Delhivery Ltd Management Discussions

Macro-economic outlook Global Economy

The global economy has demonstrated resilience while facing numerous challenges during 2024. The International Monetary Fund (IMF) estimated a 3.3% growth in global economy for 2024, but projects a slower growth of 2.8% in 2025, followed by a slight recovery to 3.0% in 2026¹. The IMF has expressed concerns regarding recent trade and protectionist policies by major economies, which are anticipated to affect global growth. The volatile geopolitical environment and the uncertainty around the tariffs imposed by the US are fuelling risk to inflation and growth trajectory.

Advanced economies witnessed a modest growth of 1.8% during 2024. The growth rate in 2025 is expected to decrease to 1.4% in 2025 on account of tariff measures and countermeasures. Emerging markets are also expected to be impacted by the global economic uncertainties. The IMF projected a slight slowdown in emerging markets economies, with growth expectations softening from 4.3% in 2024 to 3.7% in 2025 and 3.9% in 2026. Flowever, amongst the major economies, Indias growth prospects are expected to be better. The IMF has forecasted Indias growth rate in 2025 and 2026 of more than 6%. This sustained expansion underscores Indias resilience and its pivotal role in driving global economic growth.

Indian Economy

Currently the 4th largest economy in the world, India is one of the fastest growing economies. It is expected to be among the top three economic powers in the world by 2035, supported by its demographics and strong fundamentals. In FY25, economic activity faced certain hurdles due to general elections, unpredictable rainfalls and volatility in global trade in the last two quarters. Despite these hurdles, the Indian economy recorded a robust growth of 6.5%² in FY25. It is remarkably ahead of the GDP growth rates recorded by other major economies. The Economic Survey forecasts Indias growth rate between 6.3% to 6.8% for FY26. The Reserve Bank of India also estimates a growth rate of 6.5% for the Indian economy during FY26.

Key economic indicators reported an encouraging trend about the Indian economy. Head line retail inflation softened to4.6%²

during FY25 from 5.4% in FY24. As per the latest available data, the industrial sector grew by 6.2 % in FY25. Indias services sector grew by 7.1% in the first half of FY25. Indias services exports grew ~13% on a YoY basis during the April - November period of FY25. Gross FDI inflows surged 18% in the April - November period of FY25 over the same period last year. From an aggregate demand perspective, private final consumption expenditure at constant prices is estimated to grow by 7.3% in FY25, driven by a rebound in rural demand. This is significantly higher than the 4% growth in private final consumption recorded in FY24. In FY26, two critical factors, the recently announced income tax cuts and uncertainty in global trade, are expected to be key monitorables that could have a meaningful impact on our economy.

Global logistics industry overview

The global logistics market accounted for US$7.98 trillion in 2022 and it is expected to grow to US$18.23 trillion by 2030 at a CAGR of 10.7% from 2023 to 2030. The growth in the global logistics market will be primarily driven by the growth in online retail. Asia-Pacific is the leading regional market for logistics across the globe. The advancements in technology constituting automated material handling equipment, GPS, and biometrics are helping organisations and businesses to work efficiently, thereby stimulating the growth of the logistics market in the region.

India logistics industry overview

In India, the logistics sector is a significant contributor to the overall growth of the economy. More than 22 million people rely on it for their livelihood. The sector is projected to add 1 crore jobs by 2027³. 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 a recent report⁴ published by Red Seer, the total logistics market size in India was US$250 billion in FY24. India has jumped 6 places over last year to 38 out of 139 countries in the 7th edition of the Logistics Performance Index (LPI 2023) released by the World bank.

In India, the logistics sector is dominated by transportation. At present, the road transportation sector has the largest share of around 66% of total cargo movement in terms of tonnage, followed by railways⁵.

1 https://www. imfora/en/Puhlications/WFO/lssues/2025/04/22/world-economic-outlook-april-2025. accessed on May 05, 2025

2https://www.pih.nov.in/PressNoteDetails.aspxRs.Noteld=154f>f>0

3IBEF: Transforming Indias Logistics Sector: Challenges and Opportunities

4https://redseencom/reports/express-lonistics-in-motion-market-update-outlook/

5IBEF: Transforming Indias Logistics Sector: Challenges and Opportunities

Note: Market structure excludes freight transport through ship, Inland Water Transport (IWT) and pipeline

Domestic Road Transportation: Domestic Road Transportation represents the movement of freight over the national and state highway road network and in-city delivery within India. Improving reliability and reducing turnaround times due to enhancement in road infrastructure, relatively low cost of operation and increase in load-carrying capacity of trucks have led to road transportation having a higher share of freight traffic in comparison to other modes. Domestic road transportation market consists of three segments:

1. Express Parcel: Mainly comprises e-Commerce shipments, speed post and document courier with individual parcel weighing less than 40 kilograms and turnaround time of less than 3 days typically.

