Total Transport Systems Ltd Management Discussions.

Forward looking statement - Statements in this Management Discussion and Analysis of Financial Condition and Results of Operations of the Company describing the Companys objectives, expectations or predictions may be forward looking within the meaning of applicable securities laws and regulations. Forward looking statements are based on certain assumptions and expectations of future events.

The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The Company assumes no responsibility to publicly amend, modify or revise forward looking statements, on the basis of any subsequent developments, information or events. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Companys operations include changes in government regulations, tax laws, economic developments within the country and such other factors globally.

Pursuant to Regulation 34 of the SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015 the Listed Companies are required to furnish Management Discussion and Analysis Report (MDAR) as a part of Directors Report to the Shareholders. As per Schedule V of SEBI (Listing Obligations and Disclosures Requirements), Regulations, 2015, Annual Report shall contain the below points in the Management Discussion and Analysis Report (MDAR):

Industry Structure and developments.

Opportunities and Threats.

Segment- Wise or Product- wise performance.

Outlook.

Risk and Concern.

Internal Control System and their adequacy.

Discussion on Financial performance with respect to operational performance.

Material developments in Human Resources/ Industrial Relations front, including number of people employed.

1. INDUSTRY STRUCTURE AND DEVELOPMENTS

Overview of the Indian Economy

The International Monetary Fund (IMF) has pared Indias growth forecast for the just-concluded fiscal and the next two years, citing softer recent growth and weaker global outlook, but expects the country to retain its place as the fastest growing major economy. According to IMF estimates, Indias economy grew 7.1% in FY19 and is expected to accelerate to 7.3% growth in FY20 and to 7.5% in FY21.

Indias (GDP) growth is supported by the continued recovery of investment and robust consumption amid a more expansionary stance of monetary policy and some expected impetus from fiscal policy.

NATIONAL LOGISTICS POLICY

A National Logistics Policy has been drafted 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 identifieskey 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

A non-lapsable Logistics Fund will be created to drive progress against key policy thrust areas, and can be deployed for select logistics initiatives for

Reducing logistics costs

Improving Logistics Performance Index

Employment generation

Reduction of waste

We believe that the National Logistics Policy will give us the opportunity to scale up our business as the industry moves towards the organized sector.

The Indian governments increased focus on improving logistics efficiency modal mix (significantly skewed in favor of road transport), poor infrastructure, LogisticsinIndiaisinefficient lack of standardization, slow technology adoption, and a historically inefficient tax structure (pre-GST). India was ranked 44th in the World Banks Logistics Performance Index in 2018. Logistics costs in India account for 12-13% of the Gross Domestic Product (GDP), which is higher than the logistics cost to GDP ratio in developed countries such as the US and France (9-10%).

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.

Indian logistic sector is primarily categorized into four segments comprising transportation (rail, road, air and waterways) warehousing (Container freight stations and inland container depots) freight forwarding and value added logistics. Economic survey of India predicts a whopping $215 billion in revenues by 2020-21 from about $160 billion in 2016-17. Future for countrys logistics market, booming global e-Commerce shifting sourcing trends, and emergence of new markets are all driving a new preference for Less than Container Load (LCL) with much improvement on security, certainty, and speed. A key reform like GST, Make in India initiative and relaxed FDI norms in various sectors has enabled growth in the warehousing and logistics park business. The Government has taken initiatives in setting up policy which will place major emphasis on development of logistics related infrastructure like dedicated freight corridors, Logistics Parks, free trade warehousing zones and container freight stations with the objective of identifying and ironing out existing bottlenecks and gaps in the industry.

2. OPPORTUNITY & THREATS

Opportunity:

- Air freight division started by the Company provides ample growth opportunity

- Opportunity to get into first mile / shipping of cargo from various parts of the world to India.

- Entered into contract with Amazon for last mile deliveries and looking to expand it to other states also.

Threats:

- Changes in the economic and political conditions in India and globally may pose a threat to the ease of business.

