Inter State Oil Carrier Ltd Management Discussions

ANNEXURE -II

OVERVIEW AND DEVELOPMENTS

Logistics is an indispensable element of all economic activities. Indias logistics sector includes the countrys anticipated GDP growth of US$ 26 trillion by fiscal year 2048 (US$ 6 trillion by 2030). Opening huge opportunity for Indias transport and logistics sector, which is expected to increase at a CAGR of 4.5% from 2022 to 2050, reaching 15.6 trillion tonnes kilometres. By 2030, India wants to lower its logistics expenditures from 13-14% of GDP to 8-10% of the GDP. It is projected that a 10% reduction in indirect logistics costs is expected to result in a 5% to 8% increase in exports.

The logistics industry in India is experiencing a transformative phase marked by dynamic growth, evolving trends and promising opportunities. As explored, the current landscape reflects a robust sector, driven by factors such as the booming e-commerce industry, technological advancements and a proactive government approach. The launch of numerous start-ups, as well as the Governments digital initiatives such as "Make in India," Unified Logistics Platform (ULIP) and others are assisting in bringing greater transparency to the logistics sector. The digitization of work processes to enable paperless processing of paperwork and clearances, as well as improved shipment tracking, aids in increasing the pace of goods movement and lowering logistics costs. The National Logistics Policy (NLP) and the PM Gati Shakti programme are significant overarching policy moves taken by the central government in this area to deliver outcomes by 2024-25.

Looking ahead to 2024, the logistics sector in India presents a myriad of opportunities for entrepreneurs, innovators and investors. From last-mile delivery solutions to green logistics and advanced warehousing, there are diverse areas where businesses can make a significant impact. While digital technologies have been pivotal in increasing the efficiency and speed of freight movement, there is a need for greater transparency and end-to-end visibility across the supply chain.

GLOBAL ECONOMY

The global growth is predicted to be 3.1% in Current Year 2024, attributing to the exceptional stability shown by the United States and several other large emerging and developing economies. Despite a tight labour market and reduced household savings post the pandemic era, effective government policies, increased private spending and improved real disposable income have propelled the growth of the global economy. Elevated central bank rates to fight inflation and a withdrawal of fiscal support amid high debt weigh on economic activity.

Global headline inflation is expected to fall to 5.8 percent in 2024 and 4.4 percent in 2025, with the 2025 forecast having been revised down. Inflation persistence remains at the top of the list of downside risks to the global growth outlook. That could delay the widely expected start of rate cuts among the major developed market economies. The renewed rise in oil prices moved commodity prices back into the spotlight as drivers of global inflation. In addition, inflation pressures may remain higher due to ongoing labour shortages and other factors, including deglobalization and the cost of financing the energy transition.

INDIAN ECONOMY

Indias GDP grew at a massive 8.4 per cent during the October-December quarter of the FY 2024 and the country continued to remain the fastest-growing major economy and is poised to maintain its growth trajectory going ahead. The Indian economy observed a robust 7.6% GDP growth rate in FY 2024. Favourable domestic policies, regulatory support and prioritising structural changes have contributed positively to the gradual growth of the private sectors. Near-term and medium-term challenges to growth outlook would come from geopolitics, slowing potential growth from an uneven global recovery, climate change and technological disruptions.

The Indian economy is expected to grow from $5 trillion to $7 trillion by 2031, with an average growth rate of 6.7% anticipating sustained growth, supported by domestic reforms, propelling per capita income to the upper-middle income category. This will position India as the worlds third largest economy. The Indian economy can take aid from the domestic structural reforms and cyclical levers to bolster its growth. Focusing on building both physical and digital infrastructure and implementing effective reforms will enhance the ease of doing business, providing India with opportunities amidst various global risks.

