Tejas Cargo India Ltd Management Discussions

1. Economic Overview

India maintained its trajectory as the worlds fastest-growing major economy in FY25, recording GDP growth above 6%. This robust performance was driven by a strong manufacturing sector, increased private consumption, ongoing government infrastructure projects, digitalization across industries, and a focus on "Make in India" and

Atmanirbhar Bharat initiatives. Inflation stabilised, enabling business and investorconfidence to remain high throughout the year. The logistics industry, inherently linked with economic momentum, has been a key enabler in keeping supply chains robust, efficient, and ready for future growth.

2. Industry Overview

Industry Growth and Transformation

The Indian logistics industry has emerged as a pillar of economic strength, transforming rapidly from basic transportation towards full-service, tech-driven supply chain management. In FY25, the sector grew substantially underpinned by:

- Expanding Market Size & Demand

The sectors valuation crossed 2,300,000 crore, with a CAGR expected to exceed 13%, propelled by rising e-commerce, organized retail, infrastructure growth, and increased global trade. The multi-modal logistics approach has gained increasing importance to optimize total logistics costs.

- Technological Advances:

Industry-wide adoption of IoT for real-time tracking, AI for route optimization, and GPS-enabled asset monitoring has driven efficiency, transparency, and security. Digitization has reduced paperwork and improved coordination among stakeholders.

- Customer Expectations

Market demand shifted towards integrated, transparent, and end-to-end logistics solutions that offer speed, flexibility, and tailored services, such as cold chains for perishables, value-added warehousing, and just-in-time delivery.

- Sustainability Trends

A growing emphasis on eco-friendly logistics has focused attention on lower carbon footprint, green warehousing, and fleet modernization with cleaner fuels and EV deployment.

- Talent and Skill Development

The industry faces chronic driver shortages and workforce skill gaps, which are being addressed through government-supported skilling initiatives and private-sector training programs.

Tejas Cargos Differentiation

In this competitive, evolving environment, Tejas Cargo distinguishes itself through its technology-first, asset-intensive approach combined with a pan-India footprint.

The Company operates a proprietary IoT-enabled fleet with AI-backed telematics, giving clients superior visibility, operational control, and security through features such as digitally controlled container locks and centralized monitoring centers.

Unlike many players with asset-light models, Tejas Cargo owns a significant portion of its vehicles, ensuring quality and control. The Company has continually invested in fleet modernization adding 100+ new vehicles annually, phasing out ageing trucks, and deploying AI-powered safety systems (ADAS/DSM) across trailers—to align with environmental and regulatory standards.

Tejas Cargo has implemented an in-house ERP system, PESO-licensed diesel pump delivering ~14.6% fuel savings in FY25, and OEM-linked maintenance infrastructure across 9+ service stations. These initiatives directly translate into ~82% fleet utilization, 86% on-time delivery performance, and ~19% revenue contribution from hired fleet, striking a balance between scalability and operational control.

This operational rigor—supported by measurable outcomes and aligned with industry trends of digitalization, cost-efficiency, and sustainability combined with high customer stickiness built on reliability and transparency, sets Tejas Cargo apart as a leader in organized, full-truckload logistics.

3. Government Policy and Industry Initiatives

The logistics industry in FY25 was extensively influenced by government policies aimed at transforming infrastructure and supply chains:

- National Logistics Policy (NLP)

Focusing on reducing logistics costs from 14% to about 8% of GDP, NLP promotes multimodal logistics, regulatory harmonization, digital platforms (like ULIP), skill development, and green logistics. The policy enables smoother movement, transparency, and faster clearance at customs and checkpoints.

- PM Gati Shakti Programme

This initiative facilitates integrated infrastructure planning and expedited project execution across freight corridors, ensuring seamless connectivity between highways, railways, airports, and ports.

- Budgetary Measures

The 2025 Union Budget emphasized logistics infrastructure with significant capex, incentives for green fleet adoption, enhancements in warehousing, and initiatives to digitize trade and customs processes.

