Sanco Trans Ltd Management Discussions

ANNEXURE A TO DIRECTORS REPORT

A. About the Company

The Company was incorporated by late Sri K Santhanam Reddiar in the year 1979 as a Private Limited Company with a paid up share capital of Rs. 5 Lakhs which took over his proprietary business carried on in that name and was converted into a Public Limited Company in the year 1986.

The key performance indicators of the company for 10 years are given below:

(Rs in Lakhs)

Year ended 31st March	Revenue	Profit before tax	Profit after tax	Total Comprehensive income	Net worth	Fixed Assets-net	Dividend %	Earnings per share (Rupees)
2015	7677.93	227.78	235.67	NA	9844.53	11460.48	27	13.09
2016	7723.34	116.99	107.36	NA	9912.89	11702.08	18	5.96
2017*	8481.53	32.02	68.00	63.92	9747.38	11103.87	9	1.81
2018*	9122.94	(202.55)	(79.29)	(75.14)	9326.27	10394.77	9	(4.41)
2019*	10830.58	(51.55)	(37.27)	(54.89)	9322.49	9976.87	9	(2.07)
2020	9795.49	19.94	11.94	7.66	9310.59	10022.96	-	0.66
2021	10360.20	448.17	292.18	280.67	9591.26	9920.12	15	16.23
2022	12004.73	1130.83	834.16	831.34	10395.59	9830.89	45	46.34
2023	11026.87	168.62	136.97	125.18	10439.78	8751.25	12	7.61
2024	10163.55	192.62	114.86	109.44	10527.62	9009.80	15	6.38

* Figures are regrouped / restated as per Indian Accounting Standards

B. Industry Progress and outlook:

Our economy outlook is expected to grow at the rate of 6.9% this year. World Bank expects our economy to grow at 7.5% this fiscal year.

Uneven economic growth for key trade partners and an escalation of the ongoing Red Sea crisis can be a drag on exports. Unexpected events like the Baltimore accident etc are also expected to cause a negative impact on the supply chain of both export and import of goods. These events not only impact time lines on movement of goods but also result increased costs in certain trade lines, in particular to the European sub-continent.

Continued disinflation will support the purchasing power of consumers. This assumes a spell of normal monsoon in calendar 2024, which can lift agricultural growth and a gradual pick-up in private sector capex will make investment growth more broad-based and contribute to increased volume in EX-IM trade.

As indicated in our last years report the changes and improvements made by our government vide the digital platforms for the EXIM trade is helping the process for the business community in reducing the transaction cost and time to the Industry.

The other Multimodal Logistics park identified in our state of Tamilnadu is also gaining momentum from drawing board to implementation stage. Land suitable for the same has been identified by the government in Coimbatore. A similar progress in the green field airport for Chennai is also progressing in the right direction. Governmental clearances are underway to kick start the project. This will give our state the much-needed support to the business community in meeting the, Just in Time, link to the manufacturers situated in and around Chennai.

The Tamil Nadu Governments Logistics policy which released recently will also add impetus to the business growth.

C. Financial Review

During this FY 2023-24, the revenue from operations was impacted as compared to FY 2022-23, mainly on account of closure of Container Freight operations and maintenance contract at Andarkuppam with a related party from September 2022. However, the company has identified new contracts and increased the volume in existing contracts which reduced the impact in 2023-24.

The direct operating expenses have declined marginally thus improving the contribution.

The Finance costs were down by 22% during the year on account of better management of working capital with controlled usage on cash credit facility.

Depreciation for the year has increased by Rs.61 lakhs, mostly on account of additions to operating fleet.

Administrative expenses are reduced by more than 100 Lakhs through various internal initiatives taken throughout the year.

D. Internal Control Systems and their adequacy

The companys internal control system has been developed taking into account the size of operations to make sure that it would provide for accurate recording of transactions which in turn provides for safe guarding of assets and for compliance to mandatory accounting standards.

Consequent to the implementation of Companies Act, 2013 (Act), the Company has complied with the specific requirements in terms of Section 134(5)(e) of the said Act calling for establishment and implementation of an Internal Financial Control framework that supports compliance with requirements of the Act in relation to the Directors responsibility statement.

The Internal Auditor of the company carried out periodical verifications at all locations and all divisions as per the audit plan approved by Audit Committee. The observations are discussed with management and actions wherever required to strengthen the controls are taken. Significant observations are placed and discussed in Audit Committee every quarter.

Further, MD and CFO certification are provided in the Annual Report confirming the existence on adequacy of our internal financial control systems and procedures.

E. Opportunities and Threats

We believe that our strengths includes

• Facilities to handle 7500 TEUs per month to handle Import Laden Container and 1000 TEUs per month to handle Export Laden Container.

• 9 acres of leasehold space dedicated for Maintenance & Repair service (International Standard M&R Licensed - IICL).

• Availability of sufficient number of operating equipments like Reach Stackers to handle the containers without delay.

• Professionally engineered yard for economical stacking and delivery.

• Warehouse space availability (bonded, general warehouse, export and import) 50,000 sq.ft inside our CFS comprising 13.83 acres.

Despite the above strengths, the companys business volume depends on the volume handled at Chennai port. Consequently, the revenues/profits of the company are difficult to predict. Risk factors includes global economic condition and domestic demand and supply.

F. Risk Management

The Risk Management Committee discusses with Heads of Divisions for assessment of risks and will put risk mitigation plans wherever required.

G. Human Resources

During the year under review, the total number of people on the rolls of the company is 150 and the company sustained harmonious and cordial relations all through the year.

H. Ratios

Particulars	31.03.2024	31.03.2023
Debtors Turnover ratio	3.98	4.38
Interest Coverage ratio	2.84	2.24
Current ratio	1.18	1.35
Debt equity ratio	0.11	0.07
Operating profit margin (%)	4.88%	6.19%
Net profit margin (%)	1.17%	1.28%
Return on net worth (%)	1.09%	1.30%

Reason :

The reason for change in ratio during this 2023-24 compared to 2022-23 by more than 25% is largely because of reduced profitability and revenue of the Company

I. Cautionary note

Statements in this report discloses forward looking information that set our anticipated results based on the managements plans and assumptions to enable investors to fully appreciate our prospects and take informed investment decisions. The company cannot, of course, guarantee that these forward looking statements will be realized, although the company believes it has been prudent in its assumptions. The achievement of results is subject to risks, uncertainties and even inaccurate assumptions. Should known or unknown risks or uncertainties materialize or should the underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated or projected.