2. Part Truckload (PTL): Domestic road transportation service with total shipment weight of >40 kilograms, which is insufficient to fill a full truck. Volume from multiple shippers is therefore clubbed together at consolidation centres into full truckload prior to movement. PTL services can be further segmented into Express PTL, with turnaround times similar to Express Parcel and Economy PTL, with slowerturnaround times.

3. Full Truckload (FTL): Domestic road transportation service where the shipper requires a dedicated truck or trailer, typically moving directly from point of departure/ origin to the point of destination.

Domestic Rail Transportation: Domestic Rail Transportation includes movement of shipments over public and private rail networks. India has the worlds fourth largest rail network after the US, China, and Russia. Railways after roadways account for the second highest percentage of goods moved in terms of volume. It is one of the most cost-effective modes of bulk freight transportation for shipments like commodities (e.g. coal, iron ore, cement), agri products (e.g. fertilisers, food grains, mineral oil) and raw materials.

Domestic Air Express Transportation: Domestic air express transportation includes movement of shipments using dedicated cargo aircraft or belly capacity on passenger flights. This is a significantly more expensive means of transportation used mainly for applications such as delivery of critical medical supplies like vaccines, time-sensitive products such as certain critical spare parts or for critical documents such as passports, banking documents etc.

Cross-border Transportation: Cross-border Transportation includes movement of shipments into and out of India either as individual parcels (courier) or freight. This may be carried either via air or via sea. Further, sea-freight movement is containerised and may be either LCL (less than container) or FCL (full container) in nature.

Supply-chain Services: Supply-chain represents integrated services (including two or more of warehousing, transportation and other value-added services such as packaging, kitting, labelling or technology services such as warehouse management and inventory management systems etc.). This

is a more sophisticated form of logistics service provided by specialised third-party providers and typically focuses on specific industry verticals and at large enterprise customers with complex supply chain requirements. Warehousing market demand is driven by the growth in manufacturing, retail, FMCG and e-commerce sectors. Furthermore, supportive government policies such as GST, easy clearances for land, 100% FDI, establishment of logistic parks / multi modal logistics parks (MMLP) and Free Trade Warehousing Zone (FTWZ) are expected to be a major driver for the sector.

Key trends and factors driving growth and structural changes to the Indian logistics industry include:

• Economic growth: The Indian economy grew by 6.5% during FY25. Most of the national and international institutions are projecting a growth rate higherthan 6% during FY26 forthe Indian Economy. The IMF has projected 6.3% growth rate for India in 2025, respectively; the Ministry of Finance has estimated a growth rate between 6.3% to 6.8% forthe Indian Economy while the RBI has projected it to grow at 6.5% in FY26. The projected growth rate is higherthan the growth rate estimated for other emerging and developing Asian countries. Increasing consumption and growth of various businesses are expected to be the major drivers of growth of the logistics industry in India.

• Rising consumer incomes and changing preferences:

Indias per capita GDP reached US$2.73 thousand⁶ in 2024. The middle-income segment, with an annual household income in the range of US$7,500-15,000, is projected to grow from ~27% to ~40% of the population in the next 5-years. Additionally, over 50% of the population is currently under 30 years of age and digitally native, resulting in rapid growth in purchases of products and services online.

• New B2C commerce models: In addition to e-commerce marketplaces, new models like social commerce, omnichannel, quick commerce commerce and direct-to- consumer (D2C) commerce continue to disrupt traditional retail models. Category expansion is also expected to drive growth with segments like consumer durables/white goods, home and furniture rapidly transitioning online. Overall, these structural changes in the consumption economy are expected to increase the demand for reliable logistics and drive the growth of organised logistics players.

