TVS Supply Chain Solutions Ltd Management Discussions

Macroeconomic outlook Global economy

The global economy demonstrated notable resilience and early signs of stabilization throughout much of 2024, navigating persistent inflation, trade frictions, and geopolitical uncertainties. While challenges remain, particularly following the introduction of multiple waves of tariffs by the United States in early 2025 and reciprocal measures by affected trading partners, many economies continue to adapt to evolving trade dynamics.

The degree of impact varies across regions, influenced by their exposure to protectionist policies and the strength of underlying geopolitical relationships. Although global growth forecasts have been revised downward to reflect heightened tariff levels and a more uncertain policy environment, many countries remain focused on bolstering domestic demand, strengthening supply chains, and pursuing regional trade alliances to mitigate the effects.

Despite the prevailing uncertainty, the global economy has not lost its underlying momentum. Policymakers and markets are actively adjusting to the new realities, and emerging strategies aimed at fostering innovation, nearshoring, and economic diversification present new avenues for growth. While downside risks remain particularly in the form of shifting policy landscapes and financial market volatility, there is cautious optimism that global coordination and adaptive strategies can support stability and sustained recovery over the medium term.

Summary of world output* (Annual percent change)	2024	2025 (projections)
World output	3.3	2.8
Advanced economies	1.8	1.4
- US	2.8	1.8
- UK	1.1	1.1
- Euro Area	0.9	0.8
Emerging market and developing economies	4.3	3.7
China	5.0	4.0
India	6.5	6.2

* According to the IMF World Economic Outlook - April 2025

According to the International Monetary Fund (IMF), global headline inflation is projected to decline from 5.8% in 2024 to 4.3% in 2025, and 3.5% in 2025.

This downward trend reflects the ongoing effects of tighter monetary policies, easing supply chain constraints, and moderating commodity prices. The IMF notes that disinflation is occurring fasterthan previously anticipated in many regions, particularly in advanced economies. However, inflation remains above target levels in several emerging markets and developing economies.

In advanced economies, inflation is projected to reach 2.2 % in 2025 from 2.5 % in FY 24 and 2.5% in FY 25, compared with emerging market and developing economies, for which it declines to 4.5 % from 7.7% and 5.5% over the same time horizon.

While the global economy shows resilience post the temporary pause in the tariff, the IMF cautions that risks persist, including escalating trade tensions and geopolitical uncertainties, which could impact the disinflation trajectory. Faster conclusion of trade deals across trading nations will support in stability on the trade front.

Indian economy

India is poised to lead the global economy once again, with the International Monetary Fund (IMF) projecting it to remain the fastest growing major economy over the next two years. Indias economy is expected to grow by 6.2 per cent in 2025 and 6.3 per cent in 2026, maintaining a solid lead overglobal and regional peers.

For India, the growth outlook is relatively more stable at 5.2 percent in 2025, supported by private consumption, particularly in rural areas. It reflects cautious optimism, amidst the backdrop of persisting external headwinds.

On the positive side, consumer spending is expected to gain momentum, driven by an improved outlook for the agriculture sector, which is likely to bolster rural consumption and sentiment in the first half of the next fiscal year. Food inflation - which has remained elevated for over a year and strained household budgets, particularly for low- and middle-income urban families - is expected to ease. As inflationary pressures recede, urban consumption, especially for lowticket and discretionary items, is expected to witness a recovery

On investment front, the governments focus on capital expenditure is expected to remain a key growth driver in the year 2025-25. Investments in infrastructure and allied sectors—such as roads, housing, logistics, and railways—are anticipated to further economic momentum. Additionally, the services sector, particularly hospitality, real estate, health, and education, is expected to contribute to creation of fresh capacity.

Nonetheless, downside risks remain on the horizon, the private capital expenditure cycle is expected to stay subdued, with a cautious outlook limiting large- scale capacity additions. Factors such as geopolitical uncertainties, uneven domestic demand, oversupply from China have kept investors on the edge. However, with deleveraged corporate balance sheets, capacity utilization rates holding up, and uptick in demand - the momentum in private investments could build. Merchandise exports are projected to face persistent challenges, constrained by weak global demand, potential tariff wars, and ongoing geopolitical tensions. While services exports are expected to perform better than merchandise exports, uncertainties stemming from US trade policies and financial market volatility could pose additional risks.

India is poised to benefit from global supply chain diversification away from China. Its strategic position as a manufacturing hub could attract foreign direct investment in sectors like semiconductors, electronics, and automotive components. Targeted industrial policies and sector-specific strategies will remain critical to seizing these opportunities. The energy sector holds promise, with the revitalized US-India Strategic Clean Energy Partnership (SCEP) emphasizing renewable energy, energy efficiency, and sustainable fuels. India could also benefit from lower global oil prices as US production increases.

Global logistics industry overview

The global logistics industry in 2025 is experiencing robust growth, propelled by technological advancements, evolving trade dynamics, and increasing demand for efficient supply chain solutions.

The global logistics market size is calculated at USD 11.23 trillion in 2025 and is forecasted to reach around USD 23.14 trillion by 2034, accelerating at a CAGR of 8.35% from 2025 to 2034. The Asia Pacific logistics market size accounted for USD 5.07 trillion in 2025 and is expanding at a CAGR of 9.37% during the forecast period. The market sizing and forecasts are revenue- based (USD Million/Billion), with 2024 as the base year.