- Skill Development

The governments emphasis on building a skilled logistics workforce through partnerships with training institutes and ITIs addresses the sectors manpower challenges.

Tejas Cargo actively aligns with these policies by integrating its digital systems with government platforms such as

ULIP, upgrading fleets under environmental regulations, expanding multimodal services in line with Gati Shakti objectives, and investing in workforce training aligned with government-backed skill initiatives. These synergies allow the company to improve operational efficiencies and expand its service offering in a compliant manner.

4. Business Performance, Strategy, and Future Outlook

Business Performance

FY25 marked a transformative chapter in Tejas Cargos journey, with the Company delivering strong growth across both top-line and profitability metrics, supported by operational excellence and strategic expansion. Total income surged by 20.27% year-on-year to 508.24 crore, reflecting enhanced asset utilization, widening customer base, and higher fleet capacity. EBITDA grew at an even more robust pace of 50.2%, reaching 103.69 crore, driven by servicing to clients through own fleets, economies of scale, technological efficiencies, and disciplined cost management, resulting in a healthy EBITDA margin of

20.4%. Net profit rose significantly by 44.7% to 19.14 crore, with net margins improving to 3.8%, underscoring profitable growth.

The Companys fleet strength expanded by nearly 17% to

1,199 vehicles, comprising 923 container trucks and 276 trailers in FY25. This expansion enabled Tejas Cargo to increase its geographic penetration with 27 branch offices strategically spread across Indias key industrial and logistics corridors. Alongside, the contract book diversified with over 50 clients spanning sectors such as FMCG, pharmaceuticals, cement, steel, and e-commerce, reducing sectoral concentration risk and contributing to volume resilience.

Capitalizing on IPO proceeds and internal accruals, the

Company invested prudently in fleet addition, digital infrastructure, and human capital development. The asset-heavy model ensured high fleet utilization and strengthened service reliability, factors that are critical in the long-haul transportation segment where asset control is paramount.

This approach helped achieve a premium on asset turnover and solid cash flows from operations, which showed steady improvement aligned with profitability gains.

In parallel, Tejas Cargo has adopted a hybrid asset approach, complementing its owned fleet with vehicles hired from the market. This provides the dual advantage of maintaining direct operational control while ensuring scalability and cost efficiency during peak demand periods.

The Company has been generating approximately 19.05% of total revenue through hired fleets, striking a balance between asset ownership and aggregation. Going forward in FY26, the Company plans to increase the share of hired fleet revenue further, aligning with its growth strategy of blending reliability with flexibility.

Financial Position and Cash Flow

The balance sheet witnessed healthy asset growth signifying ongoing investments in fleet and technology, bolstering capacity for future growth. Fixed assets form a sizeable portion of total assets, reflecting Tejas Cargos commitment to owning and operating modern vehicles that comply with evolving environmental and safety regulations.

The net worth increased owing to profit retention and the IPO equity infusion, strengthening the Companys financial base and sustaining a comfortable leverage ratio. Total debt was managed prudently, enabling optimal capital structure for expansion while maintaining liquidity buffers. On cash flow, operating activities generated positive cash inflows, reflecting efficient working capital management through judicious oversight of receivables and payables. The receivable days for FY25 stood at 69.93 days vs 60.77 days for FY24. The increase in receivable days is a factor of skewed business during the last quarter and addition of new clients. The payable days for FY25 stood at 8.32 days vs 6.60 days for FY24. Capital expenditures, primarily on self-owned fleet augmentation and IT-enabled operational systems, were largely funded internally alongside equity capital. Free cash flow remained positive, reinforcing financial flexibility to support growth initiatives without over-reliance on external borrowings. This healthy cash position also equips Tejas Cargo to navigate periodical market fluctuations and invest in strategic opportunities.

Strategic Initiatives

The Companys strategic focus for FY25 centered on technology-led operational excellence, geographic growth, diversification, and sustainability.

