Patel Integrated Logistics Ltd Management Discussions

Economic Scenario:

The global economy has experienced numerous challenges in the form of unabating conflict between Russia and Ukraine and the war between Israel and Gaza seeded the possibility of sustained disruptions to regional trade in food, energy and other commodities while, the slowdown in the Chinese economy posed a risk to the pace of overall global economic activity. However ,the global economy showcased remarkable resilience, maintaining robust economic activity. Factors such as increased government spending, undiminished household consumption, and an unforeseen expansion in labour force participation have contributed to this steady growth.

Global economic growth was estimated at 3.2% in 2023 and is projected to continue at the same pace in 2024 and 2025, as per the latest World Economic Outlook 2024 report, published in April 2024.It predicts an increase in developed economy growth from 1.6% in 2023 to 1.7% in 2024 and 1.8% in 2025. Emerging markets and developing countries, on the contrary, are predicted to decelerate somewhat, from 4.3% in 2023 to 4.2% in 2024 and 2025. However it is interesting to note that a developing nation like India has risen to be the fifth largest economy, with the IMF indicating that it will continue to grow faster than China, the second largest economy, as the Chinese mainland struggles with the collapse of its real estate market, low consumer and business confidence, and rising trade tensions with other major countries.

In India, growth is estimated to have picked up in FY2023/24 (April 2023 to March 2024). Industrial activity, including manufacturing and construction, was stronger than expected, alongside resilient services activity, which helped offset a slowdown in agricultural production partly caused by monsoons. In India, growth of 6.7 percent per year, on average, is projected for the three fiscal years beginning in FY2024/25. Strong growth in India is supported by robust domestic and growth in the manufacturing and service sectors .

The Company ventured into health and fitness industry by taking franchisee of GYM business which continues to be steadily growing in spite of challenges faced by stiff competition in the market.

Despite being highly fragmented and dominated by unorganized players, the Indian logistics industry has shown tremendous improvement over the last decade, starting from scratch and reaching a level where the Indian logistics industry and its players today are competing with the top global players and markets. Reviving domestic demand growth, supported by government reforms, transportation sector development plans, growing retail sales, and the e-Commerce sector are likely to be the key drivers of growth for the Indian logistics industry. growth in its capacity, The air cargo industry continued to see significant as measured by available cargo tonne-kilometers

(ACTKs), which increased by 7.1 % compared to the previous year . The even higher 10.3% annual ACTK growth in YTD terms confirms that the capacity expansion compared to the previous year is a phenomenon of all four months that passed since the turn of the year, although the growth is slowly decelerating. The Air Cargo industry counted 85.3 billion CTKs year-to-date (YTD) in April, denoting a 12.7% increase compared to 2023 and 1.4% relative to the 2022 value . These figures provide additional confirmation that air cargo kicked off the second quarter with a continuation of the robust traffic levels that the industry has been experiencing over the past months. April brought growth in international air cargo demand across all world regions and major route areas, with carriers from Asia Pacificand Europe at the helm The solid upward trend in industry CTKs is driven by traffic on international routes, which grew by 11.6%

YoY in April, likely supported by booming e-commerce and capacity constraints in global maritime shipping. Importantly, all regions experienced expansions in international traffic compared to April 2023, with remarkable growth figures ranging from

8% to 14%

The logistics market in India encompasses a wide array of supply chain activities, including transportation, customer service, inventory management, information flow, and order processing, alongside warehousing, material handling, purchasing, packaging, and maintenance.

Logistics start-ups in India gained a substantial foothold after the onset of e-Commerce, and there are several new companies that are gaining traction in the industry. Online platforms have increased competition and lowered freight costs with real-time data availability and a transparent value chain. This will help the Air cargo service providers to innovate and adapt to the transforming logistics landscape and increase the Volumes.

