MFL India Ltd Management Discussions

AND REVIEW OF OPERATIONS AND FUTURE LAW

Overview

MFL India Limited is a premier transport and logistics company with Pan-India coverage; having a self-owned fleet of mixed variety high-volume / heavy-weight cargo carriers; along-with a diversified portfolio of transportation services that includes dedicated high-capacity trucks, trailers.

MFLs logistics portfolio includes freight management, cargo brokerage, inter-modal is provided through MFLs domestic networked companies and include ocean, air and ground transportation.

The main commodities transported are retail store merchandise, 2- wheeler motorcycles / scooters, consumer products, FMCGs, other manufactured products and grocery products.

Industry Structure

The Indian logistics industry forms the operational backbone connecting production centres with consumption markets, spanning transportation, warehousing, freight aggregation, last-mile distribution and value-added supply chain services. It plays a foundational role not only in domestic trade but also in enabling Indias participation in global manufacturing and export value chains.

• Multimodal but Road-Dependent Ecosystem: While the industry spans road, rail, air, coastal shipping and inland waterways, actual modal integration remains limited, with road transport continuing to bear a disproportionate share of the freight load relative to more cost- efficient modes such as rail and waterways.

• Rising Private and Institutional Investment: The sector is witnessing growing participation from private equity, strategic investors and large corporate groups building integrated logistics platforms, alongside continued presence of asset-light and asset-heavy players operating side by side.

• Policy-led Cost Rationalisation: Beyond individual infrastructure projects, the broader policy direction spanning taxation, logistics performance benchmarking, and single-window digital compliance is aimed at structurally reducing Indias logistics-cost-to-GDP ratio over the medium term, rather than through isolated interventions.

Growing industrialisation, expanding consumption markets, and Indias deepening integration into global supply chains continue to widen the addressable opportunity for logistics service providers (LSPs). The industry is simultaneously undergoing formalisation driven by tax and compliance reforms even as a significant share of capacity continues to be held by small, unorganised operators, creating a two-speed structure within the sector.

Key trends observed in the Indian logistics industry are:

1. Warehousing Modernisation:

• Rising shift from traditional, unorganised storage toward Grade-A warehousing with standardised specifications, automation and real-time inventory visibility.

• Growing development of large-format logistics parks and fulfilment centres closer to consumption hubs.

2. Data-driven Supply Chain Decision-Making:

• Increasing use of predictive analytics and demand-sensing tools to optimise inventory positioning, routing and fleet deployment.

• Growing integration of logistics data with enterprise planning systems for end-to-end supply chain visibility.

3. Deepening of Cold Chain and Temperature-Controlled Logistics:

• Expansion of cold storage and reefer transport capacity driven by pharma, healthcare and perishable food demand.

• Increasing formalisation of what was historically a fragmented, unorganised cold chain segment.

4. Skilling and Workforce Formalisation:

• Growing emphasis on structured driver training, certification and workforce upskilling programmes.

• Gradual formalisation of employment structures within logistics, supported by evolving labour regulations.

5. Rural and Tier 2/3 Market Penetration:

• Expanding logistics network depth into smaller towns and rural markets, driven by e- commerce, quick commerce and direct-to-consumer brand expansion.

• Development of regional hub-and-spoke models to serve lower-tier geographies cost- effectively.

6. Consolidation and Platformisation:

• Increasing consolidation among logistics service providers through partnerships, platform integration and network sharing to achieve scale and cost efficiency.

• Growing preference among large shippers for integrated, single-window logistics partners over multiple point solutions.

Amid a global environment marked by continuing trade and geopolitical uncertainty, Indias domestic growth momentum continues to position its logistics industry favourably. The sectors future trajectory will be shaped less by policy intent alone and more by the pace of on-ground execution with the companies best able to combine cost efficiency, service reliability and technology adoption best placed to capture the opportunity across both B2B and B2C segments.