- Technology

Ever-increasing investments in IoT, GPS tracking, AI-based route optimization, centralized fleet control rooms, and digital locks continue to enhance security, operational visibility, and customer trust.

- Geographic Expansion

Operational footprints deepened in underserved regions and key freight corridors, increasing market share and reducing logistics bottlenecks. During FY25, the Company expanded its presence by opening 6 new branches across North, West, and East India, specifically targeting high-demand corridors for Steel, Mining, and Mineral industries. With this addition, Tejas Cargo now operates 27 branch offices nationwide, enhancing its ability to service large industrial hubs and ensuring wider geographic coverage.

- Diversification

Entry into high-growth verticals such as Cement, Steel, Mining, and Mineral logistics broadened the revenue base and reduced dependence on traditional sectors.

- Sustainability

Green fleet programs and regulatory alignment demonstrate Tejas Cargos commitment to environmental responsibility and future-proofing operational capabilities

The Company is in discussion with multiple clients focusing on reducing SCOPE 3 emissions, about their requirement to deploy vehicles that are comparatively greener and environment friendly. The Company has recently executed an agreement to deploy Electric Vehicles for Amazon and the agreement is for 5 years.

Future Outlook

Looking ahead to FY26 and beyond, the Company is optimistic about sustaining its growth trajectory fueled by several macro and company-specific factors. The

Indian logistics sectors inherent growth drivers, including rising manufacturing output, infrastructure investments, e-commerce expansions, and formalization of supply chains, remain robust. Continued supportive government policies and digitization initiatives will further reduce structural inefficiencies and business frictions.

Tejas Cargo aims to deepen its trailers fleet and increase its presence in Minerals Transportation and focusing on opportunity to enter in the mining industry in partnership through joint venture.

Risk management and financial discipline will remain central to execution as the Company navigates rising fuel prices, regulatory complexities, and competitive pricing pressures. Strategic investments in talent development, ESG initiatives, and digital transformation underpin Tejas Cargos commitment to building a resilient, scalable, and sustainable logistics business. The outlook for FY26 is thus confidently positive, building on FY25s strong foundations with an emphasis on market leadership and enhanced stakeholder value.

5. Financial Performance

FY25 delivered robust financial results marked by growth, profitability, and strong cash flow management. -Revenue increased 20.3% YoY to 508.24 crore vs INR 422.59 crore, driven by higher fleet utilization and customer base expansion.

-EBITDA rose sharply by 50.2% to 103.69 crore vs INR 69.03 crore, reflecting increased fleet and higher revenue from own fleet, operating leverage, technology efficiency, and optimized cost structures, achieving a margin of 20.4% vs 16.34% for FY24.

-Net profitmarginsimprovedto3.8%,withprofit 19.14 crore vs 13.22 crore, a 44.7% rise YoY.

The asset base expanded with fleet additions funded by the

IPO proceeds and internal accruals. Fixed assets, especially owned vehicles, account for a significant portion, supporting higher control over operations. Prudent management of receivables and payables ensures a strong working capital cycle. Debt levels remain manageable, supporting financial flexibility and future growth investments.

Operating cash flow showed healthy growth aligned with earnings improvement, reflecting efficient collections and cost control. Investments in capex, particularly fleet expansion and technology infrastructure, were financed through a combination of internal accruals and equity infusion. Free cash flow remained positive, enabling dividend distribution considerations in future and debt servicing.

6. Human Resources

The company continues to build a skilled, motivated workforce through robust training programs focused on driver safety, operational compliance, and customer service excellence. Strategic partnerships with transport ITIs and ongoing upskilling initiatives address talent shortages. Emphasis on gender diversity and employee welfare enhances organizational culture. Sustainability efforts include adopting green fleet technologies, energy-efficient warehousing, and environmental awareness campaigns.