INDIAN TRANSPORT INDUSTRY: OUTLOOK AND OPPORTUNITIES

Indias logistics market, valued at $435.43 billion in 2023 is projected to reach $650.52 billion by 2028, growing at an 8.3% CAGR, contributing 5% to the countrys GDP and creating jobs for 2.2 crore Indians. Indias logistics infrastructure is facing challenges such as insufficiency, inadequate equipment and technology and inadequate design, which are hindering its ability to handle expected growth rates of 7 to 8% over the next decade. In 2024, the Freight Forwarding segment accounts for the fastest-growing logistics function in the India Freight and Logistics Market.

India has identified four pillars to strengthen its logistics industry: integrating logistics services, enhancing efficient transport infrastructure, meeting core sector logistics needs and developing international competitiveness. These initiatives aim to streamline end-to-end services, enhance connectivity through various modes and focus on critical sectors.

The industry is undergoing digital transformation, utilising technologies like IoT, block chain and AI to improve efficiency. Investments in modern infrastructure such as warehouses and transportation networks are also being made. The e-commerce boom has heightened the demand for logistics services and innovative last-mile delivery solutions are being explored.

The Indian government plans to decrease logistics costs from 14.4% to 9-10% of GDP through the National Logistics Policy, aiming for seamless goods transport. Despite challenges, India presents opportunities for growth and innovation in the logistics sector. Modern warehousing and distribution centres are needed for e-commerce and omni-channel retailing. Multimodal transportation is prioritised and infrastructure development is being invested. Despite supply chain bottlenecks and inflation, the sector remains vital for Indias economic growth.

INTER STATE OIL CARRIER LIMITED

Your Company is a prominent player in Tanker (Bulk liquid and gas movement) transport. It covers various zones like East-North-East, West-North-West, West-East-West, East-South-East, South-West-South. It has sufficient number of fleet to cater to its customers. It has its camp offices at Haldia, Chennai, Hazira, Mumbai, Kandla, Vadodara, Namrup and Paradeep.

Your Directors will leave no stone unturned to ensure that the effect of contraction in demand for movement of tankers on hired basis is minimum. Your Company has full faith in the efficiency and efficacy of staff at all levels. Moreover, your Company still enjoys the confidence of many Companies across India.

FINANCIAL PERFORMANCE OVERVIEW

The financial statement for the year ended 31st March, 2024 of the Company have been prepared in accordance with the Indian Accounting Standards (referred to as Rs. Ind AS) prescribed under section 133 of the Companies Act, 2013, read with the Companies (Indian Accounting Standards Rules, 2015, as amended from time to time. Significant accounting policies used in the preparation of the financial statements are disclosed in the notes to the financial statements.

The following table gives an overview of the financial results of the company.

(Rs. in Lakhs)

a) Analysis of revenue growth and margin performance

On a reported basis, the revenue for FY 2024 was ^8,473.59 Lakhs, higher by 57.43 percent over the previous years revenue of ^5,382.18 Lakhs in FY 2023. The PAT for FY 2024 was ^86.14 Lakhs registering a growth of 300.56 percent over the PAT of ^(42.95) Lakhs in FY 2023.

SEGMENT - WISE PERFORMANCE

The Segment wise performance for the year ended 31st March, 2024 is here in given below :

The Companys operations predominantly consist of Transportation and Investing in Shares & Securities:

FUTURE OUTLOOK OF YOUR COMPANY

Your Company has good number of fleets to cater to the demand of Industries across India. It has added new fleets also. Your Directors are hopeful that your Company will be able to direct customers of other Transport Companies into its fold. The eventual situation of higher demand for vehicles would work favourably and coupled with the inevitable freight rate hike caused by such policy implementation would lead to a higher growth for the Company.

INTERNAL CONTROL SYSTEM

Your Company has robust internal control system and procedures compatible with size and operations. The internal control is designed to ensure that the financial and other records are reliable for preparing financial statements and other data and for maintaining accountability of assets.