The global logistics industry is rapidly evolving, driven byAI adoption, e-commerce expansion, and geopolitical shifts. Geopolitical developments, including U.S. tariffs on Chinese shipping, are impacting global trade and shipping costs.

Key Industry Trends Technological Integration:

• Artificial Intelligence (Al): Al adoption in logistics is expected to increase, enhancing efficiency in inventory tracking, demand forecasting, and route optimization.

• Automation: The global logistics automation market is anticipated to grow from $55.25 billion in 2023 to $217.25 billion by 2033, at a CAGR of 12.8%.

• Internet of Things (loT): The global loT in logistics market is projected to reach $53.72 billion by 2025, facilitating real-time tracking and improved operational efficiency.

• Sustainability Initiatives: Investments in green logistics are on the rise, with the market expected to reach $1.91 trillion by 2029, growing at a CAGR of 8.29%.

• E-commerce Influence: Global e-commerce sales are on track to hit $7.4 trillion by 2025, significantly impacting logistics and last-mile delivery demand

United Kingdom

For the United Kingdom, the growth projection for 2025 is 1.1 percent, lower by 0.5 percentage point compared to the forecast in January by the IMF. This reflects a smaller carryover from 2024, the impact of recent tariff announcements, an increase in gilt yields, and weaker private consumption amid higher inflation as a result of regulated prices and energy costs.

The UK logistics market generated a revenue of USD 152.9 billion in 2024 and is expected to reach USD 251.8 billion by 2030. The UK market is expected to grow at a CAGR of 7.5% from 2025 to 2030. In terms of segment, transportation services was the largest revenue generating service in 2024. Warehousing and Distribution Services is the most lucrative service segment registering the fastest growth during the forecast period.

While the UKfaces economic headwinds in 2025, the logistics sector remains a cornerstone for growth and resilience. Strategic investments in infrastructure, technology adoption, and policy support are essential to harness the sectors full potential and drive sustainable economic recovery.

Asia Pacific

The International Monetary Fund (IMF) forecasts a GDP growth of 4.5% for Emerging and Developing Asia in 2025, a slight deceleration from 5.3% in 2024. This slowdown is attributed to factors such as weaker external demand, a subdued tech cycle, and soft private consumption.

The Asia Pacific logistics market size was valued at USD 4.45 trillion in 2024 and is expected to reach around USD 11.43 trillion by 2034 with a CAGR of 9.37% from 2025 to 2034. The expansion of retail industry in the area is observed to be the main factor for the dominance of Asia Pacific in the logistics market.

Governments in the Asia Pacific region have invested heavily in improving transportation infrastructure, such as roads, ports, and airports. These investments have enhanced the efficiency and capacity of logistics networks, making the region more competitive in global trade. The region has seen a significant rise in e-commerce activities, with countries like China and India leading the way. The growth of online retail has created a high demand for logistics services, including warehousing, transportation, and last-mile delivery

North America

The US is the primary logistics market, with a highly combined supply chain networkthat connects consumers and producers through various modes of transportation such as express and air delivery services, rail, truck transport, and maritime transport.

The U.S. logistics market generated a revenue of USD 455.4 billion in 2024 and is expected to reach USD 571.2 billion by 2030. The U.S. market is expected to grow at a CAGR of 5.7% from 2025 to 2030. In terms of segment, transportation services was the largest revenue generating service in 2024. Warehousing and Distribution Services is the most lucrative service segment registering the fastest growth during the forecast period. The regions growth can be attributed to the existence of a well-developed infrastructure in terms of road and rail connectivity.

India logistics industry overview

Indian logistics sector is one of the largest in the world and presents large addressable opportunity. The sector is critical forthe economic growth of the country as it connects various elements of the economy and consists of transportation, warehousing and other supply-chain solutions ranging from the suppliers to the end-customers.

Structure of Indian logistics market

India logistics market can be segmented in two different types of market structures: (1) type of services and (2) logistics solutions.

Key factors driving growth in Indian logistics

The Indian logistics market has been highly fragmented and has experienced rapid growth in the organized market in recent years. The logistics sector in India has witnessed significant advancements, driven by growth in ecommerce, rising 3PL activity and strong demand- side dynamics. According to India Infrastructure Research, the logistics market is expected to grow at a CAGR of 8-10 per cent to cross $480 billion by 2029.

The growing population, rising disposable income, and increasing online shopping activities are influencing market growth. Additionally, the emergence of specialised e-commerce logistics services led to the establishment of dedicated distribution centres and fulfilment hubs strategically positioned to accommodate the influx of online orders, thus contributing to the market growth. It uses advanced automation technologies, such as robotic sorting systems and Al-powered inventory management, to optimise warehousing processes and ensure speedy order processing. Moreover, the e-commerce industry invests in technology-driven logistics solutions, representing another major growth-inducing factor. Along with this, real-time tracking of shipments, automated warehouses that can autonomously manage inventory, and advanced route optimisation algorithms are integral to logistics operations, thus propelling market growth. These innovations enhance operational efficiency and reduce delivery times, enhancing customer satisfaction and loyalty.

On the warehousing and storage front, rising demand is expected to spur the development of state-of-the-art facilities that cater to consumer needs. Emerging large- scale logistics parks are also expected to shape the sector by offering benefits such as economies of scale, scalability and shared infrastructure.

