Deccan Transcon Leasing Ltd Management Discussions

(For the Financial Year ended March 31, 2025)

The Directors are pleased to present the Management Discussion and Analysis Report (MDAR) for the year ended March 31, 2025. This report outlines the Companys business performance, industry outlook, key opportunities and challenges, internal control systems, financial indicators, and future strategy. It should be read in conjunction with the financial statements and other sections of the Annual Report.

INDUSTRY STRUCTURE AND DEVELOPMENTS

The cross-border marine transportation sector in 2024-25 is navigating a complex landscape shaped by technological advancements, geopolitical tensions, and changing trade dynamics. While international trade continues to recover and expand, recent disruptions have highlighted the industrys vulnerability and resilience.

The Ukraine war has significantly impacted trans-European and Black Sea shipping routes, leading to rerouted freight traffic, increased costs, and container supply imbalances. Maritime operators are exploring alternative routes and strategic alliances to maintain service levels amid ongoing tensions and sanctions.

Meanwhile, the Red Sea crisis, involving geopolitical instability and conflict near key maritime chokepoints, has contributed to congestion and longer transit times, not to mention insurance premiums, and safety concerns. These disruptions have underscored the necessity for diversified routing options and enhanced security measures to ensure reliable cross-border transit.

Meanwhile at home, the logistics and shipping industry in India is undergoing a significant transformation, driven by infrastructure development, digitization, regulatory reforms, and increased globalization. Despite challenges arising from global economic volatility and supply chain disruptions, the sector remains resilient and is poised for long-term growth.

The Government of Indias focus on strengthening the logistics ecosystem through initiatives like the PM Gati Shakti Master Plan, logistics parks, port modernization, and unified digital platforms has enhanced operational efficiency. These initiatives are expected to support the growth of organised players and reduce logistics costs as a percentage of GDP.

COMPANY OVERVIEW

Deccan Transcon Leasing Limited (“the Company”) is actively engaged in the logistics and shipping industry, specializing in end-to-end bulk liquid logistics and integrated supply chain solutions. With a presence across India and key international markets, the Company offers:

Safe transportation of bulk liquids (hazardous and food-grade) using over 3,000 TEU, including ISO tanks, flexi-bags. Shipping services for dry cargo through a fleet of 20GP and 40HC containers. Global freight forwarding by sea, air, and multimodal routes. Customised logistics and supply chain management solutions. Tech-enabled platforms for real-time cargo tracking and operations.

The Company has built a strong reputation for safety, reliability, and regulatory compliance. It services a diversified client base of over 1,000 customers, with a high retention rate driven by customer-centric solutions.

SEGMENT-WISE PERFORMANCE

The Company operates primarily in a single business segment: logistics and shipping services. Given the integrated nature of its operations, separate segmental reporting is not applicable.

OPPORTUNITIES AND THREATS

Opportunities:

Expansion of global trade and increased outsourcing of logistics services.

Rising demand for integrated, technology-driven shipping and logistics solutions. Government push towards infrastructure development and multimodal connectivity. Growth in e-commerce, pharmaceuticals, and manufacturing sectors. Increasing preference for environmentally responsible logistics partners.

Threats:

Global supply chain disruptions due to geopolitical factors. Volatility in fuel prices and foreign exchange rates. Competitive pricing from unorganized and regional logistics players. Rising compliance requirements in hazardous material handling and shipping. Technological disruptions and cyber risks.

RISKS AND CONCERNS

The logistics and shipping sector is inherently exposed to several risks, including:

Market Risk: Economic slowdowns or trade restrictions may impact volumes. Operational Risk: Dependence on international shipping routes and third-party vendors. Regulatory Risk: Compliance with evolving maritime, customs, and environmental laws. Credit Risk: Exposure to delays or defaults in customer payments.

The Company has implemented a comprehensive risk management framework to identify, evaluate, and mitigate such risks.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company maintains a robust internal control system to ensure: Accuracy in financial reporting. Regulatory compliance. Safeguarding of assets. Efficiency of operations.

These systems are periodically reviewed by an internal auditor and monitored by the Audit Committee, ensuring corrective actions are taken wherever necessary.

PERFORMANCE EVALUATION

FINANCIAL PERFORMANCE INDICATORS

OPERATIONAL PERFORMANCE REVIEW

During the Financial Year ended 31st March 2025, the Company continued to strengthen its core operational segments, Ocean Freight and Shipping and Lease Rentals, delivering consistent growth and optimizing cost structures.

