Jalan Transolutions (India) Limited, started its progressive journey in 2003 as a two-wheeler transport solution provider with a renowned Multinational Automobile Company. Over the years, the Company has emerged into one of the leading automobile transportation companies in Northern India and expanded its network across the country that allows it to deliver clients shipment on time with greater safety and ease, through its IT enabled and value-added services, a fleet of about 400 Company Owned Trucks and extensive network. Company also provides Full Truck Load (FTL) & Less than Truck Load (LTL) services. Company has Technology Collaboration with Quikhop to increase transparency on each step and achieve greater visibility. Majority of trucks are GPS enabled and centralized information technology network provides seamless real-time monitoring of our operations and consignment bookings and delivery status. Ability to provide timely delivery and quality service is the key to our reputation and further expansion of goods transportation business. The Company has In-house Truck Service Station - Jalan Business Centre located in Dharuhera, Haryana, having connectivity with 3 national highways.
ECONOMIC OVERVIEW Industry & Growth
Logistics is regarded as the backbone of the economy, providing efficient and cost effective flow of goods on which other commercial sectors depend. Logistic industry in India is evolving rapidly, it is the interplay of infrastructure, technology and new types of service providers, which defines whether the logistic industry is able to help its customers reduce their costs in logistic sector and provide effective services.
Global economic activity continues to firm up. The global output is estimated to have grown by 3.7 percent in 2017, which is 0.1 percentage point faster than projected in the fall and % percentage point higher than in 2016. The pickup in growth has been broad based, with notable upside surprises in Europe and Asia. Global growth forecasts for 2018 and 2019 have been revised upward by 0.2 percentage point to 3.9 percent. The revision reflects increased global growth momentum and the expected impact of the recently approved U.S. tax policy changes.
Year 2021 has been a challenging year for the Indian economy. Since year 2016-17 GDP growth rate is declining and tumbled down to 11 years low of 4.2% in FY2021 from 8.2% in FY2016-17. Various factors like weak demand from rural India, stress on financial sector, continued slowdown in manufacturing and weak private consumption have been the key reasons for the declining GDP growth rate. During the year, key economic indicators such as freight movement, credit flow, domestic sales of commercial vehicles and passenger cars and other indicators remained subdued. This trend is further exacerbated by the Covid-19 induced lockdowns in FY2021 and the GDP is expected to degrow in the current year.
The Covid-19 pandemic has impacted economies across the world, and India is no different The crisis has resulted in loss of millions of jobs in India and huge reverse migration across India. It has had a huge impact on sectors like tourism, hospitality, restaurants, aviation, and malls. With the infection continuing to spread, there is little clarity on when things will return to normal.
Indian government has taken unprecedented fiscal and monetary actions to help the economy. Government announced a huge financial package to alleviate distress in the economy. The package includes Rs.1.7 lakh Cr of free food grains to the poor,Rs.1.5 lakh Cr to aid the agriculture and allied sectors, Rs. 3 lakh Cr collateral free loans to MSME and huge liquidity enhancing measures taken by RBI.The Indian GDP is expected to decline this year. The exact impact on economy growth is uncertain and the recovery will depend upon the production of Covid-19 vaccine and effectiveness of policy measures taken by the government to support the economy.
Impact of Covid-19
Covid-19 has hit the Indian economy as it was gradually recovering from a slowdown and showing some signs of growth. Economic activities significantly dropped down during the year due to Covid-19 as all the non-essential businesses were shut down.
The fall in economic activities have impacted the cash flow and liquidity position of many businesses and individuals, which subsequently impacting their debt servicing capabilities. Self employed people and small businesses in tourism, travel industry and retailing have been impacted the most.
Indian Logistic Sector
Logistics is regarded as the backbone of the economy, providing efficient and cost-effective flow of goods on which other commercial sectors depend on. The sector comprise of shipping, port-services, warehousing, rail, road and air freight, express cargo and other value-added services. The global logistics market currently generates over USD 8 trillion annually and represents around 11% of global GDP.
The Indian logistics sector comprises inbound and outbound segments of the manufacturing and service supply chains. Companies in India currently outsource an estimated 52% of their logistics requirement.
Transport is a crucial function of the logistics industry, accounting for 50-60% of the market size, followed by warehousing and storage, comprising another 25-30% of the total market. The rest of the market constitutes value-added and freight forwarding services. The size of Indian warehousing industry is estimated at over Rs.550 billion.