Rising consumer demand for faster deliveries is expected to drive the growth of hyperlocal deliveries in India. Apart from this, the sector will witness opportunities backed by an increase in demand, particularly from Tier II and Tier III cities.

The development of Indias logistics sector is vital to enhancing the competitiveness of its manufacturing sector. Through strategic policy reforms, infrastructure development, and digital integration, ongoing reforms are poised to transform the logistics landscape.

This transformation is expected to reduce costs, improve efficiency, generate substantial employment opportunities, and promote gender inclusion—driving sustainable economic growth.

However, the outsourcing as a concept is still nascent in the market. With the industry being price conscious, the integration of cutting-edge technologies and advancements in automation, warehousing, and transportation solutioning shall be cost-effective and the solutioning should have sufficient exit barriers to discourage customer churns.

There is also a need to upskill the workforce to keep up with these technological advancements. The adoption of sustainable measures to reduce the carbon footprint within supply chains is expected to remain a key focus area.

Challenges

While the sector has been progressing positively, high logistics costs remain a significant challenge to the overall growth of the industry. In comparison to other developed countries, logistics costs in India are much higher at around 13 to 14% of the GDP. The government has been working towards reducing the logistics cost to 8-9 per cent of the GDP with the launch of initiatives such as SMILE, the PM Gati Shakti National Master Plan and the National Logistics Policy. Additionally, large scale outsourcing and focusing on core-competency with emerging trends like the integration of technology are expected to increase efficiency, speed up processes and streamline operations, thereby contributing to logistics cost converging to a desired level of GDP.

The sector also faces challenges related to inadequate infrastructure like connectivity and storage facilities in remote and hard-to-reach regions. Last-mile connectivity, especially for the cold chain, continues to witness significant gaps in remote regions.

Various logistics segments, including cold chain, express logistics and agricultural supply chain, are characterised by fragmented markets with numerous small players.

Other challenges include regulatory hurdles and security concerns at various points in the supply chain.

In parallel, multiple Gol policies and reforms are implemented for the growth of manufacturing in India thereby driving robust growth for the logistics sector:

• SMILE Program: The sector also stands to benefit from recent initiatives such as the $350 million policy-based loan signed between the Government of India and the Asian Development Bank under the second sub program of the Strengthening Multimodal and Integrated Logistics Ecosystem program (SMILE Program). This initiative reportedly aims to expand the countrys manufacturing sector and enhance supply chain resilience.

The SMILE program is a programmatic policy-based loan (PBL) to support the government in undertaking wide-ranging reforms in the logistics sector in India. The programmatic approach comprises two subprograms, which aim to expand Indias manufacturing sector and improve the resilience of its supply chains.

The program establishes and operationalizes a comprehensive policy framework to enhance logistics efficiency through

(i) strengthening the institutional bases for multimodal logistics infrastructure development at the national, state, and city levels;

(ii) standardizing warehousing and other logistics assets to strengthen supply chains and incentivize greater private sector investment;

(iii) improving efficiencies in external trade logistics; and

(iv) adopting smart systems for efficient and low emission logistics.

• National Logistics Policy: The goal of the National Logistics Policy is to enhance Indias economic growth by making the logistics sector more seamless and integrated. It aims to create a singlewindow e-logistics market and make MSMEs more competitive. It will also drive down logistics costs as a percentage of the GDP.

• Production-linked incentive scheme: This scheme is a significant initiative by the Indian Government with an outlay of about Rs2,825 billion in subsidies and incentives. The maximum outlay is for semiconductor, automobile and electronic systems manufacturing industries. This scheme intends to create national manufacturing leaders and generate employment opportunities.

• Make in India: The Indian Government launched the Make in India campaign in 2014 to showcase India as a global design and manufacturing hub.

The campaign focuses on 25 sectors, including technology, construction, and biotechnology. The initiative aims to increase the manufacturing sectors annual growth rate to 12%-14%. This initiative

also aims to promote domestic manufacturing of products and infrastructure by providing dedicated investments. It aims to increase domestic manufacturing, resulting in higher demand for freight movement and the need for supply chain solutions.

• Dedicated freight corridors: The project involves two freight corridors: the Western Dedicated Freight Corridor (1,505 route kilometres long) and the Eastern Dedicated Freight Corridor (1,337 route kilometres long). The dedicated freight corridors aim to reduce overall logistics costs, improve the average speeds of freight trains, increase the freight carried per trip and link ports for faster freight movement.

• Logistics Efficiency Enhancement Programme:

This programme aims to improve freight transportation efficiency, associated costs, transportation times, and logistical practices like goods transferring and tracking through infrastructure technology and process interventions.

• Gati Shakti - National Master Plan: This comprehensive and efficient policy aspires to eliminate red tape by centralising different ministries with higher cross-sector interaction. It also aims to achieve optimisation by identifying critical gaps and synchronising activities from different departments to reduce silos. By integrating analytical and dynamic data with spatial planning and analytical tools, the policy seeks to increase the ability to visualise, review and monitor.

Our company Overview

Our Company is an India based multinational company, who pioneered the development of the supply chain solutions market in India. We were promoted by the erstwhile TVS Group, one of the reputed business groups in India, and are now part of the TVS Mobility Group. For more than 20 years, we have managed large and complex supply chains across multiple industries in India and select global markets through customized tech-enabled solutions. During this period, we have grown significantly. Ourtotal income was Rs 10,028.88 crores in Fiscal 2025.

