sical logistics ltd share price share price Management discussions

a) Industry structure and developments

The logistics industry facilitates the trade and business activities between two or more parties by transporting, storing, and distribution of goods through any of the arrangements viz. B2B, B2C, or C2C supply chain networks. At present time, logistics companies implement integrated cargo transportation services by land, air, and water while adapting to the changing nature of economic patterns and digitization.

Logistics sector is facing an era of unprecedented change as digitisation takes hold and customer expectations evolve combined with new technologies, re-shaping the marketplace and the challenges from the new entrants.

b) Opportunities and threats

The transportation and logistics sector in India is witnessing transformational growth with the rise in e-commerce and retail businesses and has been successful to keep pace with the latest demands of the sector. There has been maximum adoption of digitisation in the past two years as businesses realised the importance of embracing a computerised supply chain ecosystem for business growth. On the other hand, Indian consumers are increasingly becoming tech-savvy thus creating an opportunity for e-commerce logistics service providers to grow. The use of smartphone by larger users in India has given rise to better opportunities for penetration of e-commerce.

With the governments focus on improving infrastructure and the rise of e-commerce, the sector is expected to be a key driver of economic growth in the country. Moreover, with the increasing adoption of technology and the governments push for a digital economy, there is also significant potential for logistics players to leverage data analytics, artificial intelligence, and machine learning to improve operational efficiency and enhance customer experience. There are also opportunities for foreign investment as international companies look to tap into Indias growing logistics market.

The competition from existing and new entrants and managing the geographical / capacity expansion present the Company with new challenges.

c) Segment-wise or product-wise performance

The Companys entire business is from inter-modal logistics. There are no other primary / secondary segments in the Companys business

d) Outlook

During the CIRP period, the powers of the board of directors stood suspended and the management of the affairs of the Company was vested with the interim resolution professional/resolution professional. Pursuant to the implementation of the approved resolution plan, the erstwhile board of directors were dissolved and replaced with the new board of directors. The new board of directors were entrusted with the management of the affairs of the Company from January 11, 2023. This may have a positive impact on the Companys long term business and profitability.

e) Risks and concerns

Logistics industry in India is evolving rapidly and is regarded as the backbone of the economy for moving goods across the country. However, evolutionary changes like technological innovations, change in consumer demands and new regulations often bring challenges to this sector. In addition to that, the meaning of logistics services has also expanded over the years, especially with the advent of e-commerce business, posing different challenges with reference to timely delivery, cost reduction, returns and refund management, and more.

f) Internal control systems and their adequacy

During the CIRP period, interim resolution professional/ resolution professional was entrusted with the management of the affairs of the Company. The directors of the Reconstituted Board were entrusted with the management of the affairs of the Company from January 11, 2023. The Reconstituted Board reviewed the internal control system of the Company and has initiated steps to implement the robust internal control framework including standard operating procedures. The Reconstituted Board are of the opinion that based on the knowledge/ information gained by them about affairs of the Company in a limited period of time from records of the Company, the Company has effective internal financial control systems.

g) Financial / operational performance

Total income of the Company on stand-alone basis from operations and other income during 2022-23 was Rs. 27,063 lakhs. The profit before tax and exceptional item for 2022-23 was Rs. (4,552) lakhs. The total comprehensive income for 2022-23 was Rs. (78,909) lakhs. The retained earnings as on March 31, 2203, was Rs. (1,86,584) lakhs.

h) Human resources and industrial relations

During the year under review, employee relations at all the offices of the Company remained cordial. Despite the challenging scenario, the work force aided the Company in maintaining the operations of the Company.

Key financial ratios

Details of significant changes (i.e., change of 25% or more as compared to the immediately previous financial year) in key financial ratios, as per the standalone financial statement of the Company, is given below:

Ratio	Year ended March 31,2023	Year ended March 31, 2022	Explanation for variations above25%
Interest Coverage Ratio	1.23	(57.38)	By virtue of the Honble NCLT order dated December 08, 2022 and approved resolution plan, amount payable to secured financial creditors have reduced, and therefore this ratio has improved
Current Ratio	1.31	0.14	By virtue of the Honble NCLT order dated December 08, 2022 and approved resolution plan, current liabilities have reduced, and therefore this ratio has improved
Debt Equity Ratio	3.23	(0.95)	By virtue of the Honble NCLT order dated December 08, 2022 and approved resolution plan, amount payable to secured financial creditors have reduced, and therefore this ratio has improved

i) Details of any change in return on net worth as compared to the immediately previous financial year

By virtue of the Honble NCLT order dated December 08, 2022 and approved resolution plan, amount payable to secured financial creditors and other creditors have reduced, net-worth has improved and hence there is change in return on net worth.

j) Cautionary statement

Statements made in this report, particularly those which relate to management discussion and analysis, describing the Companys objectives, projections, estimates and expectations may constitute "forward looking statements" within the meaning of applicable laws and regulations. Actual results might vary materially from those either expressed or implied in the statement depending on the circumstances.