Of this, the industrial warehousing and retail industry accounts for more than half of the total market share, comprising over 515 million square meters, with market value of Rs.300 billion, while agri warehousing, is estimated to be 121.39 mt or Rs.100 billion. Road transport, with 60% share, dominates the logistics industry, followed by railways 32%, waterways 7%, and air cargo 1%.
Emergence of Covid-19
Towards the end of the financial year, the World Health Organisation (WHO) declared Covid- 19 a pandemic and the outbreak, which infected millions, has resulted in deaths of a significant number of people globally. Covid-19 is seen having an unprecedented impact on people and economies worldwide.
The Company is taking all necessary measures in terms of mitigating the impact of the challenges being faced in the business. The Company is working towards being resilient in order to sail through the current situation.
The Company operates its business in conformity with the highest ethical and moral standards and employee centricity. In view of the outbreak of the pandemic, the Company undertook timely and essential measures to ensure the safety and well-being of its employees at all its plant locations, various branch offices and the head office. The office based employees were allowed to work from home by providing adequate digital and other assistance. The Company observed all the government advisories and guidelines thoroughly and in good faith.
The performance of the Company for the financial year ended March 31, 2020, is as follows:
• Total revenue from operations at Rs. 1679.38 lakh for the year ended March 31, 2021, as against Rs. 1854.58 lakh for the corresponding previous period,
• The cost of Raw Materials/Revenue for the financial year ended March 31, 2021 were Rs 1636.98 lakh as against Rs 1729.90 lakh for the corresponding previous period,
• The Employee expenses for the financial year ended March 31, 2021 were Rs 27.56 lakh as against Rs. 36.57 lakh for the corresponding previous period,
• The other expenses for the financial year ended March 31, 2021 were Rs. 872.22 lakh as against Rs 1188.95 lakh for the corresponding previous period,
• The EPS (Earning per Share) for the financial year ended March 31, 2021 was Rs. (9.36) for a face value of Rs 10 per share, as against Rs. (3.02) for the corresponding previous period.
RESOURCES AND LIQUIDITY
As on March 31, 2021, the net worth stood at Rs. 296.03 lakh. The cash and cash equivalents at the end of March 31, 2021 were Rs. 12.82 lakh.
RISKS AND CONCERNS
The Company is in continuous process of strengthening its risk management framework which identifies and evaluates business risks and opportunities. The Company recognizes that risks need to be identified at the right time, managed adequately and mitigation plans needs to be prepared toprotect the interest of the stakeholders. Managing these risks actively is also a pre-requisite to achieve business objectives and enable sustainable growth of the Company. The exercise to design the risk management framework is aimed at effectively mitigating the Companys various business and operational risks. The Company has a risk management policy for identification and assessment of risks which is monitored by the Audit Committee of the Company. The Committee closely monitors the process and suggests suitable measures to mitigate the risks. The risks may be caused due to the internal or external factor and necessary precautionary measures are taken by the Company to negate the impact of probable risk. The major risks of the Company are as follows:
Companys business may be affected by interest rates, changes in Government policy, taxation and other economic developments affecting India. The Company has defined conservative internal prudential norms. The Company ensures a favorable debt/equity ratio, moderate liquidity, strong clientele with timely payment track record and focus on select markets to minimize the impact in adverse conditions. The Company has geographically diversified thereby reducing its dependency on one market.
Our business can be affected by the rise and fall in the levels of cargo in the country. Given the projected growth in the Indian economy and expected recovery in global trade, rising spending in the infrastructure and manufacturing space and increasing per capita and disposable income, it is estimated that demand will continue to rise steadily. The Company is also focusing on this business, a relatively high margin segment which is essentially dependent on timely delivery of cargo in India. Thus, we believe we have adequate mitigation in place for trade risk.
If we are unable to obtain required approvals and licenses in a timely manner, our business and operations may be adversely affected. We require certain approvals, licenses, registrations and permissions for operating our business. We may encounter delays in obtaining these requisite approvals, or may not be able to obtain such approvals at all, which may have an adverse effect on our revenues. However, the Government has come up with several initiatives to boost the sector and has planned massive investments in the infrastructure sector. As all industry predictions suggest that this will be the trend in the future as well and given our own experience in obtaining such permissions, we do not expect this risk to affect us materially in the coming years.
The liquidity risk may come in the way of smooth operation of the Company due to one or the other reasons. Whenever there is blockage of funds in the hands of customers, the liquidity crunch is likely to happen. Although wholehearted support from the bankers strengthen the hands of the Company to face the liquidity risk, the company leaves no stone unturned to avoid the possibility of liquidity risk.