The Internal Audit of the Company is done by Internal Auditor. Internal Audit is conducted regularly during the year and on quarterly basis Internal Audit Report is being submitted to audit committee for their review and also for future improvements in the system across the organisation. The Company possesses ERP system to record data for accounting, consolidation and management information purposes. The Audit Committee of the Board of Directors comprising of 100% independent Directors, which quarterly provide independent, professional and quality audit.

OPPORTUNITIES AND THREATS

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. Therefore, it is becoming increasingly important for services providers in the logistics industry to tap on the potential growth opportunities for catering this rise in demand for quality and more security. With emerging Direct to Customers (D2C), Direct to Retailers (D2R), and Direct to Kirana (D2K) models, there is a need for new models of production, storage, and distribution. As a result, logistics players need to develop capabilities in distribution, fulfilment, last-mile delivery, and the utilisation of technology for inventory management, optimization, customer data analytics, and route optimisation. Meeting these growing customer expectations is crucial. The Indian Government is placing significant emphasis on improving the countrys road network, constructing dedicated freight corridors, implementing technology-driven warehousing, and establishing multimodal logistics parks to ride on the opportunity.

The transportation industry confronts a spectrum of challenges as it navigates the complexities of a rapidly evolving landscape. Environmental concerns, including emissions and carbon footprints, underscore the urgent need for sustainable practices. Regulatory pressures and shifting emissions standards demand operational adaptations, while the integration of advanced technologies such as autonomous vehicles poses infrastructural and safety challenges. Striking a balance between economic viability and sustainable practices remains a persistent hurdle. Requiring the industry to reimagine its approaches, foster collaboration, and pioneer innovative strategies to address these multifaceted challenges. While climate change, supply chain disruptions, and aging infrastructure pose significant challenges, digitalization, automation, sustainable transportation, and collaboration offer significant opportunities for the industry to transform and thrive. Worn-out infrastructure can lead to bottlenecks, slowing down the movement of goods resulting in missed delivery windows and extended transit times. Aging infrastructure requires more frequent repairs and maintenance leading to higher costs.

RISK AND CONCERN

Risk factor is associated to all business activities of all companies, though in varying degrees and forms. Risk evaluation and its management is ongoing process within your company. The risk of your Company is in the nature of stiff competition in the market. Change in technology also plays a major role.

CHALLENGES

Logistics space is fast changing and as we evolve, we are encountering new problems to solve. Some challenges still persist at various stages of complexity and call for increased focus towards resolution.

Lack of standardization in Processes, Technology adoption and regulations, Inability to handle high traffic density, rising input costs, Lack of optimized processes for driving cost-reduction initiatives, Lack of professionally skilled workforce, 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.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

Your Company continues to place significant importance on its Human Resources and enjoys cordial relations at all levels. Our constant endeavour is to invest in people and people processes to improve human capital for the organization and service delivery to our stakeholders.

Attracting, developing and retaining the right talent will be a key strategic imperative and the organization continues its undivided attention towards that. Your Company recognizes the fact that Human Capital is one of the vital constituents of a successful organization. Your Company appreciates performance of the employees for the year and anticipates much more for the years to come. Your Company believes in employee empowerment across the entire organization in order to achieve organizational effectiveness. Your Company has sufficient pool of talents in various operational fields. The Human resource environment has been very smooth throughout the year. Your company believes that their workforce is an invaluable asset for them

The Company takes special care about the safety, which is core value of the company and all necessary actions are taken in the company to keep safety as priority.

KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREFOR

As stipulated in the Regulation 34(3) of SEBI (LODR) Regulations, 2015, the Company reports key financial ratios as follows:

a) Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios or sector specific ratios, along with detailed explanations thereof:

b) Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof;

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis Report describing projections, estimates, expectations, future outlook etc. In connection with the business may be Rs. forward looking statements within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed or implied. However, the actual results could materially differ from those expressed or implied in the statements made by the Management. Various factors which are outside the purview of the Management Control can cause these deviations. These factors include economic developments in the country, changes in governmental policies and fiscal laws, sudden and unexpected rise in input costs, change in the demand supply pattern in the industry, etc.