(Within the limits set by the Companys competitive position)
Economic Scenario:
The global economy has experienced numerous challenges in the form of global inflation,
prevailing Ukraine-Russia war, sharp policy tightening in our major markets, financial
institutions disappearing and tighter monetary conditions derailed the economic recovery
in 2022. China is rebounding strongly following the reopening of its economy after the
pandemic-related disruptions. Supply-chain disruptions are unwinding, while the
dislocations to energy and food markets caused by the war are receding. Simultaneously,
the massive tightening of monetary policy by most central banks has started reaping
benefits with inflation moving back toward its targets. The International Monetary Fund
(IMF) has projected global growth to decline from 3.4% in 2022 to 2.8% in 2023 and rise to
3.0% in 2024. Growth in Advanced Economies is projected to decline from 2.7% in 2022 to
1.3% in 2023 before rising to1.4% in 2024. The emerging economies are projected to decline
from 4% in 2022 to 3.9% in 2023 and rise to 4.2% in 2024. In the medium term, it is
imperative to focus on structural factors impeding supply and take appropriate steps to
strengthen multilateral cooperation. This will help in creating a more resilient world
economy. (Source: IMF World Economic Outlook April 2023)
In FY2023, the Indian economy continued to remain strong in the face of adverse global
macroeconomic challenges. Despite high inflation, the Indian economy has achieved GDP
growth of 7.2% in F.Y 2022-23. The Indian economys projected GDP growth according to ADB
(Asian Development Bank) will be moderate at 6.4% in fiscal year (FY) 2023 ending on 31
March 2024 and will rise to 6.7% in FY2024, driven by private consumption and private
investment on the back of government policies to improve transport infrastructure,
logistics, and the business ecosystem. Indias economic growth story was primarily
supported by robust investment activity reinforced by government capex push, return of
private consumption and capital formation, which also helped generate employment in the
country. Though, the global turmoil in FY2023 triggered broad-based inflation worldwide,
and India was no exception. In April 2022, retail inflation, measured by CPI (consumer
price index), reached the highest (7.79%). RBI increased interest rates to contain the
soaring inflation. By the end of this fiscal, CPI (consumer price index) came down to
5.66%.The index of industrial production grew by 5.1%, against a growth of 11.4% in
FY2022. Despite this drop, GST collection in FY2023 stood at 18 lakh crore, clocking a
growth of 22% over last year. It shows the resilience of the Indian economy amid several
global headwinds. Net Direct Tax collections (provisional) for the FY2023 stood at 16.61
lakh crore marking a growth of 17.63% on a y-o-y basis.
The nations vision of becoming a $5 trillion economy by 2025 requires strong
determination and incorporation of pro business policies. Providing essential support for
new players in the market, improving the ease of doing business, eliminating unnecessary
policies which prove detrimental and enhancing trade for job creation are crucial for
future growth. Exports of network products have the potential to bring the economy on
track, as it can provide impetus to the manufacturing sector and develop numerous jobs.
This will be done by merging “Assemble in India for the world” with the
“Make in India” initiative. The exports of network products is anticipated to
touch $7 trillion by 2025, which will play a crucial role for the Indian economy.
Companys Business in brief:
Presently Company is engaged into Air Cargo Consolidation business under the division
Patel Airfreight which offers transportation of high-density cargo by air and surface
within India as well as International. With around 89 branches across the country, it
offers the specialised services.
The Company has ventured into health and fitness industry by taking franchisee of GYM
business which is expected to grow during the current year.
Industry Overview:
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.
The air cargo industry continued to see significant growth in its capacity, as measured
by available cargo tonne-kilometers (ACTKs), which increased by 13.4% compared to the
previous year. This expansion propelled the industrys capacity to surpass pre-Covid
levels by 3.2%, marking the first time in three years that such levels have been achieved.
The recovery of air cargo capacity can be attributed to the restoration of belly-hold
cargo capacity provided by passenger aircraft. The ACTKs from passenger flights
experienced a remarkable increase of 47.9% this month, while ACTKs from dedicated
freighters contracted by 2.3%. Moreover, April 2023 witnessed the absence of scheduled
passenger freighters (also known as preighters) globally for the first time in two and a
half years, after they played an essential role during the pandemic. In April,
International capacity increased 10.7% YoY, consistent with the faster recovery of
belly-hold cargo capacity in international passenger markets. Despite the full recovery of
air cargo capacity, the industry continues to be challenged by softening demand, leading
to a decline in air cargo load factors. Cargo load factors dropped to 42.8% in April, 9.1%
points (ppts) lower than the previous year. This decline can be attributed to the
combination of increased capacity and weaker air cargo demand.
Opportunities & Outlook:
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.
The Government of India has planned to revive 50 airports to improve regional air
connectivity around India. Apart from this, there is also a plan to make additional
heliports, advanced landing grounds and water aerodromes. At present, only 30% of Indian
residential areas have easy access to airports. This move is therefore aimed at increasing
air traffic from Tier-II and III cities and to make air travel more accessible to the
common people. Furthermore, constructing additional airports is expected to have a
multiplier effect in creating a demand in Air Cargo Business Additionally, constructing
new airports will create new employment opportunities, boost tourism and reduce congestion
in existing ones.
The air cargo and logistics sectors may see a gradual shift from survival mode to
growth mode, as they have overcome the pandemic-related disruptions and emerged as a
winner. High air freight rates, lack of trained manpower, inadequate infrastructure, and
congestion at the terminals will remain as the main areas of concern, however, the year
ahead will bring many opportunities in improving the supply chain efficiency. Experts
forecast advanced technologies such as Artificial Intelligence, digitization, automation,
and cloud-based solutions to act as a catalyst in improving overall operations. Air cargo
ground handling and warehousing industries will see more of automation and robots taking
care of storage of goods. Indian domestic air cargo market will be strong due to increased
demand for consumer durables. Experts said in the times to come, India will become a big
exports hub in Information Technology and Defence sectors, consumer durables,
pharmaceuticals and heavy lift industry will project growth. Sustainable operations using
biodegradable, and energy efficient technology will bring noteworthy changes in the air
cargo handling, storage, and transportation.
Strong macroeconomic fundamentals, growth in retail driven by rising levels of
disposable income in the hands of more and more people, expansion in domestic air Network
by Indian Carriers, End to End solutions by Express Service Providers, growth of new time
sensitive verticals like Pharmaceuticals, Healthcare, Electronics, wireless telephony, and
Automotive Spares etc. are said to be the factors responsible for the rapid growth of
Domestic Air cargo logistics business.
The domestic air freight demand is expected to touch 1.1 million tonne by the fiscal
2025 at a compounded annual growth rate (CAGR) of 7-9% propelled by rapidly growing
e-commerce activity, increasing capacity and improving airline connectivity to smaller
cities, according to a research note.
Risks & Concerns:
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 11.5 ppts 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 favorable
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:
Your Company continues to place significant importance on its Human Resources and
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 has 272 employees as on
31st March, 2023.
Internal Control System:
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 and Transparent 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.
Cautionary Statement:
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.
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