Industry Development and Recent Scenario

• Rationalisation of the Indirect Tax Structure:

The transport and logistics sector witnessed a rationalisation of the indirect tax structure during the year, moving toward a simplified rate framework for freight and logistics services. This has prompted transporters to reassess pricing, contract structuring and Input Tax Credit strategies, while also reducing the tax incidence on commercial vehicles and components, supporting fleet modernisation across the industry.

• Accelerated National Highway Development:

Indias national highway network has expanded to approximately 1.46 lakh km, up from around 91,000 km a decade ago an increase of nearly 60%. During the year, highway construction activity continued at a robust pace, with capital expenditure on national highway development exceeding ?2.4 lakh crore, supporting faster surface connectivity for freight movement.

• Growth in Inland Waterways Cargo:

Cargo movement through Indias inland waterways has grown substantially over the past decade, rising several-fold to reach a record level, reflecting increasing utilisation of this cost-efficient and lower-emission mode of freight transport as an alternative to road.

• Resilient Macroeconomic Backdrop:

India continues to be recognised as one of the fastest-growing major economies globally, with GDP growth estimated in the range of 6.2-6.6% for the year, providing a supportive demand environment for freight, consumption-led logistics and industrial cargo movement.

• Growth in Third-Party Logistics (3PL) Outsourcing:

The 3PL market in India has continued to grow at a strong pace over recent years, reflecting increasing outsourcing of logistics functions by manufacturing, retail and e-commerce companies seeking cost efficiency and specialised expertise.

• Completion of the Dedicated Freight Corridor (DFC) Network:

The Eastern and Western Dedicated Freight Corridors, spanning approximately 2,843 km across nine states, have now been substantially completed, with the corridor network operating at high-capacity utilisation.

This is expected to shift a meaningful share of bulk and containerised freight from road to rail, reduce logistics costs by an estimated 20-25% on covered routes, and support faster average freight train speeds of up to 100 km/hour compared to 50-60 km/hour on conventional lines.

• Evolving Trade and Customs Environment:

The Indian logistics sector today functions as the connective infrastructure linking domestic production, consumption and Indias expanding global trade footprint, encompassing everything from first-mile pickup to last-mile delivery across both B2B and B2C value chains. Through FY 2025-26, the sector has continued to draw sustained attention from policymakers, industry bodies and investors alike, reflecting its growing recognition as a core enabler of Indias broader economic competitiveness rather than a purely support function.

The year has seen continued convergence between physical infrastructure development and digital enablement, with technology increasingly treated not as a peripheral add-on but as a core determinant of logistics efficiency. Private sector participation in infrastructure from logistics parks to multimodal terminals has continued to deepen, supported by an improving policy and financing environment.

At the same time, structural inefficiencies persist. A continuing mismatch between the pace of freight demand growth and the pace of supporting infrastructure particularly first-mile and last-mile connectivity, warehousing standardisation, and intermodal transfer capacity continues to constrain the full realisation of cost and time efficiencies across the supply chain. This gap disproportionately affects smaller shippers and regions outside established industrial corridors.

Companies operating in the sector, however, continue to demonstrate the ability to work around these constraints through operational discipline better load consolidation, network redesign and technology- enabled planning even as systemic infrastructure gaps are addressed over a longer horizon. This dual reality, of near-term operational workarounds alongside longer-term structural reform, continues to define the sectors evolution.

The industry continues to operate at a point of transition, shaped simultaneously by tailwinds and constraints.

On the one hand, persistent challenges remain in the form of inconsistent enforcement of regulations across states, capacity constraints in specialised segments such as cold chain and heavy cargo, and continuing dependence on informal, non-standardised service providers for a large share of freight movement.

On the other hand, the sector continues to benefit from resilient domestic demand, expanding manufacturing capacity under national industrial policy, deepening capital market and investor interest in logistics infrastructure, and continued maturation of digital freight and warehousing platforms.

As India works toward strengthening its position within global manufacturing and export networks, the pace and quality of logistics sector development will remain a determining factor not only for the industrys own growth, but for the broader competitiveness of Indian goods and services in international markets.

