Today's Top Gainer
Note:Top Gainer - Nifty 50 More
(Within the limits set by the Companys competitive position)
The Indian economy performed well in the fourth quarter of FY 2017-18 achieving the highest growth rate in last seven quarters. This highlights that the economy is emerging from the headwinds of demonetization in November 2016 and the introduction of the landmark Goods and Services Tax (GST) in July 2017, which brought in some uncertainties as businesses adjusted to the new regime. This did not take long, and from the third quarter onwards, signs of growth returning were evident. The IMF expects India to grow at 7.4% during 2018 which could increase further to 7.8% during 2019 in contrast to 6.7% during 2017.
The agricultural sector registered moderate growth where as Industrial growth accelerated sharply on account of a sharp increase in manufacturing and electricity, gas, water supply and utility services. The services sector with a share of 55.2 per cent in Indias gross value added continued to be the key driver of Indias economic growth in 2017-18. The Government has taken many initiatives in the different services which include digitization, e-visas, infrastructure status to Logistics, Start-up India, schemes for the housing sector, etc. which could give a further fillip to this sector.
Low domestic demand followed by high commodity prices, Inflationary pressures, NPAs in banking sector are remained concerns for Indian economy. The upcoming elections in FY 2018-19 will be the factor which will influence the future path of Indian economy.
Companys Business in brief:
Your Company is a single stop Logistics Services Provider, offering unified Logistics solutions through the extensive infrastructure of Offices and Delivery Destinations across all over the country. The Company provide various services to their client through its different divisions and products. Your Company offers a complete range of Logistics Products, which include following business activities:
Surface Transport through Patel Roadways division:
The Flagship division of the company undertakes the conventional transportation of Goods including Full Truck Load (FTL) & Less Truck Load (LTL). FTL takes care of full truckloads at national level in metric ton capacities of 3, 4.5,6, 9, 16 and thereafter in trailers of specific sizes. FTL is point-to-point hard freight options catering to corporates 200 delivery stations countrywide. LTL specializes in hard freight sundry shipments. Having a national network with a regional reach, it moves goods at long, medium as well as short routes at an all India level. LTL provides customized solutions as per clients requirements in sundry loads.
Retail Door Pick-up and Door Delivery through Patel Express division:
With service delivery covering PAN India and guaranteed daily dispatches on 65 routes, PATEL Express reach extends to every location in India, no matter how remote. The company guarantees a faster, safer load movement through scheduled dispatches and customers have a window of next day to nine days delivery schedule to choose from. Prompt Door-to-Door Express Cargo and cost-effective services tailored to suit client requirements, are the main drivers of Patel Express operational model. A large fleet of trucks, a wide network and trained human resources at every station fuel the reliable, safe and timely delivery of goods.
Warehousing through Patel warehouse:
Your Company is looking to spread its wings in sphere of Warehousing. Presently the Company has its Bonded Warehouse of 15,000 sq. feet at Chennai under Patel warehouse, which is providing warehousing solutions to the customers. The Construction of warehouse at Bangalore is in progress and will be operative in this financial year. It offers services in Warehousing and Distribution, Manufacturing Logistics, C&F Management apart from other valuable services in cargo and vendor management. The Company also looking to expand Warehousing at Hyderabad, NCR Region and other strategic locations in India in the coming years.
Air Cargo Consolidation through Patel Airfreight division:
This division of the Company carries on the business of courier and air cargo consolidation in the domestic as well as in the International market. These divisions are IATA approved divisions and undertakes efficient and cost-effective courier and air cargo consolidation with network of branches across all over the country.
A) Surface Transport and Logistics:
The Transport and Logistics sector is the back bone of national development and significant contributor to economic growth and prosperity. The logistics market in India comprises shipping, port-services, warehousing, rail, road and air freight, express cargo and other value-added services. The logistics sector in India supports various components of the manufacturing industry in India.
The union Budget has emphasised on the development of infrastructure by stressing the need for over Rs. 50 lakh crore in investment to connect and integrate the country with a comprehensive network of roads, railways, airports, ports and inland waterways. India was ranked 35th on the World Banks Logistics Performance Index, moving up from the 54th spot in 2014. The Indian logistics industry provides employment to more than 22 million people and has grown at a CAGR of 7.8% during the last five years. Realising the importance of the sector and to address the inefficiencies, the government has included the sector in the Harmonised Master list of Infrastructure Subsector.
B) Air Cargo:
Air Transport is vital for cross border trade and speed and efficiency in transporting high-value, time and temperature sensitive cargo. Air cargo is essential to many facets of modern life. Moving perishable goods from one side of the world to the other would not be possible without air transport. IATA forecasts a rise in cargo carried to 62.5 million tonnes in 2018 (59.9 million tonnes in 2017) representing less than 1% of world trade by volume, but over 35% by value. Amazon, Alibaba, eBay and other e-commerce companies rely on the express delivery services made possible by aviation to get those devices, and so much more, to their customers. The growth potential of Air Cargo industry is phenomenal.
Opportunities & Outlook
A) Surface Transport and Logistics:
Improving logistics sector has huge implication on exports and it is estimated that a 10 per cent decrease in indirect logistics cost can increase 5-8 per cent of exports. Apart from increasing trade, better performance in logistics will augment programmes like Make in India, Digital India and also enable India to become an important part of the global supply chain. With the advancement in e-commerce and vendors racing up to provide the fastest door to door services the scope for 3PL and warehousing has widen like never before.
