jalan transolutions india ltd Management discussions

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 35 Company Owned Trucks and extensive network. Company also provides Full Truck Load (FTL) & Less than Truck Load (LTL) services.

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.

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

The global economy showed early signs of recovery in the beginning of 2021. However, it has since faced headwinds amid fresh threats from Covid-19 variants and a rise in inflation slowing down recovery across emerging economies. Despite signs of moderation, record numbers of daily infections in several countries and consequent containment measures further strained economic activity. Rising energy prices and supply chain disruptions have resulted in higher than anticipated inflation. Developing economies were severely impacted by boom-and-bust cycles of commodity prices, leading to increase in input costs. Global trade hit record high of $28.5 trillion in 2021, but it is likely to be subdued in 2022 in the backdrop of the Russia- Ukraine war, as efforts to streamline the supply chains and diversify suppliers could affect global trade patterns. Governments and central banks across the world are mulling over policy response to curb the rise of inflation. According to the World Banks latest report, global economic growth is expected to moderate from 5.5% in 2021 to 3.2% in 2022 due to the impact of the Russia-Ukraine crisis and higher food as well as energy costs across the world.

India Economic

The last two years were challenging for the Indian economy on account of repeated waves of Covid infection, supply-chain disruptions, volatile oil and commodity prices and rising inflation. The Government of Indias response was to build back short-medium term demand through significant increase in capital expenditure on infrastructure. Supply-side measures were implemented to prepare the economy for a sustained, long-term expansion. As per latest estimates from the Ministry of Statistics & Programme Implementation, the Indian economy was expected to witness real GDP growth of 8.9% in FY22, after contracting by 7.7% in FY21. High frequency indicators showed positive signs, raising both business and consumer optimism. Factors such as rail and freight activity, passenger traffic, power consumption, e-way bills and Goods and Services Tax (GST) collections showed a rising trend. Total consumption is estimated to have grown by ~7% in FY22. Indias exports crossed the USD 400 billion mark for the first time in history, and imports recovered strongly owing to the recovery in domestic demand. Over the course of the year, India vaccinated ~60% of the eligible population with both doses and ~70% of eligible population with one dose. With the vaccination programme having covered a bulk of the population, building back of economic momentum, and the likely benefits of long-term reforms in the pipeline, the Indian economy is poised to grow at around 8.2% in FY23 as per the latest IMF report. Key risks to the growth outlook include further escalation of Russia-Ukraine conflict, rise in commodity prices, higher inflation and global growth slowdown.

Indian Logistic Sector

The logistics sector plays a vital role in facilitating economic activity and trade movement in the country. The sector was estimated to be at 13,50,000 crores in FY21 and is expected to reach ~ 24,00,000 crores by FY26 growing at 10% CAGR. Short-term growth was impacted due to Covid induced disruptions, but the long term outlook for the sector remains buoyant. Based on service offerings, the logistics sector can be sub-divided into road transportation, freight forwarding, warehousing and value-added services and other logistics services such as container logistics, cold chain logistics, coastal shipping, and so on. Road transportation dominates Indias logistics spends, given the reliance on it and the countrys vast landscape. The road transportation segment can be further divided into inbound transportation, outbound transportation and distribution, express and last-mile transportation. There are many regional players providing transactional services in transportation and storage. We believe that as the industry matures over the next few years, there will be a significant shift from pure-play transportation and warehousing services towards sophisticated, high-value and integrated logistics solutions.

FINANCIAL OVERVIEW

The performance of the Company for the financial year ended March 31, 2022, is as follows:

• Total revenue from operations at Rs. 591.97 lakh for the year ended March 31, 2022, as against Rs. 1621.80 lakh for the corresponding previous period,

• The cost of Raw Materials/Revenue for the financial year ended March 31, 2022 were Rs 827.53 lakh as against Rs 1636.98 lakh for the corresponding previous period,

• The Employee expenses for the financial year ended March 31, 2022 were Rs 10.90 lakh as against Rs. 27.56 lakh for the corresponding previous period,

• The other expenses for the financial year ended March 31, 2022 were Rs. 52.98 lakh as against Rs 69.72 lakh for the corresponding previous period,

RESOURCES AND LIQUIDITY

The cash and cash equivalents at the end of March 31, 2022 were Rs. 26.62 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 to protect the interest of the stakeholders. Managing these risks actively is also a prerequisite 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:

Economic Risk

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.

Trade Risk

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.

Regulatory 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.

Liability Risk

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.

Execution 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 designed fleets. Currently 100% fleets of Company are CMVR complied trucks and engineered to lift loads with minimum on road damages.

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 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.)

THREATS

• 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. The company has 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 has Internal Auditor. All significant audit observations and follow up actions thereon are reported to the audit committee. The Audit committee met as per the details provided in Directors Report.

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 03 (Three) permanent employees on the rolls of Company as on March 31, 2022.

CAUTIONARY STATEMENT

Estimate and expectations stated in this Management Discussion and Analysis may be "forwardlooking 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 JALAN TRANSOLUTIONS (INDIA) LIMITED
Date:	Sd/-	Sd/-
Place: Ghaziabad	Manish Jalan	Meena Jalan
	Managing Director	Director
	DIN:00043040	DIN: 00050277