• Evolving B2B business models: The emergence of new distribution channels, new go-to-market strategies such as direct-to-retail (D2R) and direct-to-consumer (D2C) and government initiatives like "Make in India" and Production Linked Incentives are driving the need for greater speed, precision and visibility in traditional B2B supply chain operations.

• Demand for integrated services: With the rollout of GST, enterprises are optimising supply chains for speed and efficiency instead of tax reasons. This shift towards a total-cost approach is driving the demand for third-party players capable of providing integrated warehousing, transportation and technology solutions instead of a multitude of traditional mono line players. In addition, economic growth of Tier 2 cities and beyond is further driving the need for players with deep national capabilities.

• Technology-led transformation: The availability of new technology and business intelligence tools are enabling organised logistics companies to solve various problems such as truck utilisation, route consolidation, demand forecasting, facility and infrastructure placement, inventory management and fraud detection. In addition, hardware investments in automated parcel sortation systems, material conveyance systems, AGV/AMR systems, ASRS etc. along with wider penetration of warehouse management systems are improving operational throughput and precision, thereby lowering human errors and operating costs. The use of drones in the logistics sector has also gained momentum and is proving to be beneficial by enabling a wide range of applications. There is also a significant potential to deploy Artificial Intelligence (Al) in supply chain operations in large, technology led nationwide logistics networks.

• Connected logistics: Connected logistics is a set of interdependent communication devices and software that help in gaining real-time information about the goods that are shipped through various modes of transport. It shares relevant data and information related to logistics so as to smoothen the transportation process. Increase in the adoption of Internet of Things (loT) technologies and sensor-based technologies such as RFID has contributed to boosting the connected logistics market. Further, there is a huge opportunity to leverage advanced connected logistics management on the upcoming 5G network in India. With ultra-high bandwidth, extremely low latency, massive capacity and increased government focus, 5G is expected to significantly improve connectivity.

• Eco-logistics: Eco-logistics or green logistics involves the use of more eco-friendly and sustainable processes in order to reduce the environmental impact of logistics. The adoption of sustainable processes will be one of the vital trends for future growth.

• Legal environment and government reforms: Measures such as implementation of GST, Logistics Efficiency Enhancement Programme (LEEP), the increased pace of building expressway and highway infrastructure and

6httpRs.>://www.imf.orci/external/clatamapper/NGDPDta)WFO/OFMDC/ADVFC/WFOWORI D. accessed on June 22,2024

reforms to axle load limits have directly benefited the logistics sector. Further, The Department of Commerce set up a logistics division in July 2017to overseethe integrated development of the sector. Some of the other initiatives undertaken by the government are:

- The government launched the national master plan PM Gati Shakti initiative, a multi-modal connectivity for all infrastructure projects pertaining to seven engines (roads, railways, airports, ports, mass transport, waterways, and logistic infrastructure). In the interim budget 2024, the government announced 3 major economic railway corridor programmes: energy, mineral and cement corridor, port connectivity corridor; and high traffic density corridor, to enable multi modal connectivity to improve logistics and reduce costs. This infrastructure development is expected to result in a decrease in the countrys logistics cost and improve the ease of living and doing business in the country.

- The government launched the National Logistics Policy (NLP) in September 2022 with the targets to (i) reduce the cost of logistics in India to be comparable to global benchmarks by 2030; (ii) improve the LPI ranking - endeavour is to be among the top 25 countries by 2030, and (iii) create a data-driven decision support mechanism for an efficient logistics ecosystem.

- In the Union Budget of 2023, the finance minister allocated US$3.3 billion to the Dedicated Freight Corridor Corporation of India (DFCC). DFCs are a network of broad-gauge freight railway lines, specifically meant to cater to freight trains. The allocated budget is expected to be used for activities such as track renewal, gauge conversion, and setting up new lines, which are expected to develop the freight infrastructure in the country.

These measures have facilitated fast and smooth flow of goods, reduced turnaround times and enabled logistics companies to invest in building large-scale and efficient infrastructure.