Segment wise performance

The Company currently operates in only one segment i.e., Transportation/Trucking, and therefore, has no separate reportable segments.

Outlook

MFL India Limited operates as a transport and logistics company with operations across multiple states in India. During the year under review, the Company continued to operate in a logistics sector that saw ongoing formalisation and demand growth, and its operations remained focused on the existing routes, cargo categories and customer segments it services.

Over the past few years, the Company has added to its fleet in a phased manner, aiming to reduce dependence on any single route or client and to keep operations reasonably diversified. This continued during the year, with incremental additions made to the vehicle fleet as part of the Companys ongoing operations, with the intent of supporting existing service levels and taking on additional business as and when it becomes available.

Internal Control Systems and Their Adequacy

The Company has a formal system of internal control testing which examines both the design effectiveness and operational effectiveness to ensure reliability of financial and operational information and all statutory / regulatory compliances. The Companys business processes are on logy sis and have a strong monitoring and reporting process resulting in financial discipline and accountability.

Risk and Concerns faced by the Logistics Industry in India

1. Driver Shortage and Retention

• Persistent shortage of trained commercial drivers, compounded by demanding working conditions, long hours away from home, and safety concerns.

• Rising attrition as drivers move toward gig-economy/last-mile delivery roles perceived as less demanding.

2. Fuel Price Volatility

• Diesel accounts for a large share of operating costs for road transport fleets; sharp price swings directly compress margins, especially where freight contracts are not fuel-indexed.

• Limited hedging instruments available to mid-size fleet operators against fuel cost risk.

3. High Turnaround Time and Border/Check-post Delays

• Despite GST and e-way bill reforms, congestion at ports, RTO checks, and state border crossings continues to add to transit times and vehicle idle time.

• Documentation mismatches still trigger detentions in several states.

4. Rising Compliance and Emission Norms

• Transition pressure toward BS-VI and electric/CNG fleets requires significant capital investment, with financing and charging/fuelling infrastructure still maturing.

• Multiplicity of state-level permits, fitness certifications, and renewal processes adds administrative burden.

5. Working Capital and Receivables Risk

• Long credit cycles with large corporate/retail clients strain working capital for asset-owning logistics companies.

• Counterparty credit risk in a fragmented client base increases the risk of delayed collections.

6. Cargo Safety, Theft and Insurance Risk

• Cargo damage, pilferage and theft in transit remain persistent risk factors, particularly on long-haul routes.

• Rising insurance premiums add to the cost base.

7. Competition from Asset-Light Digital Aggregators

• Tech-enabled freight-matching platforms and aggregators are increasingly competing on price by bypassing asset ownership, pressuring margins of traditional asset-owning fleet operators.

8. Reverse Logistics Complexity

• Growth in e-commerce returns has increased the complexity and cost of reverse logistics, an area where infrastructure and process maturity still lag forward logistics.

9. Climate and Extreme Weather Disruption

• Increasing frequency of floods, cyclones and extreme heat events disrupts road and rail networks, causing route diversions and delivery delays.

10. Transition to the Revised GST Structure

• The rationalisation of GST rates for the transport and logistics sector requires operators to choose between a lower rate without Input Tax Credit and a higher rate with ITC, adding complexity to pricing and contract structuring.

• The shift has created short-term transitional cash-flow pressure as invoicing systems, customer contracts, and vendor agreements are realigned.

• Unorganised operators continuing under the lower-rate option may gain a short-term pricing advantage over organised, ITC-claiming players.

11. Compliance Overhaul under the New Labour Codes

• The consolidation of Indias labour laws into unified Labour Codes has introduced new compliance obligations across wages, industrial relations, social security and occupational safety for fleet- and warehouse-operating businesses.

• The revised statutory definition of "wages" necessitates payroll recalibration and cost reassessment.

• Extension of social security obligations to gig and platform-linked workers adds a new category of compliance and cost.

• With implementing rules still evolving at the central and state level, companies face uncertainty in finalising long-term compliance frameworks.

