Gateway Distriparks Ltd Management Discussions

i) Indian Economy, Industry Structure and Developments

Indian Economy

India is the fifth-largest economy in the world and is poised to retain its position as the worlds fastest- growing major economy. Its GDP growth remained robust at 7.6% in FY 2023-24 as against 7% in FY 2022- 23, supported by strong domestic demand, moderate inflation,a stable interest rate environment, and strong foreign exchange reserves.

Anacceleratedpaceofeconomicreformsandincreased capital expenditurefacilitatedtheconstruction activities and created extensive employment opportunities across the country. The International Monetary Fund (IMF) praised Indias economic resilience, impressive advancements in formalisation growth,andsignificant and digital infrastructure.

The structural interventions implemented by the government shall continue to contribute to the growth of Indias economy. ‘Make in India initiative has made and is now focusing on 27 significant sectors under ‘Make in India 2.0 to place India as a manufacturing hub.

The Transport and Logistics sector form the backbone of Indias fast-paced growth. Rapid infrastructure development, government initiatives to boost exports like "Make in India", digital initiatives like "ULIP" has given this sector its much-needed growth spurt. During the year under review, the Indian Logistics industry has witnessed a steady growth and is expected to grow at a CAGR of 8-10% in the coming years with the top gainers being exports because of emergence of India as a Manufacturing hub.

The Indias Logistics industry is poised to reach a market size of US$ 380 Billion by 2025. Significant government initiatives like ‘Gati Shakti Master Plan for multimodal connectivity, a smooth logistics infrastructure development is being looked forward to in the coming years.

Role in supply chains and establishment is gaining higher significance, along with a growth in its domestic consumer market. On the Market front, changing consumption patterns in the post-pandemic era resulted in increasing demand for commerce & deliveries through Multi-Modal and Omni Channels. Logistics players have continued to innovate & re- design supply chains through tech-enablement and digital interventions.

The policies of the Government of India for the logistics industry is anticipated for effective implementation upon the re-election of the same Government which shall enable the enhanced connectivity, dedicated freight corridors, and are fueling the current growth momentum.

Having monetization and execution plan in-place, this surely is the right move towards creation of an ‘Atmanirbhar Bharat. Proposed Warehousing Policy and National Logistics Policy, Production Linked Incentive scheme (PLI) have proved instrumental in bringing ease of doing business. Other initiatives aimed at driving innovation in the industry include

Radiofrequency identification (RFID) tags, and process automation applications such as ‘Vahan and ‘Sarathi. India is committed towards the public investment in improvement of the transportation infrastructure, Indian Govt. has taken necessary steps to boost for uplifting the efficiency of the Logistics industry. In India, Logistics cost contributes to as high as 14% of the total production cost, as against a 7-8% in developed nations.

Since, the Indian economy is moving towards streamlined ways of working, therefore the opportunities are increasing manifold for organized Logistics Solution Providers (LSPs).

The Budget for FY. 2023-24 has remained constant with the factors of ongoing momentum. There may be further easing of Supply Chain bottlenecks. This will help in furthering business strategies to improve our global competitiveness. E-commerce has significantly impacted the way customers shop. Innovative Logistics services are becoming increasingly important to provide customers with a broader selection of high- quality products delivered on time, in a cost-effective manner. Hence, it is increasingly important for service providers in the logistics industry to grip the potential growth opportunities for catering this rise in demand for quality and more security.

The key opportunity & focus areas for Indian Logistics Sector are as below: Digitalisation: Through government intervention & digital solutions, digitisation has started in various departments. They still fail to provide an end-to-end visibility of logistics processes leading to inefficient route selection, planning mismatch, manual processes & uninformed decision-making thus increasing the total logistics cost.

Policy: The need for time-bound approval system, clearances and land-acquisition process will largely aid new developments in this sector.

Sustainability: Sustainability in supply chain is no longer an option but a need today. Logistics is the first action area of large companies when it comes to reducing carbon footprint. Cost reduction, compliance & push from other stakeholders are the key drivers in improving supply chain sustainability.

Decreaseinentrybarrier,adoptiontolatesttechnologies has paved way to disruptions by start- ups. Digital Freight forwarding platforms, on demand services etc., has increased the transparency, tech adoption & speed of cargo.

The Rail, port, ICDs, CFSs and related activities being one of the essential services, your Company foresees opportunities for expansion and increase in profitability in the growing containerisation in Export-Import trade and rail movement, increase in private sector participation in ports and movement of containers by rail, liberalization of Government policies and increase in the countrys foreign trade.

The company has expanded its business relating to operating container trains on the Indian railways network. Your Company has put in place a fleet of railway rakes / trailers and ICDs to provide end-to-end solution to customers across the country and continues to be the leader in Private Container Train Operators. Your Company continues to prune costs through various measures and also augment its equipment for handling and transporting containers. There has been no change in the nature of business of your Company during the year.