A large part of opportunities in logistics will be powered by technology and associated innovation. With many technological interventions such as electronic toll-collection systems for faster toll crossing and reduced requirement of paperwork, strong disruptions will be observed in this sector with increased adoption of technology. Moreover, with up gradation of road infrastructure, cargo handling will also witness a significant shift from air-based to surface-based transport. Overall this will result in achieving better infrastructural utilization, boosting overall feasibility of the network, and improving the bottom line.
The Goods and Services Tax (GST), touted as the biggest tax reform in the history of independent India became a reality in 2017. Under post GST era the Companies are enjoying the immediate benefits from removal of check posts. Trucks are able to cover longer distances every day with an improved turnaround time ensuring that the transporters can carry out their business with a smaller fleet. The logistic business will also shift from unorganized players to large organized players. GST implementation will create good opportunities for companies to enter the organised sector. The infrastructure status to the logistics industry will enable companies in the logistics and warehousing sector to access funds at lower cost, longer tenure and enhanced limits.
The Indian freight transportation sector has been forecasted to register a CAGR of more than 13% by the end of 2022 owing to factors such as rising growth of manufacturing, e-commerce, and retail industries. Furthermore, the high rate of development and new solutions for the transport infrastructure is likely to boost the logistics industry in India. In order to develop this sector in an integrated way, it is important to focus on new technology, improved investment, skilling, removing bottlenecks, improving inter modal transportation, automation, single window system for giving clearances, and simplifying processes.
B) Air Cargo:
Air freight appears to have entered a period of sustainable growth with steadily increasing volume from the e-commerce and pharmaceuticals sectors over the past few years. There are many opportunities in the air cargo industry in India that will promote domestic and international trade. Investments in infrastructure development and technology adoption will certainly lead to development of more efficient air cargo industry.
IATA has forecasted industry-wide freight ton kilometers to grow by 4.9 percent on average over each of the next five years. The general expectation is that the outlook for air freight over the next five years will be supported by a brighter economic and trade backdrop than what was seen between 2012 and 2017. Having accelerated in 2017, global GDP growth is expected to remain relatively robust over the next five years.
The two major initiatives by the Indian Government to propel the Indian air cargo further, are formation of Air Cargo Logistics Promotion Board (ACLPB) and AAI Cargo Logistics & Allied Services (AAICLAS) which will provide an ecosystem for harmonized growth of aviation sector.
Risks & Concerns:
A) Surface Transport and Logistics:
Infrastructure is one of the biggest hurdles that has cramped growth of the logistics sector which results to high and inconsistent cargo transit time, inefficient use of resources and poor fleet management.
Availability of appropriately skilled manpower remains a challenge. The sector needs to specifically build a pool of personnel comprising truck drivers, seafarers, warehousing managers, quality inspection supervisors, among others. There are limited institutes for soft skills, and operational and technical training.
Due to lack of awareness of Information Technology the logistics sector is fraught with operational inefficiencies and poor asset utilization.
Use of innovative models, new technological systems, international best practices, research and adequate implementation approach can all help to improve the sector, which in turn can stimulate growth and employment in the country.
B) Air Cargo:
The Air Cargo industry is facing challenge of modal shift from air to other modes of transport which are less expensive like road and rail transport. Customers are also looking at mixing transport options to balance costs and speed. The customer expectations are also shifting from B2B transactions to B2C transactions. To manage it and offering compatible solutions are in focus for the coming years. In addition to that increasing cost of fuel will determine the upward or downward trend in Air Cargo movements.
Cargo operations are performed at thousands of airports all over the world by hundreds of handlers, big and small. This poses a high potential risk for deviations in quality and consistency of handling. This requires need for development of ground handling operations standards, best-practice processes and procedures, and promotion of global consistency and harmonization.
Human Resource Management:
The "House of Patels" is mainly a service provider in the arena of Logistics. In this field there are several players, and the fact that we have completed more than half a century and are one of the acknowledged leaders in this field is mainly due to the quality of service that we provide to our esteemed clients. The Indian Logistics sector has been growing at faster pace than the global industry in the past decade. 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. Sourcing the right candidates, engagement, development and retention of intellectual capital is a vital management exercise. Our human capita constitutes a judicious mix of youth, imagination, risk-taking ability and seasoned experience.
The management firmly believes that the people are the driving force behind the growth of every organization and continues to focus on people development. As a service-based sector, logistics services can only be as efficient as the efficiency of its lowest rung employee. Skill based training is imparted to the entry level or the Blue Collared employee. The Company has always held the view that recognizing and rewarding excellence is essential for having a totally committed, dedicated and "charged" work force.
From the bottom to the top, a change in the efficiencies of personnel will spur the growth of the company, and allow business to scale greater heights.
The Company continues to enjoy peaceful and harmonious relations with all its employees through several proactive measures during the year. The Company employed 848 people as on 31st March, 2018.
Internal Control System:
The Company has a satisfactory Internal Control System, the adequacy of which has been reported by the Auditors in their Report as required by the Companies (Auditors Report) Order, 2015.
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.
Financial performance and segment-wise performance:
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.