12. Fleet and Capex Re-planning Pressure

• Recent changes in vehicle taxation have altered the cost-benefit calculus of fleet acquisition timing, creating a dilemma between deferring purchases and continuing existing capex plans.

• Managing Input Tax Credit continuity across vehicles acquired under different tax regimes adds administrative complexity.

13. Infrastructure Execution Lag Relative to Policy Announcements

• The pace of ground-level execution of announced freight corridors and infrastructure projects continues to lag the pace of policy announcements, creating planning uncertainty for route and network design.

• Risk of under- or over-investing in fleet and technology ahead of actual project commissioning.

14. Customs and Trade Policy Uncertainty

• Ongoing rationalisation of customs duties and evolving global trade dynamics create forecasting difficulty for companies handling import- or export-linked cargo.

• Volume and cargo-mix volatility linked to shifting trade policy adds planning risk.

15. Heightened Formalisation Pressure on Organised Players

• As tax and labour reforms push the sector toward greater formalisation, compliant organised players may face a near-term cost disadvantage relative to smaller, less-compliant operators who are slower to adapt.

• Balancing full regulatory compliance with cost competitiveness remains an ongoing challenge during the transition period.

Solutions to Some of the Challenges

1. Improving Driver Availability and Retention

• Improve driver welfare through better rest facilities, health cover, and predictable duty cycles to reduce attrition.

• Partner with driver training institutes and NSDC-affiliated centres to build a steady pipeline of trained commercial drivers.

• Introduce performance-linked incentives and long-service benefits to improve retention against gig-economy alternatives.

2. Managing Fuel Cost Volatility

• Negotiate fuel-indexed freight contracts with key customers to pass through volatility rather than absorb it.

• Explore fuel-hedging arrangements or bulk fuel-procurement tie-ups to reduce cost exposure.

• Invest in route optimisation and driver training on fuel-efficient driving to reduce consumption per trip.

3. Reducing Turnaround Time and Transit Delays

• Strengthen documentation and e-way bill compliance processes to minimise detention risk at check-posts.

• Use GPS-based real-time tracking to identify and proactively manage congestion-prone routes.

• Engage with industry associations to advocate for further check-post digitisation and uniformity in state-level enforcement.

4. Streamlining Compliance with Emission and Regulatory Norms

• Phase fleet modernisation toward BS-VI/CNG/EV vehicles in line with financing availability and route suitability.

• Evaluate leasing or financing partnerships to spread the capital cost of fleet transition.

• Centralise tracking of state-wise permits, fitness certificates and renewals to reduce administrative slippage.

5. Strengthening Working Capital and Receivables Management

• Tighten credit evaluation and monitoring for new and existing clients to reduce counterparty risk.

• Negotiate shorter payment cycles or advance/milestone billing with large corporate and retail clients where possible.

• Consider invoice discounting or bill discounting facilities to ease working capital strain from long credit cycles.

6. Enhancing Cargo Safety and Risk Management

• Strengthen in-transit monitoring through GPS tracking, geo-fencing, and route-deviation alerts.

• Conduct periodic security audits of high-value/long-haul routes and warehouse handling points.

• Maintain adequate insurance cover while working with insurers on risk-based premium optimisation through demonstrated safety improvements.

7. Strengthening Competitive Positioning Against Digital Aggregators

• Invest in digital freight-matching and customer-facing technology to compete on service and visibility, not just price.

• Leverage owned-fleet reliability and service consistency as a differentiator in contracts with quality-sensitive customers.

• Explore selective use of aggregator platforms to fill backhaul/empty-running capacity and improve asset utilisation.

8. Building Efficient Reverse Logistics Capability

• Build dedicated reverse-logistics processes and hubs to handle e-commerce returns efficiently.

• Adopt technology for return authorisation, tracking and quality-check workflows to reduce turnaround time.

• Explore consolidation of reverse-logistics volumes with forward-logistics networks to improve cost efficiency.

9. Building Resilience Against Climate and Weather Disruption

• Build route contingency planning and alternate-route mapping for weather-prone corridors.