Our Segments

Our solutions spanning the entire value chain from sourcing to consumption can be divided into two segments: (i)integrated supply chain solutions ("ISCS"); and (ii) network solutions ("NS").

Our capabilities underthe ISCS segment include sourcing and procurement, integrated transportation, logistics operation centers, in-plant logistics operations, finished goods, aftermarket fulfillment and supply chain consulting.

Our capabilities underthe NS segment include global forwarding solutions ("GFS"), which involves managing end-to-end freight forwarding and distribution across ocean, air and land, warehousing and at port storage and value added services, and integrated final mile solutions ("IFM") which involves closed loop logistics and support including spares logistics, break-fix, refurbishment and engineering support, and courier and consignment management.

Globally, we provided supply chain solutions to 5,277 customers during Fiscal 2025. We pride ourselves on the fact that we have over 91 of the Fortune 500 companies as our customers, which has increased significantly from 78 a year ago. The steady growth of marquee customers positions us favourably in our stated goal to be among the top 50 logistics companies worldwide.

Our Strategy

Our growth strategy has been guided by C3 Framework, which centres on three Cs - Customer, Capability and Country. The C3 Framework focuses on opportunities that would increase business from existing customers, acquire new customers and / or increase our geographical presence. Additionally, the C3 Framework has enabled us to grow in our core sectors as well as capitalize on opportunities in adjacent sectors and new age sectors.

Our domain knowledge and global expertise, coupled with technology is the foundation of our C3 Framework. This enables us to develop and offer customized solutions to customers thereby empowering agile and efficient supply chains at large scale.

Performance of Our Segments Integrated Supply Chain Solutions

In FY25, The Integrated Supply Chain Solutions segment performed well despite facing a few regional challenges. In India, revenue remained flat due to the strategic exit from certain low margin accounts; however, this decision significantly improved overall profitability. The North America business continued its strong growth trajectory, delivering solid gains in both revenue and margins, supported by robust customer demand and enhanced operational execution. In Europe, the business delivered a strong first-half performance. The second half, however, was impacted by a combination of factors, including lower volumes from key customers consequent to soft quarters during the holiday season. Despite these headwinds, the segment achieved a year-over-year increase in revenue. Margins, though slightly lower than the previous year, reflected the temporary challenges in the European market.

Network Solutions

In the Network Solutions segment, the turnaround of the Integrated Final Mile (IFM) business was a key milestone. While revenue remained flat for the year, the business delivered positive profitability in the final quarter, marking a strong recovery. This was achieved through a series of targeted initiatives, including price increases from customers, consolidation of forward stocking locations, manpower rationalization, and improved operational efficiencies.

In the Global Freight Forwarding Solutions (GFS) segment, revenue growth was primarily driven by increased volumes and higher freight rates. However, as much of the rate increase was passed on to customers, the positive impact on the margin was limited. The GFS business remained largely influenced by external factors such as the Red Sea crisis and U.S. trade tariff volatility. Despite these challenges, the segment benefited from significant cost-saving measures, including organizational rightsizing, which helped enhance overall resilience and operational agility.

Key Operational Indicators

A summary of our key operational indicators is provided below:

	FY24-25	FY23-24
Infrastructure (square feet)/ logistics warehouse space	24,786,489	25,475,171
TEU of Sea Freight	91,608	83,504
Permanent Employees	16,801	17,055
Number of customers	6,277	6,909
Number of warehouses	441	459

Consolidated Financial Performance

Analysis of our financial performance for the current and previous financial year is provided below:

Amounts in INR Crores	FY24-25	FY23-24
Revenue from Operations	9,995.72	9,199.98
Other income	33.16	47.92
Total income	10,028.88	9,247.90
Freight, clearing, forwarding and handling charges	2,816.23	2,327.79
Sub-contracting costs and casual labour charges	1,422.74	1,471.55
- Cost of materials consumed	12.06	12.21
- Purchase of stock-in-trade	1,757.43	1,683.94
- Changes in inventory of stock-in-trade	14.11	(34.80)
Material & related costs	1,783.60	1,661.35
Impairment losses on financial instrument	20.68	(1.70)
Employee benefits expense	2,353.40	2,243.25
Finance costs	156.72	202.71
Depreciation and amortisation expense	543.56	556.72
Foreign exchange loss/(gain) (net)	(25.23)	9.23
Other expenses	932.97	790.95
Total expenses	10,004.67	9,261.85
Share of profit from investments	5.15	4.29
Profit / (loss) before tax from continuing operations	29.36	(9.66)
Exceptional items - gain/ (loss)	0	(26.41)
Profit / (loss) before tax after exceptional items	29.36	(36.07)
Tax expenses	39.00	21.65
Profit / (loss) from continuing operations	(9.64)	(57.72)
Profit / (loss) before tax from discontinued operations	0	(32.77)
Tax expenses	0	0
Profit / (loss) from discontinued operations	0	(32.77)
Profit/ (loss) for the year	(9.64)	(90.49)

Revenue & Segment-wise split

The following is a table with a breakdown of our consolidated revenue from operations, across our business segments:

Amounts in INR Crores	LSPAN=2 ALIGN=CENTER>FY24-25	FY23-24
	Amount	% share	Amount	% share
Integrated Supply Chain Solutions	5,496.54	55%	5,239.96	57%
Network Solutions	4,499.18	45%	3,960.02	43%
Revenue from Operations	9,995.72	100%	9,199.98	100%

The Integrated Supply Chain Solutions (ISCS) segment reported a 4.9% year-over-year revenue growth, primarily driven by new business development wins, which contributed significantly to the topline and a modest price increase also supported growth. This was partially offset bythe planned exit of certain low margin customer accounts and volume declines from existing clients, particularly in select geographies.