- Competition from local and multinational players

- Execution risk – transportation of goods becomes big challenge into freight consolidation activity

- Regulatory changes

3. SEGMENT- WISE OR PRODUCT- WISE PERFORMANCE

The Company is engaged in the business of Consolidation/deconsolidation of cargo freight forwarding, logistics, warehousing and transportation. The company is dealing only in this single segment and hence segment wise performance is not applicable to the Company.

4. OUTLOOK

The long term outlook of the companies operating in Indian logistics industry is favorable on implementation of GST, successful commissioning of infrastructure projects especially in road, railways and ports increase in participation and investment of international logistics players and adoption to global standards of tracking and tracing mechanism. The near term outlook of the logistics companies expected to be stable on back of steady growth in consumer durables, FMCG, pharmaceutical engineering and other industries.

5. RISK AND CONCERN

The Companys ability to foresee and manage business risk is crucial in its effort to achieve favorable results. We are also facing business risk, operational risk, trade risk, Company specific risk etc. huge working capital requirement is also one of the major concern for the business enterprises. The Company has taken necessary steps to overcome the risk factor and helps the organization to run smoothly.

6. INTERNAL CONTROL SYSTEM

The Company has in place an adequate system of internal control commensurate with its size and nature of its business.

These have been designed to provide reasonable assurance that all assets are safeguarded and protected against loss from unauthorized use or disposition and that all transactions are authorized, recorded and reported correctly and the business operations are conducted as per the prescribed policies and procedures of the Company. The Audit committee and the management have reviewed the adequacy of the internal control systems and suitable steps are taken to improve the same.

7. FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During the period under review the Total turnover of the Company Rs. 2,48,18,37,596 as compared to previous year Rs. 2,08,33,81,774/-. The Profit before tax of the Company is Rs.12,09,60,081/- as compared to previous year Rs. 8,40,92,313/- and Profit after tax of the company stood at Rs.8,50,00,096/ as comparedto previous year Rs. 8,02,29,101/

Volume wise comparison of summary is given below:-

Vertical FY 1819 Volume in Unit FY 1718 Volume in Unit
Sea Export:
FCL 9,683 TEU 7,218 TEU
LCL 2,25,058 CBM 2,21,803 CBM
Sea Import:
FCL 2,237 TEU 2,870 TEU
LCL 1,53,572 CBM 1,74,365 CBM
Air Export 848 Ton 317 Ton
Air Import 166 Ton 65 Ton

8. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED.

Your Company firmly believes that its human resources are the key enablers for the growth of the Company and important asset.

Hence, the success of the Company is closely aligned to the goals of the human resources of the Company. The Company aims to develop the potential of every individual associated with the Company as a part of its business goals. The Company focuses on providing individual development and growth in a work culture that ensures high performance and remains empowering. The Company has employed 320 people (including contractual) strong and dedicated workforce travel abreast of the latest trends.

Key Financial ratios

In accordance with the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations 2018, the Company of 25% or more as compared to the immediately previous year) in key isrequiredto givedetailsofsignificant sector specified financial ratio.

PARTICULARS STANDALONE CONSOLIDATED
F.Y. 19 F.Y. 18 Variation F.Y. 19 F.Y. 18 Variation
Debtors Turnover ratio 82 71 16.18% 80 69 14.68%
DEBT/EBIDTA 1.25 1.37 -8.77% 1.29 1.26 2.88%
Interest Coverage ratio 8.19 5.28 55.12%1 7.67 5.22 46.89%1
Current Ratio 2.10 2.26 -6.90% 2.05 2.15 -4.51%
Debt-Equity Ratio 2.71 2.19 23.58% 2.75 2.22 23.73%
Operating Profit Margin 0.14 0.13 7.87% 0.13 0.13 5.56%
Net Profit Margin 0.03 0.04 -11.18% 0.03 0.04 -19.88%
Return on Net worth 0.59 0.56 5.95% 0.53 0.55 -3.87%

1 Ratio is high due to reduction in Loan amount and saving in Interest amount.