Zeal Global Services Ltd Management Discussions

GLOBAL INDUSTRY OVERVIEW

Logistics plays a crucial role in economic development by facilitating the movement of goods, services, and information across different regions. Efficient logistics systems contribute to reducing transportation costs, improving supply chain efficiency, and enabling businesses to reach new markets. The presence of a robust logistics network is vital for the economic growth of a country as it enhances trade opportunities, supports manufacturing, and promotes global competitiveness. Improvement in Logistics is the cornerstone of the Governments push towards achieving Aatma Nirbhar Bharat and Developed nation by the end of 47. With the view of same various initiatives are being taken by the Central and State/UT governments to improve logistics ecosystem across the country from time to time.

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. Many countries in the Asia Pacific region, particularly China and India, have experienced rapid economic growth. This growth has led to increased industrial production and trade activities, boosting the demand for efficient logistics services.

The global logistics market size accounted for USD 8.96 trillion in 3 and it is expected to be worth around USD 1.91 trillion by 33 with a noteworthy CAGR of 9.35% from 4 to 33. However the Asia pacific logistics market size was valued at USD 3.95 billion in 3 and is expected to reach around USD 1 .67 billion by 33 with a CAGR of 1 .45% from 4 to 33.

Air freight is a vital component of the logistics industry, especially for the transportation of high-value and time-sensitive shipments across long distances. The global air passenger market is a vital component of the aviation industry and plays a significant role in connecting people, cultures, and economies across the world. The market has experienced steady growth over the past few decades, driven by increasing globalization, the rise in disposable incomes, and the expansion of low-cost carriers.

Global Air Freight Market size was valued at USD 67. billion in and is poised to grow from USD 74.1 billion in 3 to USD 16 .39 billion by 31, growing at a CAGR of 1 .3% during the forecast period ( 4- 31). The global Airline Industry market size will be USD 548415. million in 4. It will expand at a compound annual growth rate (CAGR) of 4. % from 4 to 31. Asia Pacific held a market share of around 3% of the global revenue with a market size of USD 1 6135.5 million in 4 and will grow at a compound annual growth rate (CAGR) of 6. % from 4 to 31. This growth is driven by the need for rapid and efficient transportation of high-value and time-sensitive shipments, as well as the adoption of innovative technologies. However, high costs and the need for consolidated air freight services are challenges that need to be addressed. Recent developments in the industry include the launch of new services and partnerships aimed at improving efficiency and reducing costs.

Air Freight Market Recent Developments

In January 4, Delta Cargo uncovered its latest offering, Deliver Direct, created in partnership with Smart Kargo. Deliver Direct is a door-to-door delivery service customized for the U.S. market, an adaptable and competitive solution for e-commerce retailers aiming to enhance their direct-to-consumer shipping processes;

In February 4, Etihad Cargo, the cargo and logistics division of Etihad Airways, entered into a strategic partnership agreement with Worldwide Flight Services (WFS), a member of the SATS Group, for cargo handling services at 1 major international airports across Europe, Scandinavia, North America, India, and the Asia Pacific region;

In February 4, AllMasters, a digital freight consolidation platform focusing on Less Than Container Load (LCL) exports, introduced its recent solution planned to tackle the challenges faced by freight forwarders in the industry.

INDIAN INDUSTRY OVERVIEW

The Indian economy, which ranks fifth in the world with a GDP of approximately US $ 3.7 trillion in 3, grew rapidly between 5 and 19, averaging more than 7% annually. The Indian logistics sector is one of the largest in the world and presents a huge addressable opportunity. India Strives to realise its ambitious economic goals including achieving a GDP of US $ 5.5 trillion by 7. India logistic sector plays a crucial role in supporting economic growth and sustainability. Over the last five years, India has consistently improved its ranking on various global manufacturing performance indicators, logistics and ease of business, while rising six places to 38th among 139 countries on the Logistics Performance Index.

PM GatiShakti, launched by the Prime Minister in October 1, aims to improve logistics efficiency, and reduce costs by coordinating planning among different agencies. This initiative emphasizes breaking down barriers between departments, and integrating infrastructure and logistics networks. PM GatiShakti seeks to minimise disruptions and enhance efficiency by focusing on multi-modal connectivity and timely project completion. Through a National Master Plan, it intends to create an integrated transportation and logistics network, fostering value addition and generating job opportunities. The Prime Minister noted a capital expenditure of Rs. 7.5 lakh crore (USD 9 . 6 billion) in - 3 by the central government.