Your Companys cold chain logistics arm, Snowman

Logistics Ltd. is a listed company since FY 2014-15.

Snowman has expanded its capacity to become a premier player in this emerging business and has been progressing rapidly and rendering best in its class services.

The Competition from existing and new entrants and managing the geographical / capacity expansion present your Company with new challenges. Few other market challenges are:

Lack of Standardization: Lack of standardization in Processes, Technology adoption and regulations considering the Highly unorganized and fragmented market.

Pricing Pressures: Lack of optimized processes for driving cost-reduction initiatives and Rising input costs

Disintermediation Across the Value Chain:

Lack of professionally skilled workforce and New-age, technology-enabled start-ups seeking improved infrastructure to sustain automation and digitalisation across logistics face slow growth due to non-availability of skilled and experienced manpower.

Your Companys entire business is from inter-modal logistics. There are no other primary / secondary segments in your Companys business.

Indias economic outlook is optimistic, with robust domestic demand, a broad-based revival in manufacturing and services sectors, increased capital expenditure, proactive policy measures by the government, and positive business and consumer sentiments, providing impetus to the growth momentum going forward. According to the IMF, the Indian economy is expected to grow steadily at 6.8 % in FY 2024-25 and 6.5% in FY 2025-26.

The growth in demand for the cold chain logistics business, especially in the area of pharma and food, are expected to have a positive impact on your Companys long termbusinessandprofitability.

A conducive domestic policy environment will strengthen the infrastructural and manufacturing base, ensure efficiencies, create economies of scale, increase exports and make India an integral part of the global value chain.

The substantial increase in capital expenditure for infrastructure development, with a focus on projects such as the development of railway corridor projects, roads and logistics is poised to revolutionise multi- modal connectivity across the country, positioning India as a prominent global industrial hub.

National Logistics Policy: This Policy was launched on

September 17, 2022, the aim of this policy is to drive economic growth and business competitiveness of the country through an integrated, seamless, efficient, reliable, green, sustainable and cost-effective logistics network by leveraging best-in-class technology, processes and skilled manpower. CLAP – a part of policy, aregistrationof 600+ industryplayersonthe ULIP platform. CPCP – Comprehensive Port Connectivity

Plan, identified 100+ road and rail infrastructure gaps and sanctioned 107 projects to address the same. Using the data from Logistics Data Bank (LDB), analysis regarding turnaround times between port & CFS/ICD is being done to improve performance.

Dedicated Freight Corridors: (DFCs) is expected to play a crucial role in streamlining freight logistics, reducing costs, and facilitating easier access to the Northern hinterland via Western Ports, while also stimulating the development of new industrial hubs and Gati Shakti Cargo Terminals. Moreover, DFCs will also alleviate congestion on Indias heavily burdened roads and highways.

Coal Logistics Plan and Policy: The Ministry of Coal launched Coal Logistics Plan and Policy (CLPP) to address the need for efficient logistics to meet the increasing demand for coal.

Sagarmala Pariyojana: Sagarmala was rolled out in April 2016 to reduce the logistics cost for domestic as well as EXIM cargo with optimised infrastructure investment. With a strategic focus on modernising Indian ports, enhancing port connectivity, fostering Port Led Industrialisation, Coastal Shipping and Inland Water Transport (IWT) and Coastal Community

Development, encompasses 839 projects worth investment of ~ 5.8 lakhs crore for implementation by 2035. Out of which, 262 projects worth ~ 1.4 lakhs crore have been completed and the remaining projects are under various stages of implementation and development. The Sagarmala program is a pivotal initiative aimed at connecting Indian ports with industrial clusters, thereby reducing logistics costs, and serving as a vital engine for economic growth. Over the next stage of Sagarmala, Central government is targeting to build 14 new ports worth 1.25 trillion.

Past years has restated the need for higher resilience for supply chain and logistics. To tackle major risks that could hamper the seamlessness and functioning across logistics, logistics is becoming more diversified.

Freight is, thus, transported by all relevant modes of transport: road, water, rail, or air – that is, higher emphasis on multi-channel logistics. With this, modern technologies are playing a key role in improving knowledge of material movement and market demand, bringing ease and higher security by simplifying the logistics processes while improving its efficiency.

Starting in early 2022, seaborne trade, in particular dry bulk and tanker shipments, has been impacted by the war in Ukraine. In 2023, Global merchandise trade has contracted in real terms in 2023 by 1%. The impact is more substantial on the global seaborne trade mainly due to the Panama Canal crisis and Red Sea crisis. The ripple effect of these changes is even more substantial. It has pushed up the freight rates of routes that do not cross these hotspots, due to the unsettling impact on global shipping and logistics.

Despite such sharp increases, freight rates remain far below the record highs of late 2021 or early 2022.