7. SWOT Analysis

Tejas Cargos strengths lie in its highly digitized, asset-heavy business model combined with pan-India operational reach and a deep client base in crucial sectors such as FMCG, manufacturing, and e-commerce. Its technology integration for fleet management and security is a significant competitive advantage that improves operating leverage and customer satisfaction.

However, the Company does face significant capital expenditure requirements due to its asset-heavy business model, which impacts free cash flows. This structure demands continuous investment in fleet expansion, modernization, and technology upgrades, requiring prudent financial planning. Additionally, a relatively high concentration of key customers poses revenue risks if large contracts are lost, while the current policy of not paying dividends is aimed at conserving cash for growth investments.

Thelogisticssectorsevolvinglandscapepresentsnumerous opportunities for Tejas Cargo, including government-backed initiatives for multimodal logistics expansion, growing demand for eco-friendly green logistics services, and the potential for geographic and sectoral expansion into underpenetrated markets.

Nevertheless, threats such as fuel price volatility, aggressive pricing by unorganized players, driver shortages, increasing regulatory compliance complexity, cybersecurity risks posed by greater IT integration, and intensifying competition challenge the companys growth trajectory. Effective execution of risk mitigation strategies is vital to navigating this complex environment.

8. Internal Control System

Tejas Cargo operates a comprehensive, multi-layered internal control system designed to safeguard assets, enhance operational efficiency, and ensure compliance with statutory and regulatory requirements. This system includes:

- Automated financial controls adhering to Indian Accounting Standards with real-time exception reporting.

- Cybersecurity frameworks encompassing end-to-end encryption, multi-factor authentication, and routine vulnerability assessments to protect data integrity and operational continuity.

- Vigilant fleet management controls utilizing IoT and telematics to monitor vehicle movements, reduce theft risk, and optimize asset deployment.

- Independent internal audit functions reporting directly to the Boards Audit Committee, maintaining transparency through surprise audits and compliance checks. - Mandatory staff training on compliance, ethics, and safety protocols reinforces accountability and awareness across all levels.

9. Risks and Concerns

The company continually addresses a wide spectrum of risks to protect stakeholder interests and ensure sustainable growth:

- Legal and Regulatory Risks:

Pending litigations and the possibility of new regulations affecting emissions, labor, and operations may increase costs or cause reputational damage.

- Operational Risks:

Dependence on a limited number of large clients carries business concentration risk; disruptions such as driver shortages or adverse weather can affect delivery reliability; ongoing inflationary pressures can squeeze margins.

- Technology Risks:

The growing reliance on IT systems exposes the company to cyber threats and potential downtime, which could impact customer service and compliance.

- Market Risks:

Volatility in fuel prices and geopolitical events can affect costs and demand patterns. Increased competition in the logistics space could pressurize pricing and profitability.

Mitigation strategies include diversification of the customer base, comprehensive insurance coverage (including cyber risk), employee retention and upskilling programs, regular compliance audits, and business continuity planning.

10. Future Outlook

Looking ahead, the logistics sector in India is expected to grow rapidly driven by continued government support, expanding manufacturing, rising e-commerce penetration, and increasing focus on sustainability. Tejas Cargo is positioned to capitalize on this growth through strategic investments in fleet expansion, technology upgrades, and increased logistics capabilities. The company plans to deepen its presence in emerging sectors such as pharmaceuticals and mining while expanding its geographic reach across under-served corridors. Continued alignment with government initiatives, including digitization, green logistics, and talent skilling, will enhance operational efficiency and customer service. Tejas Cargo remains committed to building a resilient, scalable, and sustainable business, focused on creating long-term value for clients, investors, and employees.

11. Cautionary Statement

This MD&A contains forward-looking statements that are subject to risks and uncertainties which could cause actual performance to differ materially. The company undertakes no obligation to update any such statements except as required by law.

Tejas Cargo India Limited continues to lead with a differentiated combination of technology, asset ownership, and strategic alignment with industry and policy trends, setting a strong foundation for sustained growth and market leadership in FY26 and beyond.