Ritco Logistics Ltd Management Discussions

Ritco Logistics Limited 2022-2023

1. Overview

- Brief introduction of the companys business model and operations.

At Ritco, we define excellence through our unparalleled Logistics Services. Our journey commenced in 1996 as a modest provider of contract logistics, catering to a select group of businesses with a compact team. With a wealth of experience spanning over 25 years, we have forged a robust clientele by delivering logistics services of global standards. Our commitment to innovation within the logistics realm remains unwavering, as we continually introduce and implement groundbreaking concepts while tailoring solutions to our clients unique needs. Our dedicated professionals are ceaselessly innovating and enhancing operational efficiencies.

Our accomplished team encompasses over 1000 experts spanning various in-house verticals. Holding the ISO 9001:2000 certification and registration within Dun and Bradstreets global commercial database, our credibility is unquestionable. Weve set benchmarks in the logistics landscape over the past decades, consistently incorporating state-of-the-art technology to uphold our promise of delivering top-notch logistic services.

As a comprehensive supply chain solution provider, we extend an array of services, including land-based logistics, warehousing, and value-added solutions across India. Our offerings encompass a holistic, integrated freight transportation service, encompassing bulk load, dedicated load (round trip), full truck load (FTL), and less than truck load (LTL), managed through our own fleets or via independent third-party operators. We also provide ancillary services such as warehousing and value-added services. Our technology-enabled logistics and distribution solutions are meticulously crafted to cater primarily to corporate clientele.

Central to our competitive edge is our "3PL" business model, which, combined with a strategic blend of essential assets like fleets and warehouses, fuels our operational prowess. This asset-light "3PL" model not only provides flexibility but also empowers us to meet diverse supply chain requirements with finesse. Beyond our core supply chain solutions, a fraction of our revenue streams from fleet rental services, offering small retail customers the option to rent our fleet on a need basis.

- Key highlights of the financial year under review.

The period of financial year under review 2022 to 2023 marked a notable year of expansion for the company, characterized by a continuation of the consistent and profitable performance that the company has maintained over the past five years, achieving a Compound Annual Growth Rate (CAGR) of 19.9% during this time frame.

The present yearly advancements in key benchmarks are outlined as follows:

- Revenue Growth:	27.9%
- Operating Profit Margin:	29.2%
- Net Profit Margin:	56.25%
- Year-on-Year EPS Growth:	51.9%

- Market and industry overview and trends impacting the logistics sector.

The Indian logistics sector is a key driver of the countrys economy, facilitating the movement of goods and services across various industries. The sector is expected to grow at a CAGR of 9.5% to reach $330 billion by 2025.

The growth of the Indian logistics sector is being driven by a number of factors, including:

• The rise of e-commerce: The growth of e-commerce is leading to a surge in demand for logistics services. E-commerce companies need to ensure that their products are delivered to customers quickly and efficiently, and they are turning to logistics providers to help them do this.

• The growth of manufacturing: The Indian manufacturing sector is growing rapidly, and this is also driving demand for logistics services. Manufacturers need to be able to move their goods quickly and cost-effectively to their customers, and they are turning to logistics providers to help them do this.

• The growth of infrastructure: The Indian government is investing heavily in infrastructure, such as roads, railways, and ports. This is making it easier and cheaper to move goods around the country, which is in turn boosting the logistics sector.

The Indian logistics sector is facing a number of challenges, including:

• High logistics costs: Indias logistics costs are higher than the global average, which makes it difficult for Indian businesses to compete in the global market.

• Inefficient infrastructure: Indias infrastructure is not as developed as the infrastructure in developed countries. This can lead to delays and disruptions in the logistics process.

• Lack of skilled manpower: There is a shortage of skilled manpower in the Indian logistics sector. This can make it difficult for logistics providers to meet the growing demand for their services.

Despite these challenges, the Indian logistics sector is poised for growth. The government is taking steps to address the challenges facing the sector, such as by investing in infrastructure and developing skills training programs. The growth of e-commerce and manufacturing is also expected to boost the sector in the coming years.

Here are some of the key trends that are impacting the Indian logistics sector:

• Digitization: The logistics sector is being rapidly digitized, with the use of technology to improve efficiency and visibility. This includes the use of GPS tracking, blockchain, and artificial intelligence.

• Sustainability: There is a growing focus on sustainability in the logistics sector, with companies looking to reduce their environmental impact. This includes the use of renewable energy, energy-efficient vehicles, and green packaging.

• Regionalization: The Indian logistics sector is becoming more regionalized, with companies focusing on serving specific regions or industries. This is due to the vast size of India and the different needs of different regions.

• Globalization: The Indian logistics sector is becoming more globalized, with companies looking to expand their operations to other countries. This is due to the growing demand for Indian goods and services around the world.

These trends are expected to continue to impact the Indian logistics sector in the coming years, driving growth and innovation in the sector.