These offsets tempered the overall growth rate, but the net result reflects a stable performance with a strategic shift toward higher-quality, more profitable business.

The Network Solutions (NS) segment delivered a 13.6% year-over-year revenue growth, primarily fueled by new business wins and price increases implemented during the year, partially offset by decline in volumes and customer churns. The strong contribution from new accounts and improved pricing supported a healthy overall performance for the segment.

The following table provides a breakdown of our consolidated revenue from operations, across our geographic segments:

Amounts in INR Crores	FY24-25		FY23-24
	Amount	% share	Amount	% share
India	2,701.84	27%	2,711.00	29%
Rest of the World	7,293.88	73%	6,488.98	71%
Revenue from Operations	9,995.72	100%	9,199.98	100%

From a geographical perspective, India revenue growth remained flat. This was a result of the planned exit from certain low margin accounts, which, while impacting the topline, contributed positively to profitability in the India ISCS Segment. Offsetting this to some extent, the Global Freight Forwarding Solutions (GFS) business in India delivered a strong 8.7% revenue growth, driven by increased volumes and sustained customer demand.

The Rest of the World business delivered robust performance with overall revenue growth of 12.4%, led by a 10.2% increase in ISCS and a strong 14.5% growth in the Network Solutions (NS) segment. This is a reflection of new business wins and effective execution across key international markets.

Operating Expenses

We continue to focus on operational efficiencies and cost management with the aim of improving our profitability margins. The key components of our operational expenses include:

Material related expenses increased by 7.4% from Rs 1,661.35 Crores in FY23-24 to Rs 1,783.60 Crores in FY24-25 driven by higher volumes in Europe in the beverage and automotive sector and North America in the industrial sector.

Employee benefits expense increased by 4.9% from Rs 2,243.25 Crores in FY23-24 to Rs 2,353.40 Crores in FY24-25. The increase was primarily driven by inflation and a ramp-up in customer engagement within the ISCS segment, which required significant manpower deployment—notably for a large transformational contract in the UK and North America.

In addition, the overall increase reflects redundancy costs incurred as part of strategic initiatives aimed at right-sizing the workforce, in line with the companys broader cost reduction and efficiency programs.

Other expenses increased by 18.0% from Rs 790.95 Crores in FY23-24 to Rs 932.97 Crores in FY24-25 driven by cost inflation in short-term rentals and repairs and maintenance and increase in the material handling and spares consumption in line with the growth in revenue

Adjusted EBITDA

EBITDA is calculated as the sum of profit / (loss) for the year from continuing operations, total tax expenses, finance costs, depreciation and amortization expense reduced by exceptional items, share of profit from investments accounted for using the equity method (net of income tax) and Other income. Adjusted EBITDA is calculated as the sum of EBITDA, share based payments and foreign exchange loss/(gain) (net).

Amounts in INR Crores	FY24-25	FY23-24
Profit / (loss) before tax from continuing operations	29.36	(36.07)
Add: Finance costs	156.72	202.71
Add: Depreciation and amortization expense	543.56	556.72
Less: Exceptional items - gain/(loss)	-	26.41
Less: Share of profit of equity accounted investees	(5.15)	(4.29)
Less: Other Income	(33.16)	(47.92)
EBITDA	691.33	697.56
Add: Share based payments	1.27	3.35
Foreign exchange loss/(gain) (net)	(25.23)	9.23
Adjusted EBITDA	667.37	710.14

Adjusted EBITDA declined by 6.0%, from Rs710.14 Cr to Rs 667.37 Cr, primarily due to headwinds in key business segments.

ISCS adjusted EBITDA fell by 2.4%, from Rs 536.2 Crores to Rs 523.5 Crores, mainly due to volume reductions in Q3 being a soft quarter during the holiday season, all of which impacted cost absorption and profitability.

In the NS segment, adjusted EBITDA declined by 9.3%, from Rs 185.8 Crores to Rs 168.6 Crores, despite strong revenue growth of 13.6%. This was primarily due to IFM business, where the turnaround was completed in Q4, as well as margin pressure in the GFS segment, where revenue growth was largely pass-through and did not translate into EBITDA. Additionally, macro- economic pressures such as global trade disruptions and cost volatility further impacted margins. Overall, while revenue performance remained strong, these factors contributed to a year-over-year reduction in profitability.

Other Costs

Depreciation 8< Amortization decreased by 2.4% from Rs 556.72 Crores in FY23-24 to Rs 543.56 Crores in FY24-25 driven by reduction in depreciation from right of use assets consequent to lesser addition to the lease commitments during the year comparing to FY 23-24

Finance Expenses decreased 22.7% from Rs 202.71 Crores in FY23-24 to Rs 156.72 Crores in FY24-25 mainly on account of settlement of the term loans from the IPO Proceeds in the second half of the FY 23-24 resulting in lesser interest expense in FY 24-25 on a run rate basis.

We had an exceptional items - loss of Rs 26.41 Crores in FY23-24 on account of loss on issue of CCPS (Rs 23.17 crores), loss on deconsolidation and sale of step down subsidiary (Rs 38.53 crores) partially offset by gain on stake dilution in joint venture (Rs 35.29 crores).