In the Ocean Freight and Shipping line of business, the Company generated revenue of 15,799.73 lakhs in Financial Year 2024 25 as compared to 14,382.02 lakhs in the previous Financial Year, reflecting a revenue growth of 9.86%. Correspondingly, the operating expenses under this line of business increased from 10,123.18 lakhs in

Financial Year 2023 24 to 13,573.62 lakhs in Financial Year 2024 25, marking a 34% rise. The increase in costs also reflects a rise in fuel and handling charges, along with expanded operational capacity. We have also seen the impact of geopolitical changes caused by the war in Europe and the Red Sea crisis on the margins, due to a drop off in business to and from Europe and increased transit times, driving a drop in utilization of our assets and margins.

In the Lease Rental line of business, the Company reported revenue of 831.53 lakhs in Financial Year 2024 25, a marginal decline from 873.69 lakhs in the previous year. Notably, lease rental-related expenses dropped significantly to 0.34 lakhs from 2,097.70 lakhs in Financial Year 2023 24, indicating strategic cost reduction measures, renegotiation of lease terms, or asset ownership transitions. This sharp decline in expenses has contributed positively to the net profitability despite the slight dip in top-line revenue of this line of business.

In support of its operations, the Company incurred employee benefit expenses amounting to 994.38 lakhs in Financial Year 2024 25 as compared to 776.18 lakhs in Financial Year 2023 24, representing an increase of 28.1%. The rise was primarily driven by higher outflows under salaries and wages, which stood at 681.22 lakhs in the current year (as against 455.94 lakhs in the previous year), in line with the Companys expanded workforce and performance-linked increments. We have invested in our peoples strength to grow our capabilities in the liquid transportation market with senior leadership hiring. We have also increased our end-user outreach in multiple geographies to increase the depth of our customer relationships. Other components include Director Remuneration of 269.13 lakhs, Bonus Expenses of 24.86 lakhs, and Gratuity of 11.37 lakhs.

Overall, the Company demonstrated resilience and operational efficiency, with growth in freight operations and optimized lease-related expenditure, supported by strategic investment in human capital to drive long-term value creation.

KEY FINANCIAL RATIOS

The Companys net worth for the Financial Year 2024-25 stood at Rs. 7,696.71 lakh, as compared to Rs. 2,329.58 lakh in the previous Financial Year 2023-24, registering an increase of Rs. 5,367.13 lakh. This significant growth is primarily attributable to the funds raised from the public through the issuance of shares at a premium during the year.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES.

The Company recognizes that its human resources are a key driver of sustained performance and long-term growth. During the Financial Year 2024 25, Deccan Transcon Leasing Limited undertook several initiatives to enhance workforce capabilities and employee experience. This included structured talent acquisition, focused learning and development programs, and employee engagement activities aligned with the Companys strategic objectives.

A strong emphasis was placed on occupational health and safety, particularly in areas involving hazardous cargo operations. Comprehensive safety protocols, regular training sessions, and workplace audits were conducted to ensure the well-being of employees across operational sites.

In line with the Companys commitment to fostering a respectful, inclusive, and safe work environment, awareness and sensitization sessions on the Prevention of Sexual Harassment (POSH) were conducted during the year. These sessions aimed to educate employees about their rights, responsibilities, and the internal redressal mechanism available under the Companys POSH- Policy, in compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Internal Committee (IC) remained active and functioned independently, with no complaints reported during the year.

Industrial relations continued to remain cordial and constructive throughout the year, contributing to a positive and collaborative workplace culture.

As of March 31, 2025, the Companys workforce has nearly doubled to 86 employees, up from 42 employees as of March 31, 2024. This remarkable growth underscores our success in attracting and retaining top talent across diverse functions. The Company remains steadfast in its commitment to nurturing human capital, fostering a culture of accountability and integrity, and empowering our people as a driving force in achieving long-term business goals. Looking ahead, we will continue to expand and strengthen our team to support sustained growth and create enduring value.

STRENGTHS

Domain expertise in logistics and shipping for hazardous and food-grade materials. Presence in international markets including UAE, Malaysia, China, and Thailand. Strong customer relationships and high client retention. Integrated digital platforms for logistics visibility and operational efficiency. Commitment to safety, sustainability, and compliance.

DISCLOSURE OF ACCOUNTING TREATMENT

In the preparation of its financial statements for the Financial Year 2024 25, the Company has followed the accounting treatments prescribed under the applicable Accounting Standards, as notified under the Companies Act, 2013.

No alternative or different accounting treatment has been adopted that deviates from the prescribed standards. Accordingly, there are no instances requiring disclosure of any deviation along with managements justification, as the financial statements reflect a true and fair view of the underlying business transactions in accordance with applicable regulatory requirements.

CAUTIONARY STATEMENT

Certain statements in this Report may be forward-looking in nature and are intended to describe the Companys expectations or forecasts. Actual results may differ materially from those expressed or implied due to changes in economic conditions, government regulations, market dynamics, or other external factors beyond the Companys control.