Key Challenges ahead for logistics industry • Fragmented supply chain: The logistics industry in India is highly fragmented, with numerous small players operating independently across supply chain segments. This fragmentation results in suboptimal utilisation of resources, lack of standardisation, and difficulties in coordination and collaboration among stakeholders. Consolidating and integrating logistics operations by adopting technology platforms and establishing logistics parks and hubs can help overcome fragmentation. Such

initiatives would streamline operations, improve efficiency, and cut costs through economies of scale

• Volatile fuel prices: Fuel accounts for a major portion of transportation costs for logistics service providers. The cost of diesel in India depends on international crude oil prices as India imports a majority of its fuel requirements. The fluctuations in fuel prices can dramatically impact the logistics industry margins impacting each stakeholder in the value chain. Rapid increase in the price for the fuel can have a major impact on the logistics companies- forcing them to raise prices or take losses. A sudden fall could result in short-term boosts in profit and a surge of competition within the market to provide consumers with the lowest price. Many logistics companies mitigate this risk by having customer contracts linked to fuel prices.

• Truck driver shortage: Many truck drivers find the profession unattractive due to the lack of security and safety, harsh working conditions, irregular working hours and a long time away from their families. With significant improvement in road infrastructure coupled with new technologies such as ADAS which ensure higher safety, the working conditions for the drivers are improving.

• Reverse logistics cost: Indias e-commerce sector is growing, driven by increased consumer incomes and smartphone penetration. However, one major challenge in the e-commerce sector is the logistics cost. Customers may decide to return the product for various reasons. These reverse logistics result in numerous challenges pertaining to pick-up timings, on-time communication with pick up persons, packaging of products etc. Such activities add complexity to the operations and put an additional cost on the sellers thus affecting the potential growth of the logistics industry.

• Last-mile connectivity: The last-mile delivery segment of the logistics chain encounters challenges such as manpower availability, inadequate road infrastructure, traffic congestion, poor address mapping and weather related disruptions. These factors contribute to delays, higher costs, and lower customer satisfaction, especially for ecommerce and FMCG companies reliant on timely deliveries. Improving last-mile connectivity through initiatives such as digital mapping technologies, alternate delivery modes, different vehicle types etc. would optimise delivery routes, shorten transit times, and enhance service reliability, thus improving the overall customer experience.

Consolidated financial performance

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

!Mn	March 31, 2025	March 31, 2024
Revenue from contracts with customers	89,319.01	81,415.38
Other income	4,401.08	4,526.95
Total income	93,720.09	85,942.34
Freight, handling and servicing cost	65,347.85	59,707.49
Employee benefit expense	13,759.04	14,367.70
Other expenses	6,453.89	6,073.78
Depreciation and amortisation expense	5,349.08	7,215.50
Finance costs	1,257.87	885.20
Profit before tax, exception items and profit /(loss) of associate	1,552.36	(2,307.33)
Share of profit /(loss) of associate (net)	70.30	86.95
Exceptional items	(51.34)	(224.10)
Profit/(Loss) before tax	1,571.32	(2,444.48)
Tax expense/(Credit)	(49.78)	47.38
Profit/(Loss) for the year	1,621.10	(2,491.86)
EBITDA	3,758.23	1,266.41

Revenue by Service Line

We provide a full-range of logistics services including Express Parcel delivery, PTL (part truckload) freight, FTL (full truckload) freight, Supply Chain service, Cross Border express and freight services and logistics software as a service. Our service lines are reported as one combined segment - "Logistics Services" as per Ind AS 108.

!Mn	1 March 31, 2025 1	% share	March 31,2024	% share
Revenue from Express Parcel Services	53,175.16	59.53%	50,765.87	62.35%
Revenue from Part Truckload Services	18,894.86	21.15%	15,174.05	18.64%
Revenue from Supply Chain Services	9,073.98	10.16%	7,760.29	9.53%
Revenue from Full Truckload Services	6,260.29	7.01%	6,087.96	7.48%
Revenue from Cross Border Services	1,792.68	2.01%	1,525.31	1.87%
Others	122.04	0.14%	101.90	0.13%
Total Revenue from Customers	89,319.01	100.00%	81,415.38	100.00%

Performance highlights

• Total income increased by 9.05% to Rs.93,720.09 million in FY25 from Rs.85,942.34 million in FY24. Revenue from customers increased by9.71%toRs.89,319.01 million in FY25 from Rs.81,415.38 million in FY24

• Revenuefrom Express Parcel services increased by 4.75% to Rs.53,175.16 million in FY25 from Rs.50,765.87 million in FY24. Express Parcel shipment volume increased by 1.68% to 752 million parcels in FY25 from 740 million parcels in FY24

