MANAGEMENT DISCUSSION AND ANALYSIS REPORT Economic Developments and Industry View Global Economic growth began to recover in financial year 2013-14 with much of the impetus coming from advanced economies and is expected to improve further in 2014-15. The strengthening in activity was mirrored in global trade and industrial production. After witnessing a decline in GDP growth in two consecutive years, a modest recovery in Indian economy was seen in financial year 2013-14. As per the latest estimate of Asian Development Bank, Indian GDP is expected to grow at 5.5% in financial year 2014-15. Indian economy is likely to accelerate as the reform process continues and begins to bear fruit. For any economy, the logistics sector, encompassing transportation, warehousing, cargo consolidation and border clearances, would form the backbone of its trade and associated economic activity and growth of key sectors. The cost of trading whether by sea, land or air forms a critical component of the final price of a commodity. An efficient logistics system reduces this cost, providing a competitive edge and propelling economic activity. With the Indian economy transforming itself into a major power with mega infrastructural projects, growing investments and several other significant developments, the Indian logistics industry expects a big rise in demand in spite of infrastructural constraints. Looking at the future growth prospects, India is currently considered the most attractive in the world and might emerge as a major logistics hub in the future. With this forward looking attitude and a promise of growth and improvements, the service oriented logistics industry is all set to expand beyond the horizons. Currently India's logistic sector is valued at around US$110 billion and is expected to touch US$385 billion by 2015. The cost of logistics in India is valued at 13 -14% of GDP where as in developed nations the cost is in the range of 7-8% of their GDP. India offers huge opportunity for investment. There is a tremendous scope for the growth of infrastructure segment. The Central and State Governments are focusing on the development and inclusive growth. With several policy measures announced by the Government coupled with seamless execution, focus on process improvement, providing end to end solutions to customer and quality of operation, the company continues to delivery in its focus areas of logistics , trading in lubricants and investment and finance activities. Outlook on Opportunities The logistics industry in India is evolving rapidly and it is the interplay of infrastructure, technology and new types of service providers that will define whether the industry is able to help its customers reduce their logistics costs and provide effective services. The roads and railway network is considered one of the most important component in the supply chain management in addition to the other modes of transport. As demand for goods are either for mass consumption or for industrial development grows beyond the conventional demand supply from the hubs of metropolitan cities to Tier-1 and Tier-2 cities, the share of road transport is anticipated to go up further, given its ability to facilitate the last-mile reach. Warehousing storage, third party logistics (3PL) and logistics parks are the three fastest emerging segments taking the Indian logistics industry to new horizons. With the increasing awareness among Indian companies of the benefits of logistics outsourcing and 3PL, the business dynamics is expected to grow by leaps and bounds. The primary reason for growth in the finance and investment industry can be attributed to increasing trade reforms in Government policy, increased Government spending on finance and investment sector and rise in domestic consumption. The Company has successfully implemented the growth strategy and expansion. The changes in the political and social conditions in India, the monetary and interest rate policies of India and other countries have also helped in maintaining the momentum in the finance activities of the Company. Outlook for Threats, risks and concern One of the major critical challenges faced by companies today is of insufficient integration of transport networks, information technology (IT), warehousing and distribution facilities. Also the Regulations exist at a number of different tiers, imposed by national, regional and local authorities. Regulations often differ from city to city, hindering the creation of national networks and economies of scale for the logistics players. Further the disorganized nature of the logistics sector in India, its perception as a manpower-heavy industry and lack of adequate training institutions has led to a shortfall in skilled management and client service personnel. The cyclical fluctuations due to economic recession, downturn in business cycle , interest rate fluctuations and other economic factors beyond control has posed a serious threat on the Company policies. Newer regulatory updates pose a constant challenge for smooth operations of the Company. Higher cost of funds might lead to reduced bottomline for the Company. Like in most other industries, opportunity brings itself competition. The different levels of competition in each segment have led to the price cutting as well. Internal Control system The philosophy we have with regard to internal control systems and their adequacy has been formulation of effective systems and their strict implementation to ensure that assets and interests of the Company are safeguarded; checks and balances are in place to determine the accuracy and reliability of accounting data. The Internal Audit, an independent appraisal function to examine and evaluate the efficiency and effectiveness of the internal control system, appraises periodically about activities and audit findings to the Audit Committee, Statutory auditors and the Top Management. Internal audit ensures that systems are designed and implemented with adequate internal controls commensurate with the size and operations; transactions are executed and assets are safeguarded and deployed in accordance with the policies, existence of adequacy of internal controls in all existing policies and procedures. Human Resources/Industrial Relations The Company has continuously strive to attract and retain the best talent from the local markets; clearly define their roles and responsibilities; include them into robust performance management systems; create an inspiring and rewarding work environment; engage them into an inclusive work place; impart training and create development opportunities for increasing employee knowledge and efficiency to make them future ready; and create career opportunities within. The Company is committed in ensuring that the work environment at all its locations is conducive to fair, safe and harmonious relations between employees. It strongly believes in maintaining the dignity of all its employees, irrespective of their gender or seniority. Discrimination and harassment of any type are strictly prohibited. The Company ensures that no employee is disadvantaged by way of gender discrimination. Segment Wise or product wise performance There has been the growth in the trading in lubricants and finance and investment activities of the Company from last year's performance. Due to the economic factors there has been decrese in the revenue extracted from logidtic activites. With superior methodologies and improved process and systems , the Company is well positioned to lead a high growth path. The details can be extracted from the notes to accounts. Cautionary statement Certain statements in the Management Discussion and Analysis describing the Company's objectives, brdictions may be "forward-looking statements" within the meaning of applicable laws and regulations. Actual results may vary significantly from the forward looking statements contained in this document due to various risks and uncertainties. These risks and uncertainties include the effect of economic and political conditions in India, volatility in interest rates, new regulations and Government policies that may impact the Company's business as well as its ability to implement the strategy. The Company does not undertake to update these statements. sd/- (Satya Pal Sindhu) Managing Director Din no.-00218355 sd/- (Vir Sen Sindhu) Whole-Time Director Din no.-00034773 |