The industry is characterised by dynamism, undergoing rapid evolution to meet escalating demands. Technological advancements, infrastructure enhancements and governmental initiatives, including GST implementation and the National Logistics Policy (NLP), are precipitating substantial transformations within the sector. Digitalisation, augmented connectivity, and the adoption of cutting-edge innovations such as Radio Frequency Identification (RFID) and Global Positioning System (GPS) are bolstering operational efficiency while mitigating costs. Furthermore, the surge in e-commerce activities and international trade is propelling demand for streamlined logistics solutions. Despite persistent challenges such as infrastructural deficits and regulatory intricacies, the industry stands poised for significant expansion, presenting domestic and international entities with opportunities to flourish within Indias burgeoning market.

With the pivotal role in driving economic progress by facilitating the efficient movement of goods and services across the supply chain, the logistics sector contributes around 13-14% to GDP and provides livelihood for more than million people. It enables timely delivery, decreases costs, and enhances competitiveness, crucial for thriving businesses. Logistics boosts productivity and trade by improving connectivity infrastructure and adopting innovative technologies, thereby stimulating economic growth. Moreover, it fosters investment and supports various sectors, contributing significantly to GDP expansion. As a key enabler of trade and commerce, the logistics sector underpins economic development, enabling nations like India to harness their full potential and achieve sustainable progress.

According to an EY report titled India@1 , Indias GDP is estimated to be around US$ 6 trillion in market exchange rate terms by 47-48. The transportation and logistics sector are expected to play a crucial role in supporting the countrys ambitious growth targets. As India aims to reach this milestone over the next 5 years, the transportation and logistics industry would be essential for enabling this growth as logistics cost as a % of GDP accounts for currently. The considerable expenses in the logistics industry can be ascribed to the fact that most freight movement in India depends on road transportation, which constitutes 66% of cargo in ton-kilometres. Rail transportation comes next with a share of 31%, whereas shipping and air transportation comprise only 3% and 1%, respectively. However, the distribution of freight transportation varies across sectors.

The Indian logistics sector stands as one of the worlds largest and plays a crucial role in driving economic growth. Following a % contraction in FY 1, the market experienced a robust post-COVID recovery in FY , witnessing a remarkable 14% growth and reaching a value of US$435 billion. As per the projections from EY, a leading global consulting firm, the logistics market in India is poised to expand further, reaching US$591 billion by FY 7.

The report further states that in FY , organised players represented only 5.5-6% of the logistics market segments, encompassing road transportation, warehousing, and supply chain services. However, organised players are anticipated to exhibit a notable CAGR of approximately 3 % between and 7. Consequently, their market share is expected to reach 1 -15% by FY 7. This transformation is expected to be led by organised players- capacity to provide integrated services, leverage network- and scale-driven efficiencies, and make substantial investments in technology and engineering. These efforts are projected to promote their market competitiveness and capture a larger share of customer business.

Indias air cargo industry is experiencing significant growth. This growth is projected to continue, with India aiming to become one of the top five freight markets by 5 and achieve 1 million tonnes of air cargo by 31.

The civil aviation industry in India has emerged as one of the fastest growing industries in the country during the last three years and can be broadly classified into scheduled air transport service which includes domestic and international airlines, non-scheduled air transport service which consists of charter operators and air taxi operators, air cargo service, which includes air transportation of cargo and mail. The Indian aviation industry has recovered fully from the covid-19 pandemic shock as indicated by the air traffic movement which stood at 3 7. 8 million in FY 3 compared to 188.89 million in FY . India is expected to overtake China and the United States as the worlds third-largest air passenger market in the next ten years, by 3 , according to the International Air Transport Association (IATA).

In FY 4, airports in India pegged the domestic passenger traffic to be 3 6.79 million, a 13.5% YoY growth, and international passenger traffic to be 69.64 million, a .3% YoY growth, over the same period last year.

On December 19, 3, ICRA reported that the Indian aviation industry is projected to see year-on-year revenue growth of 15- % in FY 4 and 1 -15% in FY 5. Despite healthy passenger traffic growth, the recovery in industry earnings will be gradual due to the high fixed costs. From FY16 to FY 4, domestic freight traffic increased at a CAGR of 3% and international freight traffic increased at a CAGR of .7%. In FY 4, domestic freight traffic stood at 1.3 MMT and international freight traffic was . 4 MMT. During April-March 4, domestic freight traffic was

13 thousand tonnes and international freight traffic was 46 thousand tonnes. Aircraft movement increased at a CAGR of 3.85% from . 5 million in FY17 to .67 million in FY 4. To cater to the rising air traffic, the Government of India has been working towards increasing the number of airports. As of 3, India has 148 operational airports. India has envisaged increasing the number of operational airports to by 5.

THREAT, RISK AND cONcERNS

The availability and costs of aviation fuel remain one of the major economic factors affecting the airline industry for decades. A spike in jet fuel prices has a direct influence on the financial portfolio of airline firms. In 4, airline fuel

: www.zeal-global.com is expected to represent over 31% of all operating costs. The conflict between Russia and Ukraine, starting in , brought along the imposition of various sanctions and the creation of a few no-fly zones, which hampered the aviation sector. The impact of the conflict was especially felt by specific trading partners and across key markets.

Airport infrastructure such as runways, hotels, terminals, concourses, shopping centres, and lounges need to consistently be upgraded to cope with the rise in the number of air passengers. To maintain the reputation of the airline and remain ahead of the competition, aircraft should be periodically upgraded and maintained, while onsite amenities such as aircraft ground handling systems are also required to be renovated. According to ACI Latin America and Caribbean, more than USD 94 billion will be required up to 4 to meet infrastructure needs at airports, considering the booming air transport in the region

Air congestion and passenger traffic are other challenges faced by the aviation market, which seem to have no quick solution, at least in the immediate future. Airports in small cities are often crowded, and flight delays have turned out to become a regular thing. Most flights these days seem full, and terminals are always congested, with the rise in the number of air passengers constituting a major factor. According to estimates, the Asia Pacific region is expected to add around .5 billion passenger journeys per year by 4 . In the Air Cargo Industry insufficient infrastructure, lack of proper technology, high operational costs and shortfall of skilled man force also considered to be challenges for the Industry.

Cybercrime remains a clear and present danger to the aviation sector which cannot be ignored. The sector is witnessing a rising tide of cyber-attacks and a surge in the levels of risk, as criminals, hackers, and cyber-attackers look to use vulnerabilities, cause chaos, and steal capital at the expense of passengers and the aviation sector.

Climate change and environmental issues certainly remain among the key challenges faced by the airline industry. Since commercial aviation is responsible for a significant percentage of carbon emissions, the industry is under significant pressure to take measures to reduce the environmental impact of air travel.

OPPORTUNITIES

The air passenger market is experiencing significant growth, driven by increasing demand for air travel in developing regions, rising disposable incomes, and urbanization. This trend is expected to continue, with more people taking to the skies for business and leisure. Airlines are responding by expanding their routes, increasing frequencies, and investing in passenger experience enhancements such as premium cabins, in-flight entertainment, and personalized services. As a result, businesses that cater to air passengers, such as airports, ground handling services, and travel retailers, are also seeing opportunities for growth.

The air cargo market is also thriving, driven by the rapid growth of e-commerce, increasing demand for temperature-sensitive products, and globalization. As more businesses turn to air freight to transport their goods quickly and efficiently, airlines and logistics companies are investing in dedicated cargo aircraft, expanding their cargo networks, and adopting innovative technologies to enhance their services. This trend presents opportunities for businesses that specialize in air cargo handling, warehousing, and distribution, as well as those that provide cargo-related services such as customs brokerage and freight forwarding.

The air cargo industry in India is undergoing a significant technological transformation, placing sustainability at the forefront of supply chain management. This shift is characterised by innovations and advanced logistics solutions aimed at boosting operational efficiency, cutting costs, and enhancing overall competitiveness.

Key technologies like Artificial Intelligence (AI), the Internet of Things (IoT), Blockchain, and Machine Learning are poised to redefine logistics practices, ushering in a more eco-friendly and efficient future. This has enabled better tracking and visibility of goods, reduced waste and emissions, and improved efficiency. These technological advancements have facilitated better tracking of shipments, reduced transit times, and optimised routes ultimately leading to reduced fuel consumption and emissions.