• Use weather-tracking and predictive-alert tools integrated with fleet-management systems to reroute proactively.

• Maintain buffer scheduling for weather-sensitive routes during monsoon/extreme-weather periods.

10. Managing the Transition to the Revised GST Structure

• Undertake route- and contract-level financial modelling to determine the optimal GST option (with or without ITC) for each business line.

• Update invoicing, ERP and contract templates promptly to ensure smooth transition and avoid compliance gaps.

• Engage tax advisors to monitor evolving clarifications and ensure consistent application across the organisation.

11. Ensuring Smooth Compliance with the New Labour Codes

• Conduct a comprehensive payroll and compliance audit against the revised wage definition and Labour Code requirements.

• Extend social security registration and benefits to eligible gig/platform-linked workers in a phased, structured manner.

• Set up a dedicated compliance tracking mechanism to stay aligned with central and state rules as they are notified.

12. Optimising Fleet Investment and Capex Planning

• Develop a phased fleet-replacement plan that balances the benefit of revised vehicle taxation against operational needs.

• Maintain clear ITC tracking systems to manage credit continuity across vehicles acquired under different tax regimes.

• Periodically reassess capex plans in light of financing costs, tax changes and route/demand outlook.

13. Aligning Network Planning with Infrastructure Execution

• Adopt a phased, milestone-linked approach to network and fleet investment tied to actual project commissioning rather than announcement timelines.

• Maintain flexibility in route planning to adapt quickly once new corridors/infrastructure become operational.

• Engage with industry bodies and government agencies to track project execution status closely.

14. Mitigating Customs and Trade Policy Uncertainty

• Diversify cargo mix and customer base to reduce dependence on any single trade-policy- sensitive segment.

• Build scenario-based forecasting models to plan for shifts in import/export-linked volumes.

• Stay engaged with trade bodies and customs advisors to anticipate and respond quickly to policy changes.

15. Leveraging Formalisation as a Competitive Strength

• Highlight compliance, reliability and service quality as differentiators to customers who value formalised, low-risk logistics partners.

• Pursue operational efficiencies (technology adoption, route optimisation, fleet utilisation) to offset the near-term cost disadvantage versus less-compliant competitors.

• Engage with industry associations to advocate for stronger enforcement against noncompliant operators, levelling the competitive field over time.

Future Prospects

1. Export Logistics Opportunity from New Trade Agreements

• The India-UK Comprehensive Economic and Trade Agreement (CETA), which has come into force during the year, removes or reduces tariffs on the substantial majority of traded goods between the two countries, with bilateral trade targeted to nearly double by 2030.

• This is expected to boost export volumes in sectors such as textiles, apparel, seafood and processed food, creating incremental demand for export-oriented freight forwarding, cold chain and port-linked logistics services.

• Similar trade facilitation measures under negotiation with other geographies are expected to further expand cross-border logistics opportunities over the coming years.

2. Faster Customs Clearance Supporting Trade-linked Logistics

• Commitments under new trade agreements toward expedited customs clearance timelines for compliant shipments are expected to reduce dwell times and improve predictability for companies engaged in cross-border freight movement.

• This creates an opportunity for logistics providers to build differentiated, compliance-ready service offerings for exporters and importers seeking faster, more reliable clearance.

3. Growing Investor and Capital Market Interest in Logistics

• The logistics and supply chain sector has continued to attract growing interest from institutional investors, private capital and strategic partners, reflecting rising confidence in the sectors long-term growth and formalisation.

• Improved access to organised capital is expected to support fleet modernisation, warehousing expansion and technology adoption for well-positioned logistics companies going forward.

4. Rising Demand from Data Centre and GCC-led Industrial Activity

• Continued expansion of data centres and Global Capability Centres (GCCs) across India is generating incremental demand for specialised logistics, including equipment transportation, warehousing near technology hubs, and time-sensitive freight movement.

• This represents an emerging, less cyclical demand stream for logistics providers with the capability to serve technology and infrastructure-linked clients.

