a notable uptick, especially in consumption-driven regions like Eastern India, driven by omni-channel retail and the push for automated, Grade-A logistics spaces.

Fleet operators faced margin pressures due to rising fuel prices and flat volumes in some FMCG segments. However, integrated logistics

players offering value-added services like warehousing, inventory management, and digital tracking gained momentum.

Growth in organized warehousing driven by client consolidation and automation. Rising demand for end-to-end 3PL and tech-enabled distribution solutions. Expansion of EV-ready logistics infrastructure and green warehousing norms.

Increased competition in the freight segment from both organized players and price-cutting local operators. Client-driven rate rationalizations. Technology obsolescence risks without sustained investment in digital capabilities.

The Company operates under two key segments: Freight Transportation and Warehouse Management.

FREIGHT TRANSPORTATION: Segment revenue for FY 2024 25 remained resilient, achieving 99% of last years levels, despite muted

growth in certain client segments. Segment result remained negative at 10.01 lakh (PY: 8.08 lakh loss).

SUPPLY CHAIN SOLUTIONS: This segment witnessed strong growth, with revenue increasing to 9.66 crore (148% of the previous years 6.54 crore). Segment results improved significantly to 2.86 crore from 1.82 crore in FY 2023 24. The area under management grew significantly from 2.50 lakh sq. ft. to approximately 4.25 lakh sq. ft., driven by both organic expansion and strategic client migrations.

The Company anticipates continued expansion in its warehousing business, particularly in FMCG clusters, where automation demand is

rising. Focus areas for FY 2025 26 include:

Consolidating freight operations with optimized asset utilization. Targeted growth in Grade-A warehousing infrastructure.

Exploring green logistics initiatives, including AI-enabled ADAS systems across select fleet.

FREIGHT VOLUME RISK: Dependence on select key accounts may expose the Company to volatility.

EXECUTION RISK IN WAREHOUSING: High client expectations around automation and uptime will require continual investment and skill

enhancement.

TECHNOLOGY RISK: Adapting to evolving WMS and tracking platforms is essential to remain competitive.

DRIVER & MANPOWER RISK: The logistics sector continues to face challenges in retaining skilled personnel, particularly for fleet & MHE

operations.

The Company maintains robust internal control systems commensurate with its size and operations. All trucks are GPS-enabled with trip-wise monitoring and DMS implementation.

Warehousing operations are supported by SOP-driven compliance audits, WMS-linked inventory checks, and periodic physical verification. Automation-led controls (ASRS, HHTs) have significantly enhanced traceability and operational discipline in the newly transitioned warehouse.

Despite headwinds in the freight segment, the Company has managed to retain topline performance in freight (at ~99% of previous levels), while generating significant growth in warehousing. Improved asset utilization, operating efficiencies from automation, and reduction in manual intervention in the new warehouse have positively impacted margins. Revenue from Operation for FY 2024 25 stood at 41.00 crore as compared to 38.24 crore in FY 2023 24. Profit Before Tax (excluding unrealised gain and fair value measurement) improved to 2.03 crore from 1.09 crore last year, reflecting operational leverage from the scale-up in warehousing.

The Company continued its focus on building capabilities to manage automated warehousing operations. Skill training for ASRS, MHEs, HHTs, and WMS has been prioritised. A culture of safety and accountability is reinforced at all levels, especially in fleet and warehouse operations. As of March 31, 2025, the Company employed 46 permanent staff. Industrial relations remained cordial throughout the year across all locations.

Note:

(a) Timely repayment of debts with no fresh borrowing. Very limited value of loan remaining to be paid. (b) Improved profitability of Supply Chain Solutions segment and other income. (c) Variation in unrealised gains on investments in mutual funds(FVTPL)

Statements in this report describing the Companys objectives, projections, estimates, expectations, or predictions may be "forward-looking statements" within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied.