Gconnect Logitech & Supply Chain Ltd Management Discussions

BUSINESS OVERVIEW

Our Company was incorporated as “Gconnect Logitech and Supply Chain Private Limited” pursuant to a certificate of incorporation bearing CIN U63030GJ2022PTC134029 dated July 20, 2022, issued by the Deputy Registrar of Companies, Central Registration Centre. Thereafter, pursuant to a resolution passed by our Shareholders in the extraordinary general meeting held on March 24, 2023, wherein the business of M/s Prithvi Enterprise, a sole proprietorship c oncern was taken over by Business Takeover Agreement. Subsequently, our Company was converted into a Public Limited Company and the name of the Company was consequently changed to ‘Gconnect Logitech and Supply Chain Limited and a fresh Certificate of Incorporation dated September 18, 2023 issued by Registrar of Companies, Ahmedabad.

Our Company is engaged in the business of providing surface logistics services viz. goods transport services. Our Company offers its services to other logistic companies, including surface logistic companies and to direct customers. The range of services offered by our Company includes bulk load, Full Truck Load (FTL) s ervice and dedicated load. Under bulk load, our Company offers bulk transportation service to large sized Companies through their transport contractors, Full Truck Load (FTL) service to retailers and traders, wherein our Company provides point to point services to the customers in which the goods are loaded from the premises of the customer and are delivered to the delivery point as specified by them (i.e. factory/warehouse). Our Company also provide dedicated load service, which includes multiple pick-ups and drops. Our Company mainly serves transport contractors and industrial customers, who have requirement to transport bulk quantities of their goods from one place to another within India.

INDUSTRY OVERVIEW

LOGISTICS INDUSTRY IN INDIA

Logistics is essential for the economy of a country. It pertains to the general method of controlling how resources are obtained, housed and delivered to their ultimate location. Determining the efficiency and accessibility of potential distributors and suppliers is part of logistics management. It is a differentiating sector that can largely affect any countrys exports, thereby adding a significant competitive edge, with the underlying assumption of a robust logistics sector. The logistics industry comprises all supply chain activities, mainly transportation, inventory management, flow of information and customer service. It determines the success of not only the countrys supply chain but also influences it on a global scale. The effectiveness of logistics helps to determine the degree of ability that enterprises can keep up with demand.

The Indian logistics sector is on a big growth tide. The warehousing, industrial, and logistics (WIL) sectors are projected to be crucial for attaining Indias vision of being a US$ 5 trillion economy by FY25. The warehouse and logistics industry has benefited the most from the COVID-19 epidemic, increasing its share from 2% in 2020 to 20% in 2021. Because of the growing shift from discretionary to essential internet buying during the COVID-19 epidemic, the e-commerce industry became more appealing and attractive.

The expansion of this industry is likely to be aided by a robust economy, government efforts to improve infrastructure, and a favourable business environment. Increasing consumerism and a huge consumer base are fostering the growth of retail and e-commerce in India. The Indian retail sectors market size is predicted to increase at a CAGR of 9% between 2019 and 2030, totaling more than US$ 1.8 trillion. Large international funds and corporations have invested in warehousing developers and operators to grow their reach and geographical footprint, which are the sectors key differentiators. The Government of India has taken many initiatives to strengthen the sectors infrastructure, including the establishment of dedicated freight corridors and the extension of road and rail networks, to improve connectivity and decrease travel times. Another critical governmental intervention has been the sectors digital transformation, projects such as Digital India, Bharat Net, and the National Logistics Portal would aid in the industrys digitization. Furthermore, the government has announced the establishment of logistics parks and warehouses across the country to provide appropriate storage facilities for enterprises. The recently implemented National Logistics Policy intends to reduce Indias logistics costs from the double digits of GDP to the single digits by 2030.

Strong economic growth in the first quarter of FY23 helped India overcome the UK to become the fifth-largest economy after it recovered from the COVID-19 pandemic shock. Real GDP at constant prices in the second quarter of 2022 23 is estimated at US$ 1.94 trillion (Rs. 160.06 trillion), showing a growth of 7.2% as compared to the First Revised Estimates of GDP for the year 2021-22 of US$ 1.81 trillion (Rs. 149.26 trillion), indicating a strong start for Indias recovery from the pandemic. Given the release of pent-up demand and the widespread vaccination coverage, the contact-intensive services sector will probably be the main driver of development in 2022 2023.

India has emerged as the fastest-growing major economy in the world and is expected to be one of the top three economic powers in the world over the next 10-15 years, backed by its robust democracy and strong partnerships. Indias appeal as a destination for investments has grown stronger and more sustainable as a result of the current period of global unpredictability and volatility, and the record amounts of money raised by India-focused funds in 2022 are evidence of investor faith in the "Invest in India" narrative.

KEY INDUSTRY DRIVERS

Government Initiatives

The governments warehousing policy focuses on creating exclusive warehousing zones through public-private partnerships in order to reduce transportation and logistics costs and accelerate growth. The government will invest US$ 91.38 billion (Rs. 7.5 lakh crore) in infrastructure, logistics development, and multi-modal connectivity in FY23. Reforms such as GST and e-way bills are fostering industrial growth, consolidation, and efficiency. The introduction of free trade logistics parks and warehousing zones.

Global manufacturing shift

Demand for warehouse alternatives and logistics services has increased as a result of international firms relocating their manufacturing focus to India. The Production Linked Incentive (PLI) scheme is increasing domestic production and, as a result, increasing demand for industrial space and warehousing.

New-age startups

The emergence of new-age tech logistics startups that are aggressively infiltrating this market and producing competing products. Several new businesses are entering the B2B market, driven by manufacturing. New players are introducing more technology and digital systems to boost productivity, resulting in overall industry growth.

Technology advancement

Solutions based on modern technology are opening up chances for solution expansion throughout the entire value chain. Warehouses are being designed and integrated with technologies such as the Internet of Things (IoT), robotics, and artificial intelligence (AI).

Flourishing e-commerce

An increase in e-commerce leads to expanded operations to meet increased demand. Consumer behaviour is changing, and they are demanding convenience through last-mile connectivity, ease of returns, and other valueadded services. The expansion of Direct-to-Consumer (D2C) brands demanding end-to-end logistics services. Omni-channel retailing increases the need for several warehouses to serve end users.

OPPORTUNITIES, THREATS, CONCERN AND OUTLOOK

The logistics companies at present provide services from transportation to warehousing and inventory management. But, in the near future, they will have to expand their products basket to include new value added services, such as packaging, labelling and reverse logistics. The biggest challenge that faces these companies is that they should quickly imbibe latest technologies, such as GPC/GIS tracking of consignments, and uncork new services to cater to corporates seeking to outsource their logistics needs. Also, the Government should come out with a sound policy that facilitates the operations of the logistics companies.

The initiatives taken by the government will lead to the progress of the logistics sector. The integration in the form of a multi modal network of transport and warehousing will lead to increased efficiency in the transportation and storage of goods throughout the country. By focusing on the digital aspect, the governments aim is to upgrade the existing system that will lead to faster, better communication with fewer errors that will benefit the sector significantly. The plan has a strong monitor system with periodic audits in order to check the implementation of policies and application of required corrective measures. The warehousing and logistics industry in India is a dynamic and rapidly growing sector that is expected to play an increasingly important role in the countrys economy. Despite some challenges, the sector is well-positioned for long-term growth and presents exciting opportunities for investors and businesses. With the governments focus on improving infrastructure and the rise of e-commerce, the sector is expected to be a key driver of economic growth in the country. Moreover, with the increasing adoption of technology and the governments push for a digital economy, there is also significant potential for logistics players to leverage data analytics, artificial intelligence, and machine learning to improve operational efficiency and enhance customer experience. There are also opportunities for foreign investment as international companies look to tap into Indias growing logistics market. The government has made it easier for foreign companies to invest in the sector by allowing 100% foreign direct investment in logistics parks and warehouses.

According to a report by Redseer Strategy Consultants, Indias e-commerce logistics market would surpass 10 billion parcels by FY28 as it grows in Tier 2 plus cities, new categories, and direct-to-consumer (D2C) companies. In FY23, e-commerce logistics total shipments (forward and reverse) increased to 4 billion. (excluding hyperlocal shipments). In this pie, the shares of in-house logistics and third parties were about equal. According to the Redseer research, "Over the course of the year, the industry witnessed intensifying competitive trends from smaller incumbents with yields also being challenged." The whole e-commerce logistics opportunity is expected to increase at a minimum CAGR of 20% to c omfortably reach 10 billion parcels by FY28 on the back of c ontinuous e-commerce development, according to the report. Despite this, the market is still a compelling long-term investment. D2C has become a rapidly expanding area of e-commerce. According to Redseer, D2C companies will have a 35% increase in overall GMV (gross merchandise value) over the next several years, with brand.com contributing significantly to this rise. By CY27, D2C brands are anticipated to produce a combined US$ 33 billion in GMV over all channels.

According to Redseer, logistics providers with pertinent and tailored offerings for direct-to-consumer (D2C) firms are well-positioned to gain market share in this rapidly expanding industry. In the future, they are anticipated to have a greater yield profile. In the second quarter of FY23, the growth momentum of the first quarter was sustained, and high-frequency indicators (HFIs) performed well in July and August of 2022. Indias comparatively strong position in the external sector reflects the countrys generally positive outlook for economic growth and rising employment rates. India ranked fifth in foreign direct investment inflows among the developed and developing nations listed for the first quarter of 2022.

Indias economic story during the first half of the current financial year highlighted the unwavering support the government gave to its capital expenditure, which, in FY23 (until August 2022), stood 46.8% higher than the same period last year. The ratio of revenue expenditure to capital outlay decreased from 6.4 in the previous year to 4.5 in the current year, signaling a clear change in favour of higher-quality spending. Stronger revenue generation because of improved tax compliance, increased profitability of the company, and increasing economic activity also contributed to rising capital spending levels. Since Indias resilient growth despite the global pandemic, Indias exports climbed at the second-highest rate with a year-over-year(YoY) growth of 8.39% in merchandise exports and a 29.82% growth in service exports till April 2023. With a reduction in port congestion, supply networks are being restored. The CPI-C inflation reduction from June 2022 already reflects the impact. In June 2023 (Provisional), CPI-C inflation was 4.81%, down from 7.01% in June 2022. With a proactive set of administrative actions by the government, flexible monetary policy, and a softening of global commodity prices and supply-chain bottlenecks, inflationary pressures in India look to be on the decline overall.

INTERNAL CONTROL FRAMEWORK

Your Company conducts its business with integrity and high standards of ethical behaviour, and in compliance with the laws and regulations that govern its business. Your Company has a established framework of internal controls in operation, supported by standard operating procedures, policies and guidelines, including self-assessment exercises. The Company time to time seek evaluating the adequacy of all internal controls and ensuring that operating and business units adhere to internal processes and procedures as well as to regulatory and legal requirements.

PEOPLE AND PRACTICES:

The Board of Directors continues to challenge the management and push for higher targets. The Boards well-rounded experience in industry. The Board continues to provide long term direction to the Company and engages actively towards initiatives inputs on the Companys long-term vision.

The Company recognizes the importance and contribution of its human resources for its growth and development and values their talent, integrity and dedication. With the focus to develop leadership talent from within, the Company conduct various programmes. Employee motivation is key to organization success. On these lines, the Company conducts its various social programs and motivate them. As on March 31, 2025, the Company has 6 employees.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The Company is engaged in the business of logistics and transportation. Your Company has achieved a total income of Rs. 470.35/- Lakhs/- during the year under review as against Rs. 401.47/- Lakhs in the previous financial year. The net profit after tax of the Company for the year under review is Rs. 27.89/- Lakhs as compared to profit of Rs. 23.98/- Lakhs for the previous year. The net profit before tax for the year under review is Rs. 38.01/- Lakhs as compared to profit of Rs. 32.87/- Lakhs for the previous year.

FINANCIAL RATIOS

Please refer note 24: Key Financial Ratios in Audited Financials attached to this report.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis Report containing the objectives, expectations or predictions of the company may be forward-looking within the meaning of securities laws and regulations. Actual results may differ materially from those expressed in the statement. The operations of the Company could be influenced by various factors such as domestic and global demand and supply conditions affecting sales volumes and selling prices of finished goods, input availability and cost, tax laws, economic developments within the country and other factors such as litigation and industrial relations.