5. Urban Logistics Policy and Last-Mile Regulation

• Growing policy attention toward structured urban logistics — including designated freight movement windows, urban consolidation centres, and regulation of last-mile delivery vehicles in congested cities — is expected to shape how companies design their city-level distribution networks going forward.

• Early alignment with emerging urban logistics norms may offer a competitive advantage in metro and Tier 1 city operations.

6. Strategic and Defence-linked Infrastructure Corridors

• Continued development of strategic and border-area infrastructure, alongside broader national connectivity programmes, is gradually opening logistics opportunities in previously underserved regions, supporting both defence-linked and civilian freight movement.

7. Growing Role of Logistics in Indias Broader Trade Diversification

• Amid ongoing global trade uncertainty, Indias efforts to diversify export markets and reduce dependence on any single trading partner are expected to create a more distributed set of cross-border freight lanes, requiring logistics providers to build flexibility across multiple trade corridors rather than concentrated dependence on a few.

Financial Performance with Respect to Operational Performance (Amount in Lakhs)

During the year under review, the Company has recorded an income of Rs. 6611.70 as against Rs. 5275.44 in the previous financial year. The Company incurred a profit after tax of Rs. 157.57 during the year under review, as compared to a loss of Rs. 82.71 in the preceding financial year. Your directors are continuously looking for avenues for future growth and are hopeful that the Company will perform better in the coming years.

The improvement in financial performance reflects the Companys improved operational performance during the year. The Directors remain committed to strengthening the Companys operations and exploring opportunities for sustainable growth and improved performance in the coming years.

Human Resources

The Company considers its human resources to be an important asset for achieving sustainable growth and operational efficiency. During the year under review, the Company maintained cordial and harmonious relations with its employees and continued to focus on employee development, engagement and a conducive working environment.

There were no material developments in the area of human resources or industrial relations during the year under review. The Company continues to have an adequate workforce to support its business operations and remains committed to strengthening its human resources in line with its operational requirements.

Key Financial Ratios

The details of the significant changes in the Key Financial Ratios as compared to FY 2024-25 with detailed explanation for significant changes for 25% or more is provided in the Balance Sheet of the company attached hereunder that forms an integral part of this Annual Report.

Return on Net Worth

The Company has a negative Net Worth. However, during FY 2024-25, the Company earned a Profit Before Tax of Rs. 17.70 (lakh), whereas during FY 2025-26, the Company incurred a Loss Before Tax of Rs. 188.19 (lakh). Consequently, the income has been decreased to (79.18%) in FY 2025-26 viz a viz 2024-25.

The decline in Return on Net Worth is primarily attributable to the loss incurred by the Company during FY 2025-26.

Accounting Treatment

The Company has prepared its financial statements in accordance with the applicable Accounting Standards and the provisions of the Companies Act, 2013. No treatment different from that prescribed under the applicable Accounting Standards has been followed in the preparation of the financial statements. Accordingly, no further disclosure in this regard is considered necessary.

Research & Development

Given the nature of the Companys business as a transportation and logistics service provider, formal R&D infrastructure is not a requirement of its operations. The Companys focus instead remains on service quality improvement regularly reviewing turnaround times, delivery accuracy and customer feedback to identify areas for operational refinement.

During the year, the Company continued its practice of periodically benchmarking its service standards against evolving customer expectations and industry practice, using these insights to fine- tune scheduling, fleet deployment and handling procedures.

Cautionary Statement

Statements in the Management Discussion and Analysis describing the Companys strategies on business, projections and estimates are forward looking statements. The actual results may vary from those expressed or implied, depending upon economic conditions, Government policies, regulations, tax laws and other incidental factors.

MR -3

The Secretarial audit report is attached herewith as per attachment. https://www.mflindia.co.in/

Link of the website for AGM notice with explanatory notes and Annual Return

By Order of the Board	Sd/-	Sd/-
MFL India Limited	Anil Thukral	Jafar Ahamed
Place: Delhi	(Managing Director)	(Director)
Date: 01.09.2026	DIN- 01168540	DIN- 06447145