Recently company has announced vide its announcement dated 3rd July, 4 at NSE that Company has appointed as GSSA of South African Airways (SAA) Cargo in Logistics Sector in India. The said partnership aims to strengthen SAA Cargo s position in India and on the other hand to grow the business of the Company in the Cargo Sector. The recent restart of SAAs Australia-Perth route underscores the importance of the Asian market, particularly India.

Zeal Global Logistics, has a significant presence in key Indian cities through its passenger and cargo GSA operations and expressed enthusiasm for the partnership. The collaboration is expected to benefit both companies, aligning with Zeals ambitious growth plans and SAAs expanding network post-COVID-19. There is over 6 tons of cargo destined for South Africa from India, with Johannesburg attracting a lions share of the market. The inbound market from India is dominated by Pharmaceuticals, Textiles and Automotive parts. SAA Cargo has a history of successful off line partnerships in the Asian market. The Zeal Logistics partnership presents numerous opportunities, and both companies are eager to explore its potential, especially in the India-to-South Africa market.

SEGMENT-WISE PERFORMANcE

The Company has been performing well in terms of its market presence and share. Your Company is being pioneer in Cargo Carrier Service and Passenger Carrier Service. Our main focused in rendered the services to our customers along with to maintain our core values and Business principles. The Company is continues working to improve its system and reduce the cost without comprising the business values with our customers. We have two business verticals:

cargo carrier Service: We are representing various airlines across the globe for Transfer and shipment of goods by arrangement with the represented / contracted airlines for the transportation of cargo through air.

Passenger carrier Service: We work with Airlines and provide them with the support for the transportation of passengers through Airways from one country to another. We create a smooth cross cultural experience for passengers as well as airlines. As a pilot project we have started working with different Airlines. In order to expand its business wings in the passenger segment Company has commenced its business operations from Mumbai-Baku-Mumbai in the current financial year.

1. Offline Distribution

Airlines which are not bringing their own Aircrafts to India and connect through some other airlines out of India falls under offline distribution.

2. Online Distribution

Airlines which are operating directly from India falls under online distribution.

www.zeal-global.com : 3

INTERNAL cONTROL SYSTEMS AND THEIR ADEQUAcY

The Company has placed system of Internal Control Systems and checks which are considered adequate and commensurate with the size and nature of operations providing sufficient assurance about safe guarding of all assets, authorizing transactions, recording and timely reporting.

DIScUSSION ON FINANcIAL PERFORMANcE WITH RESPEcT TO OPERATIONAL PERFORMANcE

Company has earned INR 193 8.76 Lacs in comparison to 11 .73 Lacs of the previous year which is witnessing a growth of approx. 73.38% on Y-o-Y basis. In FY 4 EBIDTA stand at INR 76.5 Lacs in comparison to INR 1536.45 Lacs of the previous year which is up by 35.15% on Y-o-Y basis whereas PBT witnesses growth of 19.17% on Y-o-Y basis as its Stand at INR 1576.7 Lacs in comparison to INR 13 3. Lacs. After making a provision of taxes including deferred tax and tax adjustment of earlier years profit after tax stand at INR 1 .13 Lacs against INR 985.19 Lacs in previous year which is up by . %. Company has also significantly reduced its debt from INR 1733.88 Lacs to INR 981.66 Lacs in FY 4 in order to reduce its interest cost in the upcoming future operations and also witnessed a significant growth of 5 .9 % in its Cargo business in terms of volume as its handled 3714 Tons of Cargo Shipment in Comparison of 4 9 Tons in previous year.

MATERIAL DEVELOPMENTS IN HUMAN RESOURcES/INDUSTRIAL RELATIONS FRONT, INcLUDING NUMBER OF PEOPLE EMPLOYED

Human Resources are very important for every organization. The Company maintains healthy and harmonious Industrial relationship with its employees, customers and suppliers. The Company witnesses the importance and contribution of human resources for its continued Growth and Development. As on 31st March 4 Company has a total strength of 54 employees.

DIScLOSURE OF AccOUNTING TREATMENT

The Company has followed prescribed Accounting Standard in preparation of its financial statements in order to give true and fair view of the underlying business transaction.

DETAILS OF SIGNIFIcANT cHANGES IN KEY FINANcIAL RATIOS AND IN RETURN ON NET-WORTH ALONG WITH DETAILED EXPLANATIONS THEREFORE

(Rs. In Lacs)