2. Financial Performance Review

- Analyzing the financial performance of Ritco Logistics Limited encompasses an exploration of its revenue, profitability, and margins.

During the year 2023, Ritco Logistics Limited showcased its adeptness in manoeuvring through a dynamic market landscape by upholding a consistent financial performance. The company accomplished a noteworthy total revenue of INR 751 Crores, signifying a remarkable growth of 27.9% in comparison to the preceding year. This upsurge in revenue can be attributed to amplified demand for logistics services, the successful execution of strategic contracts, and the continual expansion of the companys service area and warehouse network. These expansions have led to optimized delivery times for our clientele. Moreover, the company remained steadfast in its pursuit of operational efficiency, leading to a significant increase of 27.9% Year on Year in the Operational Profit Margin. Additionally, the Net Profit Margin escalated by over 56% when contrasted with the previous year, highlighting a pronounced focus on enhancing profitability.

The Management expresses its contentment with this performance, as it has resulted in an amplified value for all stakeholders. The companys upward trajectory in growth remains a central concern for the Management, reflecting their dedication to fostering continued expansion.

- Analysis of key financial ratios (e.g., debt-to-equity ratio, interest coverage ratio) and their implications.

The key financial ratios, such as the debt-to-equity ratio, interest coverage ratio, and debt service coverage ratio, provides valuable insights into Ritco Logistics Limiteds financial health and its ability to manage its financial obligations effectively. These ratios offer a comprehensive view of the companys leverage, solvency, and its capacity to meet its interest and debt repayment commitments.

	2023	2022
Debt equity ratio	1.380	1.390
Debt service coverage ratio	1.810	1.700
Interest service coverage ratio	2.990	3.320

Overall, the analysis of these financial ratios indicates that Ritco Logistics Limited has made progress in its financial management, with improvements in its ability to cover debt service obligations. However, a slightly reduced interest coverage ratio might warrant monitoring to ensure that the companys profitability remains adequate to sustain its interest payments.

- Comparison of current financials with the previous years performance and industry benchmarks.

Revenue:

The Revenue of Ritco Logistics has been growing consistently year on year and characterized by a continuation of the consistent and profitable performance that the company has maintained over the past five years, achieving a Compound Annual Growth Rate (CAGR) of 19.9% during this time frame

Net Profit:

The Net Profit of the company has been consistently increasing with exception of the COVID-19 period of the financial years 2020 and 2021.

EPS (Earning Per Share):

The EPS of the company has been consistently increasing with exception of the COVID-19 period of the financial years 2020 and 2021.

The Company Book Value is the intrinsic value of the company and that the consistent performance of the company has steadily increased the value of the stakeholders.

ROE (Return on Equity):

Return on equity, which is a measure of how much net income a company generates relative to its shareholders equity. The ROE of the company has been consistently increasing with exception of the COVID-19 period of the financial years 2020 and 2021.

3. Capital Structure and Funding

- Ritco has issued equity shares through IPO in 2019 and has since maintained the same capital, further as it has a strong market presence and that has always supported us in availability of working capital through banking channels and the company has always optimised the use of funds basis the needs of operation thus keeping our debt cost flexible and optimised

4. Outlook and Future Strategies

- Managements outlook for the upcoming financial year and beyond is to maintain the growth rates the company has been able to achieve in the past couple of years while keeping its focus on the changing trends of the industry.

- As the company has initiated its direction towards technological integration and it has invested in the company Logro Sourcing Private Limited that is working on a unique tech driven model of logistics aggregator thus integrating the long history of the company with current and fast emerging technologies allowing us to offer products in new spaces.

5. Corporate Governance and Sustainability

- At Ritco we believe in following best corporate governance practices and compliance with regulatory requirements and has established the code of conduct.

- Apart from the statutory CSR activities the company runs various programs for its employees and partner drivers, such as:

Health and Safety

Ritcos CSR programs are primarily focused on our truck drivers Health & Safety. Our company organises special safety campaigns to spread awareness regarding the road safety rules, common causes of road accidents and the tips & tricks to driving safely.

Medical Camps

Ritco regularly organizes multiple medical Camps in collaboration with well-trained doctors. Our doctors:

• Conduct extensive medical screening of our drivers.

• Review the individual case history

• Appropriately inform the drivers about their medical issues.

• Put special focus on the education of AIDS

• Give convenient counselling sessions for the drivers.

6. Conclusion

- Ritco always aims to be a customer oriented, multi-technology, specialized transport system in the Indian Market. It is our commitment to achieve excellence in all aspects of activity as well as pursue value-based policies to satisfy the aspirations of society, customers, vendors, employees and shareholders.

Forward Looking Statements

This report contains forward looking statements based on certain assumptions and expectations of future events.

The Company cannot guarantee that these assumptions and expectations are accurate or will be realised. The Companys actual results, performance or achievements could thus differ materially from those projected in any such forward looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events.