Capital expenditure

We operate as an asset-light business wherein our warehouses are operated through leases. While we do not have ownership of these assets, we have control overthe capacity and space, and the scheduling, routing, storing, and delivery of goods are managed by us. Our capital expenditures in: (i) ISCS segment is primarily for customers in warehousing and material handling segments of the business; and (ii) NS segment is primarily for intangible assets such as computer software and others.

During FY24-25, our capex spending was Rs 160.90 Crores towards purchase of property, plant and equipment and intangible assets, net of proceeds from disposal. As at 31^st March 2025, Capital work in progress was Rs 74.26 Crores and intangible assets under development were Rs 7.97 Crores.

Discussion on certain balance sheet items Goodwill

Goodwill increased by 2.07% from Rs 588.47 Crores as of 31^st Mar 2024 toRs 600.64 Crores as of 31^st Mar 2025 due to exchange differences on translation of foreign operations of 12.17 Crores

Right of use asset

Right-of-use asset decreased by 15.61% from Rs 1,185.76 Crores as of 31^st Mar, 2024 to Rs 1,000.70 Crores as of 31^st Mar, 2025 primarily due to depreciation of right-of- use asset of Rs 398.48 Crores and reversals on account of termination/ closure of long-term leases (typically warehouses, office premises and material handling equipment) amounting to Rs 25.38 Crores which was offset by similar long-term leases resulting in additions to right-of-use asset of Rs 201.30 Crores, and exchange differences on translation of foreign operations of Rs 37.5 Crores.

Inventories

Inventories decreased by 1.44% from Rs 385.57 Crores as of 31^st Mar 2024toRs380.99 Crores as of 31^st Mar 2025 in the ordinary course of business.

Trade Receivables

Net trade receivables (current and non-current) increased by 2.3% from Rs 1,409.23 Crores as of 31^st Mar 2024 to Rs 1,442.11 Crores as of 31^st Mar 2025 in line with the growth of business. However the DSO days has reduced from 55 days in Fiscal 2024 to 53 days in Fiscal 2025 due to various working capital initiatives in Fiscal 2025.

Lease Liability

Lease liability (current and non-current) decreased by 12.55% from Rs 1,405.08 Crores as of 31^st Mar 2024 to Rs 1,228.57 Crores as of 31^st Mar 2025 primarily due to payments of lease liability of Rs 477.21 Crores, reversal of lease liability of Rs 25.81 Crores offset by additions to lease liability ofRs 198.83 Crores, accretion of interest of Rs 87.50 Crores.

Borrowings

Total borrowings on a consolidated basis, comprising of current and non-current borrowings increased from Rs 793.94 Crores as on 31^st Mar 2024 to Rs 859.44 Crores as on 31^st Mar 2025. The increase in borrowing was due to additional short-term borrowings to meet the working capital requirements.

Trade Payables

Trade payables increased by 3.09% from Rs 1,358.22 Crores as of 31^st Mar 2024 to Rs 1,410.54 Crores as of March 31, 2025 in the ordinary course of business.

Other Financial Liabilities

Other financial liabilities (current and non-current) increased by 44.51% from Rs 94.54 Crores as of 31^st Mar 2024 to Rs 135.75 Crores of March 31, 2025 primarily due to increase in payable to factor by 38.55 Crores and increase in advances from customers, repayable in cash by Rs 25.52 Crores which was partially offset by decrease in derivative liabilities of 22.95 Crores due to settlement of the hedge.

Key performance indicators and key financial ratios Key performance indicators

Particulars	FY24-25	FY23-24
Growth Rate of Revenue from Operations (%)	8.6%	-7.9%
EBITDA Margin (%)	6.9%	7.6%
EBITDA Growth Rate (%)	-0.9%	5.3%
Adjusted EBITDA Margin (%)	6.7%	7.7%
Adjusted EBITDA Growth Rate (%)	-6.0%	3.7%
PBT Margin (%)	0.3%	-0.1%
PBT Growth Rate (%)	403.9%	-117.3%
Profit / (Loss) Margin for the year (%)	-0.1%	-0.6%
Profit/ (Loss) Growth Rate for the year (%)	83.3%	-221.1%
ROCE (%)	4.7%	4.8%
ROE (%)	-0.5%	-1.7%
RolC Pre-Tax	3.1%	3.9%
RolC Post-Tax	1.9%	3.3%

Key financial ratios

In compliance with the requirement of SEBI (Listing Obligations and Disclosure Requirements) Regulations,2015, the key financial ratios of the Group have been provided hereunder along with the explanation only for the significant changes, i.e., change of 25% or more as compared to the previous financial year.

Particulars	FY24-25	FY23-24
PBT Margin (%) (refer note i below)	0.3%	-0.1%
Profit / (Loss) Margin for the year (%) (refer note i below)	-0.1%	-0.6%
Trade Receivables Turnover	52.60	55.67
Interest Coverage Ratio (refer note ii below)	0.81	0.76
Current Ratio	1.08	1.09
Debt Equity Ratio	0.47	0.43

(i) PBT and PAT margins are improved by lower finance costs, reduced depreciation, and foreign exchange gains and partially offset by higher tax expenses while Adjusted EBITDA declined by 5% impacted by lower volumes in ISCS, margin pressure in GFS, IFM turnaround completed in Q4 FY25, as explained in the financial performance discussion.