• Revenuefrom Part Truckload services increased by 24.52% to Rs.18,894.86 million in FY25 from Rs.15,174.05 million in FY24. Freight tonnage increased by 18.71% to 1.696K tonnes in FY25 from 1.429K tonnes in FY24. Realisation increased by 4.89% to Rs.11.14 in FY25 from no.62 in FY24

• Revenue from Supply Chain services increased by 16.93% to Rs.9,073.98 million in FY25 from Rs.7,760.29 million in FY24

• Revenue from Full Truckload services increased by 2.83% to Rs.6,260.29 million in FY25 from Rs.6,087.96 million in FY24

• Revenue from Cross Border services increased by 17.53% to Rs.1,792.68 million in FY25 from Rs.1,525.31 million in FY24

• Others include revenue from software services platform OS1, value added services, franchise fees, new services - Rapid and Delhivery Direct etc.

• Reported EBITDA increased 196.76% to Rs.3,758.23 million in FY25 from Rs.1,266.41 million in FY24

• Profit aftertax was Rs.1,621.10 million for FY25, an increase of Rs.4,112.96 million as compared to loss of Rs.2,491.86 million reported for FY24

Operating costs

We continue to achieve cost efficiency in our operations

through process improvements, increasing scale and

continued integration of our various logistics service offerings.

Key components of our operating costs include:

Freight, handling & servicing costs

Our freight, handling and servicing costs increased by 9.45% to Rs.65,347.85 million for FY25 from Rs.59,707.49 million for FY24 due to an increase in Express Parcel volumes, Part Truckload tonnage, revenue from Supply Chain services, Full Truckload service and Cross Border services network expansion and inflation. Due to increase in our network utilisation and our continuous cost optimisation measures, our freight, handling and servicing costs decreased as a percentage of revenue from contracts with customers to 73.16% for FY25 from 73.34% for FY24.

Employee benefits expense

Our employee benefits expense decreased by 4.24% to Rs.13,759.04 million for FY25from Rs.14,367.70 million for FY24. The decrease was mainly on account of reduction in the share based payment expenses, which reduced 49.18% to Rs.1,148.82 million in FY25 from Rs.2,260.38 million in FY24. The employee benefits expense excluding share based payment expenses increased 4.15% in FY25 from FY24 mainly due to a 9.79% increase in the average headcount during theyear FY25. Our employee benefits expense decreased as a percentage of revenue from contracts with customers to 15.40% for FY25 from 17.65% for FY24.

Other expenses

Other expenses include expenses such as allowances for doubtful debts, travelling and conveyance, cash management service charges, software and technology expenses, housekeeping expenses, business development expenses, legal and professional fees and repairs & maintenance etc. Other expenses increased by 6.26% to Rs.6,453.89 million for FY25 from Rs.6,073.78 million for FY24duetoan increase in our operating scale. Flowever, Other expenses, as a percentage of revenue from contracts with customers decreased to 7.23% for FY25 from 7.46% for FY24.

Other costs

Depreciation and amortisation expense

Our depreciation and amortisation expense decreased by 25.87% to Rs.5,349.08 million for FY25 from Rs.7,215.50 million

for FY24. We have revised our depreciation and amortisation accounting method from Written Down Value (WDV) to Straight Line Method (SLM)fortangibleand intangible assets w.e.f. April 01, 2024 to better reflect the pattern of economic benefits derived from the use of assets. If we had continued to follow WDV as our depreciation and amortisation method for FY25, then on a like to like basis, our depreciation and amortisation expense would have been Rs.8,649.08 million.

Finance cost

Our finance cost increased by 42.10% to Rs.1,257.87 million for FY25 from Rs.885.20 million for FY24, primarily due to increase in interest on lease liabilities during FY25 on account of expansion of our logistics network.

Exceptional Items

During FY25, we recognised a fair value loss of Rs.51.34 million on our investment in Boxseat Ventures Private Limited, which was accounted at fair value through profit and loss. We had acquired 4.97% in Boxseat Ventures Private Limited in FY23 by subscribing to the preference shares for a consideration of Rs.197.90 million. A fair value loss of Rs.146.56 million on this investment was already recognised in FY24.

