Tara Chand Logistic Solutions Ltd Management Discussions.


India has emerged as the fastest growing major economy in the world and is expected to be one of the top three economic powers of the world in the next 10-15 years, backed by favourable demographics and ongoing structural reforms. The fast pace of growth of Indian economy over the last decade has placed immense pressure on the existing infrastructure of the nation. In case of Railways, the infrastructure is ageing and requires investment and similarly, road sector is under developed. As such, efficient use of the existing infrastructure and development of new assets has become very important.

The government has responded in the right manner by increasing allocation in the infrastructure sector in its budget presentation. Construction Equipment sector which has experienced growth in the range of 12-15% in last few years, is expected to see heightened business activities on the back of increased thrust on the infrastructure sector by the government and is estimated to grow by 15-18% during 2019-20. Based on the trend seen over the last three years in infra development, road/ metro/urban infrastructure sector is expected to be the main growth driver for the Construction Equipment industry. In its budget, the government accelerated the implementation of its big, ambitious schemes and projects that were announced in recent years. These include Sagarmala, Jal Marg Vikas, AMRUT, Housing for All, Diamond Quadrilateral for high-speed railways, river linkages, Bullet Train, and Bharatmala project to uplift the condition of roads and highways. The outlook for the infra and construction sectors looks promising and is likely to lead to sustained growth in the Construction Equipment industry for the next few years. The governments increased focus on infra and public has catapulted the industry as well as your company in a sweet spot in terms of volume and growth. Some of the key highlights from the Union Budget 201920 are outlined below. These initiatives bode well for the Contruction Equipment and Logistic industries.

• Ministry of Railways have been allocated Rs 94,071 crore (US$ 14.11 billion) in 2019-20.

• The government has suggested the investment of Rs 5,000,000 crore (US$ 750 billion) for railways infrastructure between 2018-2030.

• Metro rail network has reached to 657 Km.

• Government has announced to invest Rs 10,000,000 crore (US$ 1.5 trillion) in infrastructure over the next five years

• To upgrade 1,25,000 kms of road length over the next five years, the estimated cost of Rs 80,250 crore (US$ 12.03 billion) is envisaged under Pradhan Mantri Gram Sadak Yojana-III (PMGSY)

• Road - Bharatmala phase 2 going to be launched to develop the state road networks.

• Aims to achieve housing for all by 2022

• 19.5 million household to be built in rural areas


The Indian logistics industry was estimated at INR 15,40,000 crores in the Fiscal Year 2018, according to a report titled "India Logistics Clear Road Ahead" dated 26 November 2018, authored by Edelweiss Securities Ltd (hereinafter referred to as "Edelweiss Report").

A National Logistics Policy has been drafted by the Government of India to enable integrated development of the logistics sector in the country with a vision to drive economic growth and trade competitiveness of the country through a truly integrated, seamless, efficient, reliable and cost effective logistics network, leveraging best in class technology, processes and skilled manpower. A Logistics wing, under the Department of Commerce and Industry, has been created in July 2017 to overcome the issues of high logistics cost, skewed modal mix and lack of integration. The National Logistics Policy identifies key thrust areas to reduce logistics cost, promote logistics efficiency, optimize modal mix and improve first and last mile connectivity:

• Reducing Logistics Cost

• Optimizing modal mix

• Strengthening of warehousing sector

• Development of Multi Modal Logistics Parks

• Enhancing rolling infrastructure

• Improving road transportation

• Strengthening EXIM processes

• Promoting e-commerce trade

• Enhancing skills in the Logistics sector

• Strengthening MSME sector

• Promoting green and sustainable logistics

• Startup acceleration fund

• National Logistics action plan

• Creating a Center of Trade Facilitation and Logistics Excellence (CTFL)

• Single window logistics e-marketplace

• Logistics data and analytics center

• Standardization in the logistics sector

The Indian logistics sector was estimated to be at INR 15,40,000 crores in the Fiscal Year 2018 and the sector is estimated to grow at 12-13% CAGR for the next 5 to 7 years. Nearly two thirds of the Indian logistics spend is in transportation, the remainder is in warehousing/container freight stations/ inland container depots and storage (including inventory costs). Road transport accounts for approximately 75% of transportation (by volume)-rail, ocean, and air account for the remainder. The government is making large investments in road infrastructure -and road transportation will continue to be the main mode for goods transportation in India in the near future, despite the imminent completion of dedicated train freight corridors.