(ii) Interest coverage ratio improved primarily due to a 22.7% reduction in finance expenses. This was mainly on account of the settlement of term loans using IPO proceeds during the second half of FY23- 24, resulting in lower interest costs on a full-year basis in FY24-25.

Risks to the industry and our business

As a global company operating across multiple geographies, we face several risks that could impact our business in various ways. This could in turn affect our ability to create value for all our stakeholders.

The management team is committed to recognizing these risks (both internal and external) and continue to implement actions that can proactively handle these risks mitigating potential impact on our business.

The key risks the Company is exposed to are:

Macroeconomic trends in the industries our customers operate

Our growth and results of operations and financial condition are significantly affected by end-consumer demand for products manufactured or sold or services provided by our customers which in turn is linked to macro factors driving India and the global economy. These factors include levels of per capita disposable income, levels of consumer spending, consumer preferences, business investment (specifically supply chain related investments), overall logistics spending, changes in interest rates, fuel and power prices, government policies or taxation, social or civil unrest and political, economic or other developments that affect consumption and business activities in general.

Our performance may decline during recessionary periods or in other periods where one or more macro- economic factors, or potential macro-economic factors, negatively affect the level of consumer and business confidence and consumption or the performance of our customers. For example, our operations and the demand for our services were adversely impacted by certain macro-economic developments including growing geopolitical tensions and trade-related uncertainties. The ongoing Red Sea crisis has disrupted critical shipping routes, leading to higher freight costs, longer lead times, and supply chain unpredictability. Meanwhile, escalating US-China trade frictions, including renewed tariff impositions and technology export restrictions, have the potential to reconfigure global supply chains, delay cross-border projects, and dampen investment sentiment in key markets.

Demand for outsourced supply chain solutions and logistics services

As supply chain demands become increasingly complex, more companies and sectors, particularly in India and in sectors such as retail, healthcare, telecom and technology, are expected to turn to specialist supply chain service providers that can curate more efficient and better tech enabled solutions to more efficiently manage these demands as well as increase cost savings. Moreover, in developed markets such as the United Kingdom, we have experienced this evolution of demand with businesses and government operations increasingly evaluating and engaging with third party supply chain service providers. As a result, our ability to continually innovate and adapt our offerings to the evolving needs of industries will determine our growth trajectory.

Indias third-party logistics (3PL) market is experiencing significant growth, with projections indicating an increase of approximately USD 16.77 billion between 2023 and 2028, at a compound annual growth rate (CAGR) of 9.45%. This expansion is driven by factors such as tax reforms, the rise of e-commerce, and increased investments in logistics startups. Notably, the adoption of digitalization in logistics is a key trend propelling this growth.

Customer concentration risk:

We derive a portion of our revenue from certain key customers, and accordingly, a material percentage of our future revenues will be dependent upon the successful continuation of our relationships with these customers or finding customers of similar size and scope.

The loss of any of our key customers, due to our inabilityto renew our contracts with them ora decision by any one of them to reduce the services we provide to them would result in a decline in our revenues. The renewal or expansion of customer relationships may decrease or vary as a result of a number of factors, including our customers satisfaction or dissatisfaction with our services, reliability of our services, our pricing, the effects of general economic conditions, competitive offerings or alternatives, or reductions in our customers spending levels. In addition, our reliance on any individual customer for a significant portion of our revenues may give that customer a certain degree of pricing leverage against us when negotiating contracts and terms of service.

That said, we maintain a diversified portfolio of customers across multiple industries, which helps mitigate the overall impact of any single customer relationship. This industry diversification reduces our exposure to sector-specific downturns and enhances the stability of our revenue base.

Ability to effectively invest in technological capabilities:

Our ability to engage with customers and enhance our supply chain solutions and logistics services is affected by ourtechnological capabilities, which are critical to our ability to timely adapttothe rapidly evolving industry trends. We have made significant investments in developing ourtechnological capabilities to attract customers, enhance customer experience and expand the capabilities and scale of our solution and service offerings.

We believe further enhancement of our technologies is important to our future performance, particularly to increase asset productivity, improve operating efficiencies and strengthen our competitive position, and we expect to continue to make investments in developing and implementing new technologies. Specifically, we plan to continue to invest in improving and expanding our technology infrastructure, talent recruitment in the fields of automation and digitalization to strengthen our technological advantage.

Our business could be affected if we fail to implement and maintain our technology systems or fail to upgrade or replace our technology systems to meet the demands of our clients and protect against system failures. Some of our existing technologies and processes in the business may become obsolete or perform less efficiently compared to newer and better technologies and processes in the future. The logistics industry could also experience unexpected disruptions from technology-based start-ups. Moreover, the implementation of technology can typically entail a significant amount of capital expenditure, including in relation to maintenance when needed, which may have an effect on our cash flow until we are able to realize the benefits of its implementation in terms of increased volumes and cost efficiency. Additionally, technology is susceptible to outages and technical snags, which may disrupt our workflow and affect our revenues.

Global operations and foreign exchange

We derive majority of our revenue from our services provided to customers located in Europe, United Kingdom, North America and Asia-Pacific. As of March 31, 2025, we have presence in 26 countries.

Our revenue from operations from rest of the world as a percentage of our revenue from operations on a consolidated basis stands at 73% and 71% in Fiscal 2025 and 2024 respectively.