Adjusted EBITDA

In evaluating our business we consider and use Adjusted EBITDA, a non-GAAP measure, that eliminates expenses that are non-cash, non-recurring or non-operating in nature and considers expenses that are recurring cash operating expenses and thus acts as a measure of true recurring operating profitability of our business. We believe Adjusted EBITDA helps us identify underlying trends in our business economics and facilitates evaluation of operating performance by eliminating non-cash, non-recurring or nonoperating items over multiple periods. We also believe that this provides useful information about our operating results, enhances the overall understanding of our past performance and future prospects, and allows for greater transparency with respect to key metrics we use for financial and operational decision-making.

The belowtable provides a reconciliation from our Total Revenue from contracts with customers to Adjusted EBITDA.

Rs. Mn	March 31, 2025 1	March 31, 2024	Remarks
Revenue from contracts with customers	89,319.01	81,415.38
Less: Freight, handling and servicing costs	65,347.85	59,707.49
Less: Employee benefits expense	13,759.04	14,367.70
Less: Other expenses	6,453.89	6,073.78
EBITDA	3,758.23	1,266.42
Add: Share based payment expense	1,148.82	2,260.37	Accounting expenses towards ESOPs already granted
Less: Actual lease rent paid	3,432.00	2,768.93	Actual cash rent paid on leased properties recognised under Ind AS 116
Adjusted EBITDA	1,475.06	757.86
Adjusted EBITDA margin	1.65%	0.93%

Note: Excluding share of profit/loss of associate

Our EBITDA and Adjusted EBITDA increased significantly during FY25 over FY24 primarily due to growth in revenues from Express Parcel, Part Truckload, Full Truckload, Supply Chain and Cross Border Services, better network utilisation, improvement in profitability of Part Truckload Services and the continuous cost optimisation measures adopted throughout the year.

Key financial ratios

Key financial ratios for the current and previous financial year are provided below:

	March 31, 2025 1	March 31, 2024	Remarks
EBITDA margin	4.21%	1.56%	EBITDA margin is a measure of a companys operating profit as a percentage of its revenue. Our EBITDA margin expanded by 265 basis points from FY24 to FY25 due to growth in revenues from Express Parcel, Part Truckload, Full Truckload, Supply Chain and Cross Border Services, better network utilisation, improvement in profitability of Part Truckload Services and the continuous cost optimisation measures adopted throughout the year.
Profit aftertax margin	1.73%	(2.90%)	Profit after tax margin is a measure of a companys net profit as a percentage of its total income. Our profit aftertax margin turned positive and showed an increment of 463 basis points in FY25 primarily on account of (i) improvement in operating margins and (ii) reduction in depreciation and amortisation expense due to change in the depreciation and amortisation method from WDV to SLM adopted in FY25.
Debt-Equity ratio	0.00	0.01	Debt-Equity ratio is a measure of a companys financial leverage, calculated as division of total borrowings by its total shareholders equity. Our debt-equity ratio improved in FY25 on account of reduction in availed banking facilities during FY24.
Receivables turnover(1)	6.00	5.31	Receivables turnover is a measure of a companys effectiveness in collecting receivables from its customers and is calculated by dividing total revenue by average trade receivables. The receivables turnover ratio improved during FY25 due to significant measures taken by us to improve billing and collections across our businesses.
Current ratio	4.23	4.42	Current ratio is a measure of a companys ability to meet its short-term obligations and is calculated by dividing current assets by current liabilities. Our current ratio reduced during FY25 due to a 4.57% increase in current liabilities on account of increase in lease liabilities, trade payables and other financial liabilities.
Return on networth	1.75%	(2.72%)	Return on Networth is a measure of a companys profitability and is calculated by dividing the profit after tax of the company by average shareholders equity. The return on networth turned positive in FY25 from FY24 due to improvement in our profit aftertax. The profit aftertax increased by Rs.4,112.96 million to Rs.1,621.10 million in FY25 from Rs.(2,491.86) million in FY24.
Inventory turnover ratio	n/a	n/a	Inventory turnover ratio is a measure of a companys effectiveness in converting its inventory into sales and is calculated by dividing total revenue by average inventory. Since we are a services company and do not manufacture goods for sale, our inventory comprises items for internal consumption in our operations and is not raw materials inventory for production or finished goods inventory for sale, the inventory turnover ratio is not applicable to us.
Interest coverage ratio	2.99	1.43	Interest coverage ratio is a measure of a companys ability to meet its interest obligations on its outstanding debt from its earnings before interest, tax, depreciation and amortisation (EBITDA) and is calculated by dividing EBITDA by interest expense. Due to the improvement in EBITDA in FY25, the ratio has improved in FY25 from FY24.