The Company has undertaken number of trips for customers in the last year and several more are in the pipeline. Execution is largely dependent upon project management skills and timely delivery. Any delay in implementation can impact revenue and profit for that period. Our implementation schedules are in line with the plans. Emergency and contingency plans are in place to prevent or minimize business interruptions. Therefore, we do not expect this risk to affect us materially in the future. Concerns like complex tax structure, infrastructure bottlenecks, retaining talent and unprecedented natural and man-made disasters and political/social turmoil which may affect our business, remain. However, these are threats faced by the entire industry. With superior methodologies and improved processes and systems, the Company is well positioned to lead a high growth path.
OPPORTUNITIES AND THREATS
The most essential challenge faced by the industry today is insufficient integration of transport networks, information technology & distribution facilities. Regulations exist at a number of different tiers, is imposed by national, regional and local authorities. However, the regulations differ from city to city, hindering the creation of national networks.
Logistics sector in India is a highly disorganized sector, its perception as a manpower-heavy industry and lack of adequate training institutions has led to a shortfall in skilled management and client service personnel. There is a lack of IT standard, equipment and poor systems integration.
Whereas the Government gave emphasis on building world-class road networks and creation of logistics parks, the company had also converted its fleets strength in specially designer fleets. Currently 100% fleets of Company are CMVR complied trucks and engineered to lift loads with minimum on road damages.
The Company understands the emerging requirements of technology enhancement to manage fleets, cost control and third party tie up. During the year company had make agreement with Quikhop Logistic Solutions Ltd. to manage back loads from markets and to organize the sector in best interest of company.
Transportation dominates supply chain management in automobile
Among the various segments of the supply chain, transportation accounts for about 75-80% of the total supply chain management market for automobiles. Transportation is used in both inbound as well as outbound part of the supply chain, as the vehicles as well as the components are required to be transported to and from several locations. However, warehousing (including VAS and in-factory logistics) which accounts for about 20-25% of the total supply chain management market for automobiles is majorly required in the inbound part of the supply chain rather than on the outbound.
The Indian Governments increased focus on infrastructure
The CRISIL Report estimates investments of approximately @10.3 trillion in roads (national highways, state roads and rural roads) between Fiscals 2018 and 2022. In case of railways, the investment numbers are estimated at @6.7 trillion between Fiscals 2016 and 2020. Significant investments by the GOI to improve rail and road infrastructure are expected to improve the overall logistics scenario across India.
The Indian Government to also focus on new transportation avenues
Indias railways and roadways collectively accounted for approximately 87% of the total freight movement. Weighed down by the sheer load, the rail and road networks have been grappling with severe congestion. This has led the GOI to identify other alternatives to reduce congestion. Inland waterways and coastal shipping are both fuel and cost efficient, thereby reducing cost of logistics. The GOI is, therefore, promoting schemes such as Sagarmala and inland waterways as well as working towards developing an integrated, multi-modal logistics and transport policy for optimum and efficient utilization of all modes of transport. (Source: CRISIL Report.)
• Competition from local and multinational players
• Execution risk
• Regulatory changes
• Attraction and retention of human capital INTERNAL CONTROL SYSTEMS AND ADEQUACY
The Company has initiated adequate internal control procedure commensurate with the nature of its business and size of its operations. An Audit committee constituted with two independents and one executive director. To conduct independent audit on quarterly basis, which covers all the key areas of operations our company is considering appointing an independent Internal Auditor. All significant audit observations and follow up actions thereon are reported to the audit committee. The Audit committee met four times during the financial year under review.
The Board of Directors of the Company have adopted various policies such as Related Party Transactions Policy, Whistle Blower Policy, Policy to determine the materiality of event and such other procedures for ensuring the orderly and efficient conduct of its business for safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.
HUMAN RESOURCE DEVELOPMENT
Human resources are the most valued assets of the Company. They work individually and collectively contributing to the achievement of the objectives of the business. The relation between the employees and the Company remained cordial throughout the year. Your Companys corporate culture and the vision and values help unite the workforce and provide standards for how your Company conducts the business. The Company has 07 (Seven) permanent employees on the rolls of Company as on March 31, 2020.
Estimate and expectations stated in this Management Discussion and Analysis may be "forward-looking statement" within the meaning of applicable securities, laws and regulations. Actual result could differ materially from those expressed or implied. Important factors that could make difference to your Companys operations include economic conditions in the government regulations, tax laws, other statutes and other incidental factors.
|For and on behalf of the Board|
|M/s JALAN TRANSOLUTIONS (INDIA) LIMITED|
|Date: 31.08.2021||Meena Jalan||Manish Jalan|