The Indian government has launched initiatives to organize the logistics sector and reduce the cost of logistics in India. Recent government actions include:

• The GST regulation has been implemented. Companies are now making supply chain decisions based on logistics efficiency and not tax efficiency.

• The e-way bill has helped streamline documentation and enabled faster transportation of goods across states.

The Department of Logistics within the Ministry of Commerce has published a draft of the National Logistics Policy. The Economic Advisory Council to the Prime Minister has constituted a logistics development committee to make it easier to trade in India. In addition, the government is formulating a policy for the integrated development of multimodal logistics parks.

• The government continues to invest in logistics infrastructure such as the Sagarmala project, UDAN scheme, Bharatmala pariyojana, and Dedicated Freight Corridors (DFCs). DFCs are expected to be commissioned in 2020-this should help improve the average speed of freight trains from 26 kmph to 70 kmph.

• The government has granted the logistics sector infrastructure status with the objective of reducing logistics costs. We believe that the Governments push for development of the Logistics sector coupled with the initiatives directed towards Ease of Doing Business will give your Company the opportunity to scale up its business as the industry moves towards the organized sector.


To improve the countrys infrastructure and to boost the economy, the Government has taken several steps and your Company is optimistic about capturing the upcoming opportunities. Some of the exciting opportunities that could be addressed include:

• Housing for all coupled with the governments credit linked subsidy schemes and a rising middle class will drive demand for affordable houses thus leading to increase in demand of construction equipment.

• The GST reform should help in streamlining the manufacturing sector and boost demand for efficient logistics for movement and storage of manufactured goods.

• With both government and private bodies heavily investing to boost infrastructure development across the country, the construction equipment industry stands to benefit immensely. This will positively impact the business for construction equipment rental companies and the resale market for these machines.

• We believe that our proactive steps in providing innovative efficient services and solutions to our customers and implementation of our strategies have prepared us for next leg of growth.

• The Company is focused on bringing cost & operational efficiencies to achieve profitable growth in the present competitive business environment. Our endeavor is to lower costs while maintaining quality of service.

• The Company will continue to focus on reducing the working capital levels by emphasis on speedy customer collection.


Any change in the government policy or its budgetary allocation towards the infrastructure sector will have an impact on the Companys business. Increasing trade protectionism globally poses the risk of trade war which can curb the economic momentum. The construction equipment industry might have to face an increasing shortage of trained manpower to operate and service these machines.

Our business is significantly influenced by the performance of the steel industry. About 45% of our revenues in the Fiscal Year 2019 were from clients who are into manufacturing of steel. Due to our dependence on steel, any downturn in the sector may impact our business. We operate in a very competitive industry, with many unorganized players. In the recent past, startups and international logistics companies have entered the India market. Competition from these segments is likely to increase. We will need to stay ahead of our competition through consistent focus on service quality and value- added services.


The Companys ability to foresee and manage business risks is crucial in achieving favorable results. The Company operates in an environment which is affected by various risks, some of which are identifiable and controllable. Some others are unexpected and cannot be controlled. Under these conditions, proper identification and management of risks is very important in determining the ability of the organization to sustain value creation for its stakeholders. The impact of the key risks, which are potentially significant are listed below have been identified through a formal process by the management. Your Company recognizes that every business has its inherent risks and the Company has been taking proactive approach to identify and mitigate them on a continuous basis.

• Continued Economic Growth: Demand of our warehousing, transportation and equipment hiring services is dependent on economic growth and / or infrastructure development. Any slowdown in the economic growth affects our growth.

• Our Client Base: The Company depends on its limited marquee clients for a majority of its revenues. This exposes the company to a risk of client concentration. The Company continues to take steps to create a larger client base, while continuing to benefit from the already strong long term association it shares with its current customers.

• Risks from Competition: Aggressive focus on infrastructural development has created opportunities and also increased competition in the logistics and equipment hiring businesses.