(1) Including unbilled receivables

Capital expenditure

Our capital expenditure is focused towards investing in fit-out infrastructure, state-of-the-art automation and IT assets and tractor-trailers. Automation includes parcel sorter systems, bag sortation systems and conveyance systems and future ready technologies such as automatic guided vehicles, automatic storage and retrieval systems and unmanned aerial vehicles. Such investments enable us to achieve further speed, efficiency and precision in our operations. We do not incur any capital expenditure towards ownership of real estate and own only a portion of the fleet that is deployed in our network.

During FY25,we capitalised Rs.4,628.40 million of property, plant and equipment and intangible assets, excluding additions through acquisition and excluding any disposals. Capital work in progress was Rs.328.96 million at the end of FY25.

Some of the major capital expenditure projects we undertook during FY25 include:

• Commissioned the new Bengaluru gateway in Hoskote, which is one of our three large mega-gateways, spread across 0.55 million sq ft.

• Expanded the mid-mile facilities in Coimbatore, Siliguri, Indore, Varanasi and Noida

• Deployed 190 additional tractors (46ft) and 210 trailers to further increase the share of tractor-trailer capacity in our linehaul network

The capital expenditure was funded through internal accruals and available cash.

Inorganic investments

We undertake selective investments, acquisitions and other strategic initiatives within and outside India, which complement our product and service offerings, enable us to build new capabilities, strengthen or establish our presence in our target markets, or enable us to gain access to technology.

During FY25, we did not make any inorganic investments.

Liquidity

We continue to remain extremely well capitalised, which we believe, is a significant competitive advantage in a high-growth logistics market like India. We had cash of Rs.54,928.89 million at end of FY25 which included cash & cash equivalents, bank balances, investments, margin money deposits and deposits with original maturity of >12 months. A significant portion of our cash is invested in low risk treasury investments such as fixed deposits, debt mutual funds, debentures and bonds. We will continue to deploy our cash for organic and inorganic growth in our business.

Borrowings

We have availed borrowings from financial institutions for purchase of vehicles, for our working capital requirements and for general corporate purposes. We had outstanding borrowings of Rs.396.69 million as at the end of FY25. Our Debt- Equity ratio was ~0.00 as at the end of FY25.

Corporate Social Responsibility

In FY25, we channeled our CSR contributions towards sports development and access to education. We contributed Rs.10.00 million towards Indias Olympic Gold Quest (OGQ). OGQs mission is to help Indian athletes win Olympic and Paralympic medals. We also contributed Rs.1.96 million to Simply Sport Foundation which is working towards creating a support ecosystem for grassroot athletes to succeed in sports. We contributed ~Rs.2.00 million towards access to education through our partnership with Avanti Fellows, which provides engineering and medical test preparation for government school students from low income backgrounds. We also partnered with Samarpan which works towards creating a sustainable ecosystem in schools to ensure inclusive education to children in rural areas.

Risks/threats to the industry and our business

The logistics industry, including Delhivery, faces numerous risks that can impact our business in various ways:

1. Political, macroeconomic and demographic changes could adversely affect economic conditions in India thus impacting the logistics industry. Since we derive a majority of our revenue from contracts with customers in India, such risks may impact our earnings.

2. Natural disasters, epidemics, pandemics, acts of war, geo-political tensions, terrorist attacks and other events

could materially and adversely impact the industry and hence our business.

3. Any deficiency in Indias road network and telecommunication, internet, air cargo and airport infrastructure could impact the functioning of our business operations and technology systems.

4. Changes in the taxation system in India could adversely impact our business, thus impacting our cash flows and financial condition.

5. Rising fuel prices and inflationary pressures on wages and assets can impact our cash flows and profitability.

6. Inabilityto attract and retain suitably qualified and skilled employees, labour unrest or union activities, increase in the costs of labour or failure to comply with applicable labour laws could negatively affect our operations and earnings.

7. Any disruption to our logistics and transportation facilities could have an impact on our business operations and hence our cash flows.