Indias aviation sector is set for substantial investment from 2021 to 2025, with the Airports Authority of India and private operators jointly committing USD 11 billion. The Regional Connectivity Scheme aims to develop smaller, underserved, and remote airports, adding 600 regional routes to connect 156 airports by 2024, including the establishment of 100 new airports, predominantly funded by public-private partnerships Government initiatives like infrastructure improvements, digital transformation projects (e.g., Digital India, Bharat Net), and the establishment of logistics parks and warehouses are enhancing connectivity and storage capacities, particularly bolstered by the growth of e-commerce. The logistics industry, which accounts for 14.4% of Indias GDP, is transitioning from basic transportation and storage to comprehensive end-to-end planning, value-added services, predictive analytics, and technology-driven solutions like transportation and warehouse management systems (TMS, WMS). This evolution is spurred by a booming e-commerce market, technological advancements, and a vast workforce of 22 million supporting diverse businesses. The industrys dynamism is evident through a myriad of participants, including major local players, global industry leaders, government postal services express divisions, and emerging startups specialising in e-commerce delivery. These factors collectively position Indias logistics sector for continued expansion, increased efficiency, cost reduction, and enhanced customer service while playing an important role in the India logistics market development.

Lack of supporting infrastructure, automated material handling systems, and high manual process interference are some key areas where the Indian Air Cargo industry lags.

Industry-wide cargo capacity declined by 42.0% annually, stemming from the evaporation of the belly capacity of passenger aircraft. Airlines raised freighters capacity – notably by converting passenger aircraft into freighters – to meet demand.

Though the Freighter operations and Cargo on seat flights have helped to drive the cargo load factor up 11.5ppts year-on-year but the high pricing of freighter operations is a deterrent to the growth of the air cargo on freighter.

In normal times, this would be consistent with improving air cargo demand. But the current lack of air cargo capacity prevents that demand from materializing, and instead leads to elevated air cargo rates and load factors and moreover forcing the industry to move shipments by other means of transport .

Air Cargo full freighter operations have not developed as was expected and continual efforts through new policies/incentives need to be devised to provide a favourable environment to support growth.

Inspite of the international fuel prices cooling off to all time new low the Indian fuel prices have climbed up the operating costs of the air cargo industry. The ever-increasing cost of fuel is the biggest area of concern as it is reducing profitability.

The warehouse industry in India is still highly unorganized and fragmented. High inventory holding costs, higher storage cost, and improper material handling which leads to damage of the product are the major concern for warehouse industry.

Human Resource Management: on its Human Resources and Your Company continues to place significant 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 stake holders.

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. The management strengthens Human Resources by making available better tools, technology, techniques and training at the work place to harness the latent potential as it has always aimed at bettering the performance of individuals and as a team. Employees health and safety measures were taken care at all work places,

The Company is operating in Logistics sector which has been growing rapidly. However, there is an acute shortfall of personnel with adequate training and education in logistical management in India. The management and mid-tier levels are provided with training on leadership skills, jointed skills and positions and being process-driven.

Guided by the vision and overall strategy of Company, the focus is to build strong workforce by establishing strong linkages between employees, processes and values. Its focus remains on capability development in employees to maximise productivity and expand skillset.

The Company continues to enjoy peaceful and harmonious relations with all its employees through several proactive measures during the year. The Company has261employees as on 31^st March 2024.

In your Company, an internal control system is in place to ensure the effectiveness and efficiency of the operations. Internal control system plays a significant role in the process of risk identification and its mitigation. It is a valuable contribution which ensures compliance of applicable laws and regulations.

The Company is committed to further improve Internal Controls and strengthen the Internal Audit function. Further stress on

Corporate Governance is being given in the current year. We firmly believe that the business can grow and develop on the required lines and profitability can be sustained only through Strong andTransparent Corporate Governance.

The discussion on the financial performance of the Company is covered in the Directors Report. The segment-wise performance is available in note 39 of the notes forming part of the Accounts for the year under consideration.

Statements in the Management Discussion and Analysis Report describing Projections, Estimates, Expectations, Future

Outlook etc. in connection with the business may be ‘forward looking statements within the meaning of applicable securities laws and regulations. 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.