• Ability to pass on increasing cost: Ability to pass on increasing cost in a timely manner depends upon the demand supply situation and competitve activities and there has been a general reluctance as seen in the past, to make significant price hikes.

• Liquidity Crunch: The infrastructure development is directly dependent on the availability of capital. With the recent escalating NPAs of the public and private sectors banks, there exists the risk of liquidity crunch for our clients thereby putting a risk to our liquidity.

• Monsoon: Infrastructure development, to some extent, runs the risk in case of above normal monsoon. With normal monsoon and infra spending from the government, we expect both the logistics and equipment hiring industries to grow in double digit percentage terms in near future.


Your Company maintains adequate internal control system and procedures commensurate with its size and nature of operations. The internal control systems are designed to provide a reasonable assurance over reliability in financial reporting, ensure appropriate authorization of transactions, safeguarding the assets of the Company and prevent misuse/ losses and legal compliances. The internal control system includes a well-defined delegation of authority and a comprehensive Management Information System coupled with monthly and quarterly reviews of operational and financial performance, a well-structured budgeting process with regular monitoring of expenses and Internal audit. The Internal Audit reports are periodically reviewed by the Management and the Audit Committee and necessary improvements are undertaken, if required. The Companys efforts towards Internal Control Systems help it to achieve the following:

• Timely and accurate financial reporting in accordance with applicable accounting standards

• Optimum utilization and safety of assets

• Compliance with applicable laws, regulations, listing applications and management policies

• An effective management information system and reviews of other systems.


The key highlights of financial performance of standalone basis are as under:

• The Company crossed the 100 Crore turnover milestone in the year ended 31st March 2019 with a YoY growth of 22.6%. The Total Revenue for FY 2018-19 stood at INR 101.68 Crores as against INR 82.95 Crores in FY 2017-18.

• The Earnings before interest, tax, depreciation and amortization (EBITA) went up by 37.1% to INR 20.57 Crores in the year ended March 31, 2019 as against INR 15.01 Crores in the year ended March 31, 2018.

• The profit before tax (PBT) went up by 2.8% to INR 6.60 Crores in the year ended March 31, 2019 as against INR 6.42 Crores in the year ended March 31, 2018.

• The Operating Profit of the company grew 21.6% from INR 10.53 Crores for the year ended on 31st March 2019 as against INR 8.66 Crores for the year ended 31st March 2018.

• The Profit After Tax (PAT) went up by 3.03 to INR 4.75 Crores in the year ended March 31, 2019 as against INR 4.61 Crores in the year ended March 31, 2018.


The company believes that its HR policies should be dynamic and therefore takes adequate steps to review and realign them to ensure that they address changing workforce trends, best practices, and legislative requirements to help your organization achieve its evolving objectives. The company is focused on its people strategy to create a high performing work culture and fosters a culture that is performance oriented, promotes rewards for results and helps its people grow. Your company recognizes that its workforce is one of the most critical resources and it is working relentlessly to foster a growth driven culture. The focus is on development of employees at professional and personal levels using a pioneering, integrated approach to all its employees. Industrial relations were harmonious and cordial throughout the year.


The company recognizes that effective risk management is crucial to its continued profitability and long-term sustainability of its business. The company is committed to adopt good corporate governance, which promotes the long-term interests of all stakeholders, creates self-accountability across its management and helps built trust in the Company. A robust internal financial control system forms the backbone of our risk management and governance. In line with our commitment to provide sustainable returns to our stakeholders, your company has formalized clearly defined systems to manage its risks within acceptable limits by using risk mitigating techniques and have framed policies for timely addressing key business challenges and leveraging of business opportunities.


Management Discussion and Analysis detailing the Companys objectives, outlook and expectations have "forward looking statement" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied depending upon global and Indian demand supply conditions, changes in Government regulations, tax regimes and economic developments within India and overseas.

On behalf of the Board of Directors Tara Chand Logistic Solutions Limited


Vinay Kumar

Chairman & Managing Director DIN:00151567

Add: C/O: 342 Industrial Area, Phase I, Chandigarh - 160002

Date: July 23, 2019

Place: Chandigarh