As a result of our international operations, certain portions of our revenues and expenditure are influenced by the currencies of those countries where we sell our products. Since our reporting currency is Indian rupee, all foreign currency transactions including sales, purchases and expenses are translated into Indian rupees. We are exposed to foreign currency risks that arise from our business transactions that are denominated in foreign currencies. The depreciation of the Indian Rupee against foreign currency (primarily USD, GBP, Euro, SGD and AUD), will generally have a positive effect on our reported revenues and operating income, while the appreciation of Indian Rupee against foreign currency will generally have a negative effect on our reported revenues and operating income. In addition, a significant portion of our working capital debt is denominated in GBP and SGD. The value of the Indian Rupee against foreign currencies is affected by, among other things, the demand and supply of the Indian Rupee and changes in Indias political and economic conditions. These factors may expose us to exchange rate movements, which may have a material effect on our operating results in a given period.

Inflation risk:

Our operations largely depend on air, sea, rail and road transport. As a result, transportation costs form a significant part of our operating costs. Inflationary pressures—especially those affecting global fuel prices such as kerosene, diesel, and marine diesel—pose a continuing risk to our cost structure.

While FY25 saw a moderation in Indias headline inflation rates, volatility in fuel prices and logistics- related input costs remains elevated due to global factors. Notable disruptions include constrained air and ocean freight capacities in the aftermath of the COVID-19 pandemic, geopolitical instability such as the Red Sea crisis, and ongoing supply-side challenges in global commodity markets.

There can be no assurance that any increases in costs can be passed on to our customers. An increase in such operating costs or inability to pass on such increased costs to our customers may adversely affect our revenues, business, results of operations, financial condition and cash flows.

Working capital risk:

Our business requires a significant amount of working capital which is based on certain assumptions, and accordingly, any change of such assumptions would result in changes to our working capital requirements. Further, our working capital requirements have been increasing with the growth of our operations. While we have not faced any instances of material losses or adverse impacts on our business and operations due to failure to raise additional financing or resources, there can be no assurance that we will always be able to raise resources to meet our working capital requirements on commercially acceptable terms and in a timely manner or at all in the future, which may adversely impact our business operations and future growth plans.

Internal controls

TVS SCS is committed to ensuring effective internal control systems commensurate with the size and the complexity of our business. We have established adequate and effective internal controls to achieve its compliance and reporting objectives. These controls are deployed through various policies and procedures and are periodically revisited to ensure they are in line with changes to our business environment. Our Audit Committee, composed of Independent and Non-Executive Directors, regularly reviews significant audit findings, adequacy of internal controls, audit plans, reasons for changes in accounting policies and practices, if any, and monitors the implementation of audit recommendations.

Our internal audit functions make an evaluation of the adequacy and effectiveness of internal systems on an ongoing basis so that our operations adhere to our policies, compliance requirements and internal guidelines. Our internal control system is supplemented by an internal audit carried out by KPMG, a third-party internal audit firm. We ensure that preventive and detective controls are embedded in all the business processes. Significant audit observations and follow-up actions thereon are reported to the Audit Committee.

Further, the Directors Report and Corporate Governance Report sections contain comprehensive details pertaining to corporate governance and statutory compliances.

Human Resources Management

At TVS Supply Chain Solutions (TVS SCS), the Human Resources Management (HRM) function plays a strategic role in supporting a workforce of over 16,800 on-roll and 15,000 off-roll employees across 25 countries. HRM is closely aligned with the companys global business objectives and supply chain operations. The companys HR policies are crafted to foster a culture of Trust, Value, Service and innovation- anchored in its core values and guiding principles.

VIBE 2025 - 10th Edition of the Employee Engagement Survey

VIBE 2025 represented the most ambitious iteration of TVS SCSs flagship employee engagement survey. Designed to evaluate employee satisfaction, engagement, and workplace sentiment, the survey enables data-driven enhancements to HR practices.

It captures valuable employee perspectives on organizational culture, leadership, career development, and job satisfaction. With participation spanning 25 countries and 19 languages, inclusion remained a key focus.

Key Highlights from VIBE 2025:

1. Record Participation: A remarkable 94% participation rate, the highest in the companys history—demonstrates strong employee engagement.

2. Global Reach: Contributions from employees across all major regions reflect a truly global and inclusive response.

3. Net Promoter Score (NPS): Employee advocacy continues to rise, with NPS improving to 55% this year.

4. Overall Satisfaction: Employee satisfaction levels remained consistently high at 94%, mirroring last years result.

5. Vision-Aligned Feedback: Employees were invited to share their views on how the organization can achieve its Vision through a set of optional open-ended questions. Atotal of 4,170 employees provided insightful input.

Each submission was carefully reviewed, categorized, and analyzed to uncover actionable insights.

These findings are now being leveraged to address organizational challenges, drive improvements, and align strategic efforts with TVS SCSs long-term Vision.

Cautionary statement

Statements in this Management Discussion and Analysis and this Annual Report describing our vision, projections, estimates, expectations, plans or predictions or industry conditions or events may be forward-looking statements within the meaning of applicable securities laws and regulations. Actual results, performance or achievements could differ materially from those expressed or implied. Several factors could make a significant difference to the Companys operations. These include economic conditions affecting demand and supply, government regulations and taxation, natural calamities, pandemics etc. over which the Company does not have any direct control.