sanco trans ltd Management discussions

B. Industry Progress and outlook:

Uncertainties have become the new normal of the 21st century. After living in fear of the spread of the deadly coronavirus for almost two years, 2022 looked more promising as economic activities resumed to almost pre-Covid levels.

However, while the global economies were trying to find ways to tackle the supply chain related issues, the conflict between Russia and Ukraine further crippled the global supply chain last year.

Among the economies with impacted supply chains include the US, Canada, Italy, Australia, China, and Brazil, with just over 90 per cent based in the US. The baggage of uncertainties, inflation and recession has been carried forward in 2023 as well.

Like everywhere else in the world, the supply chain sector in India is trying to come up with new ways to mitigate the impact of logistics on the environment. Therefore, there is a growing commitment to reducing the environmental impact of logistics operations on part of companies both big and small.

The Indian government has been prioritizing the enhancement of this sector and the implementation of the United Logistics Interface Platform (ULIP) is one such endeavour. This is a digital framework that will help to bridge the gulf between the several stakeholders in this sector including manufacturers, government bodies, shippers, customers etc by allowing for real-time data exchange in a secure way.

Additionally, it could also promote enterprise efficiency by promoting quality assessment, standardization and of course digitization.

With an increased allocation by the Government of India on various Infrastructure related projects on all sectors, we are poised to witness exponential growth in the ports sector too. The volume of EXIM trade will direct benefit from these investments.

Indias logistics industry has achieved remarkable progress, highlighted by the countrys rise of six spots in the World Banks Logistics Performance Index (LPI). This improvement is credited to various factors, such as technology innovation, data-driven decision-making, and policy initiatives aimed at facilitating world-class infrastructure.

The development of multimodal logistics parks is a strategic step towards providing comprehensive freight-handling facilities. Spread across at least 100 acres, these parks offer access to various modes of transportation, including road, rail, and air. They also provide advanced storage solutions like mechanized warehouses and cold storage facilities, along with essential services like customs clearance and quarantine zones. By reducing freight costs, warehouse expenses, and vehicle congestion, these parks aim to optimize logistics operations and enhance overall supply chain efficiency.

One such facility is coming up in the outskirts of chennai closer to the Chennai - Bengaluru National Highway.

C. Financial Review

During this FY 2022-23, the revenue from operations was adversely impacted as compared to FY2021-22, mainly on account of closure of Container Freight operations contract at Andarkuppam with a related party from September 2022. Apart from this, during this financial year, income from container storage has declined much when compared to the previous financial year.

The direct operating expenses have increased by 2% primarily on account of equipment and fleet upkeep.

The Finance costs were down by 25% during the year on account of better management of working capital and closure of high interest cost loans.

Depreciation for the year has increased by Rs.56 lakhs, mostly on account of additions to operating fleet.

Administrative expenses are maintained at low levels 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, Executive Chairman 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 dedicated 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) 2,00,000 sq.ft

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 160 and the company sustained harmonious and cordial relations all through the year.

H. Ratios

Reason : The reason for change in ratio by more than 25% mainly due to lower revenue and profitability during the year ended March 31,2023 compared with year ended March 31,2022.

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.