Yet the monthly levels of March 2024 of the Shanghai Containerised Freight Index or the Dry Bulk Index stood above the 85 percentile of their distribution (starting from late 2009). Going forward, the situation in the

Panama Canal is expected to improve after the rainy season begins in late April–early May.

These changes have led to changes in shipping patterns and increased the distances travelled for commodities, especially oil and grain. Growth in tonne-miles exceeds growth in tonnes in 2022 and 2023. These average distances are further expected to increase in 2024 due to these reasons.

To mitigate the risk of congestion of containers at your Companys facilities, adequate warehousing services will be provided.

Your Company has in place an adequate system of internal controls commensurate with its size and nature of operations, along with a well-defined organisation structure, documented policy guidelines and procedures, as well as predefined delegation of authority covering all corporate functions and all operating units.

The effectiveness of internal controls is reviewed through the internal audit framework, which is undertaken for every Operating Unit and all major corporate support functions.

The focus of these reviews is as follows:

Identify weaknesses and areas of improvement

Compliance with defined policies and processes

Safe guarding of tangible and intangible assets Management of business and operational risks Compliance with applicable statutes Compliance with the Companys Code of Conduct The control framework had integrated components including control environment, risk assessment, control activity, information and communication and monitoring. Anti-fraud programmes including whistle blower mechanisms are operative across the company. The Board takes responsibility for the overall process of risk management throughout the organisation. The controls were documented, assessed, tested and found satisfactory by the Board of Directors based on the discussion at the meeting held on May 30, 2024.

The evaluation was carried out under guidance of

Chief Financial Officer. Your Companys accounts and operations are subject to internal audit and review by the Audit Committee of the Board of Directors.

The FY 2023-24 has been an excellent year for your Company. Your Company has witnessed a strong growth in revenueaswellasprofitability.

During the year under review, the total revenue from operations and other income was Rs.1,53,613.07 Lacs as against Rs.1,42,094.20 Lacs of previous year. Profit before taxation was Rs.26,129.04 Lacs as against Rs.24,628.23 Lacs of previous year during the year whereas the finance cost has been increased to Rs.4,608.38 Lacs from Rs.4,530.22 Lacs. Net Profit after taxes of the Company has increased by approx.

6.76 Percent year on year basis.

During the year under review, the total revenue from operations and other income was Rs. 1,49,693.64 Lacs as against 1,39,605.72 Lacs of previous year. Profit before taxation was Rs. 24,530.17 Lacs as against Rs. 23,972.86 Lacs of previous year during the year and finance cost was Rs. 4,295.92 Lacs as against Rs. 4,275.42 Lacs previous year. Net Profit of the Company has increased by approximate 4.04

Percent year on year basis. viii) Finance

Your Company has outstanding Term loans of Rs.

12070 Lakhs, loans for transport / handling equipment Rs. Nil, cash credit outstanding Rs. 334 lakhs with ICICI Bank Limited.

Your Company has outstanding Vehicle Loan of Rs. 2783 lakh from Axis Bank Limited.

Your Company has outstanding Term loans of Rs. 8917 lakh with Axis Finance Limited and Rs. 7250 lakh with Bajaj Finance Limited.

At Gateway, our most valuable resource is our people. We have remained committed to creating a supportive and inclusive work environment that fosters their well- being, safety, and professional growth. This aligns with our goal of delivering top-quality services, generating profitable business, and ensuring long-term success.

We continuously focus on ensuring the safety of our workforce, talent development, offering equal opportunities, supporting communities, maintaining compliance and governance, and embedding safety and ethics into our culture. We have successfully included 110 employees in our workforce, all were in permanent employees. However, we acknowledge the need for better representation and diversity, particularly in terms of gender balance and differently abled representation. While our retention rates have been steady, we acknowledge the need for further efforts to reduce turnover rates among our female employees. Our commitment to fostering a culture of learning is evident in the number of training and awareness programs we conducted in FY2023. These programs covered diverse topics, ensuring our workforce is knowledgeable and equipped to handle the challenges and opportunities associated with our business. Our performance review coverage remained relatively high, with 100% of our total employees receiving performance and career development reviews in

FY2023-24. Our occupational health and safety management system, comprehensive insurance, and benefits coverage reflect our firm commitment to health and safety. We take pride in implementing procedures that identify work-related hazards and routinely assess risks. Regular training and development programmes are scheduled to upskill them and assist them in their career expansion. Performances are regularly supervised and feedback is given on the scope of improvements. The Company also encourages its people through rewards and recognitions and organises frequent events to acknowledge and honour the workforce in a very diverse manner.

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, is given below:

Statements in the Management Discussion and Analysis Report describing the companys objectives, projections, estimates, expectations, or projections may be ‘forward looking statements within the meaning of the applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could influence the companys operations include economic and political conditions in which the company operates, interest rate fluctuations, changes in Government/RBI regulations, tax laws, other statues, and incidental factors.