8. Reliance on partners and other third parties for certain aspects of our business such as first mile, mid mile, last mile services, contractual manpower, fleet etc. poses additional risks to our operations and financial condition.

9. As our proprietary technology infrastructure is critical to our operations, any disruptions to our technology infrastructure could impact our business operations.

10. Although we continue to diversify our customer base, e-commerce customers contribute a significant portion of our volume and revenue. Accordingly, our business growth is significantly correlated with the growth of e-commerce and more generally, commerce, in India.

11. Due to the nature of the industry, a significant portion of our business is driven by a few large customers across multiple services they obtain from us. Their future actions, including decisions related to their strategy on outsourcing their platform volumes to logistics partners, may have an adverse impact on our business.

12. Changes in competitive dynamics in our industry, including competition from captive logistics arms of large customers could have an impact on our business.

13. Any adverse changes in consumption growth in the country or change in consumption behaviour of end consumers, including shift of consumption to alternate channels of commerce could have an impact on our business.

Internal control systems

A robust framework of internal controls has been documented and implemented across our business processes. Our internal control systems are commensurate with the nature of our business and the size and complexity of our operations. These controls have been designed to provide a reasonable assurance regarding maintenance of proper accounting controls for ensuring orderly and efficient conduct of its business, monitoring of operations, reliability of financial reporting, accuracy and completeness of the accounting records, thetimely preparation of reliable financial information, protecting assets from unauthorised use or losses, prevention and detection of frauds and errors, and compliances with regulations.

The 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. Design and operating effectiveness of controls are tested by the management annually with the support of external consultants and later audited by the statutory auditors. Controls testing is carried out as per the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). The Companys internal control system is further evaluated by the Internal Audit Department through internal audits and reviews by in-house audit team and third-party internal audit firms like PricewaterhouseCoopers Services LLP. Internal auditors validate 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.

Development in human resources

In FY25, we continued strengthening our human capital through internal talent development, leadership training and inclusive career growth. We empowered our women employees by inducting a higher number of women to leadership and supervisory roles in the core operations. Our skilling initiatives created opportunities across smaller cities, enhancing local capabilities. Through employee engagement and wellness programmes, we fostered a connected, motivated, and future- ready workforce aligned with Indias growth story.

In FY25, we continued to foster homegrown talent as we believe that building a world class logistics company needs developing capabilities from within. We promoted 412 employees across various hierarchical levels and another 1,553 employees got the opportunity to advance in their careers through internal mobility. Additionally, we continued to absorb contractual workers into permanent roles. We converted 3,270 contract/offroll employees to permanent

positions in FY25, providing them job security and other benefits associated with permanent employment. Last year, we introduced the Annual Performance Incentive (API) programme for employees in senior management and midsenior management. This performance linked reward system operates over and above the annual increment on fixed salary, ensuring that our leaders are directly incentivised for driving exceptional results that contribute to Indias logistics excellence. The API programme has been instrumental in attracting and retaining talent who are committed to building a world class logistics company.

In FY25, the female headcount in our on-roll positions increased by 5.7% to 1,839, or 7.6% of the total on-roll employees, in FY25 from 1,740, or 7.1% of the total on-roll employees, in FY24. Building on the success of our first all-women hub in Moga, Punjab, we established 4 additional women-operated facilities in Sikar, Satna, Mayapuri & Shahdara, Delhi in FY25. These hubs serve as beacons of women empowerment in Indias heartland, proving that women can not just participate in hardcore logistics roles but can lead the operations as well.

Our Skill Development Programme has become a key channel for us to identify and develop budding talent for the logistics industry in the country. Through the SDP we have been able to create employment opportunities in tier-ll and tier-ill cities. In FY25, we expanded the programmes reach significantly, conducting training across 14 cities nationwide and receiving over 20,374 registrations.

Under the aegis of the Delhivery Academy, we trained 14,192 employees in FY25 at 4,216 facilities spread across the length and breadth of the country. We have now partnered with leading educational institutions for creating a comprehensive training ecosystem. A milestone achievement in our leadership development was the launch of our week-long Management Development Programme (MDP) in partnership with the Goa Institute of Management. The MDP curriculum covered strategic thinking, digital transformation, sustainable business practices, and inclusive leadership - competencies essential for nurturing the leaders of the future.

Cautionary statement

Statements in this "Management Discussion and Analysis" and this Annual Report describing the Companys 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.