Tara Chand Infralogistic Solutions Ltd Management Discussions

ANNEXURE-5

Indian Economy Outlook FY24 Overview

The Indian economy, with its resilience and dynamic growth patterns, continues to be a focal point in the global economic landscape. As we progress through FY24, the outlook remains optimistic, bolstered by a series of structural reforms, robust macroeconomic fundamentals, and the governments commitment to driving economic growth. This annual report delves into the various facets of the Indian economy, providing a comprehensive analysis of the anticipated trends and developments in the forthcoming year.

Economic Growth

Indias Gross Domestic Product (GDP) is projected to grow at a robust pace of approximately 6.5% to 7% in FY24. This growth is underpinned by strong domestic consumption, increased investment activities, and a favorable external environment. The rebound from the pandemic-induced slowdown has been swift, with sectors such as manufacturing, services, and agriculture showing significant improvement. The governments continued focus on infrastructure development, digitization, and ease of doing business further augments this growth trajectory.

Inflation and Monetary Policy

Inflation management remains a critical focus for policymakers. The Reserve Bank of India (RBI) has been proactive in maintaining a balanced approach to ensure price stability while supporting economic growth. With inflation expected to moderate to around 4% to 5%, the central banks monetary policy stance is likely to remain accommodative. This environment is conducive to sustained economic expansion and encourages both consumer spending and business investments.

Fiscal Policy and Government Initiatives

The governments fiscal policy in FY24 aims to strike a balance between fiscal prudence and growth stimulation. The Union Budget has earmarked substantial allocations for key sectors such as infrastructure, healthcare, and education. Initiatives like the Production-Linked Incentive (PLI) scheme and the Atmanirbhar Bharat (Self-Reliant India) mission are set to drive industrial growth and enhance the manufacturing sectors competitiveness. Moreover, the emphasis on renewable energy and sustainability aligns with global climate goals and opens new avenues for economic development.

Sectoral Analysis

1. Manufacturing and Industrial Growth: The manufacturing sector is poised for significant growth, driven by increased foreign direct investment (FDI) and the PLI scheme. Sectors such as electronics, pharmaceuticals, and automotive are expected to witness robust expansion.

2. Services Sector: The services sector, particularly IT and IT-enabled services, continues to be a major contributor to the economy. The digital transformation across industries and the global demand for IT services provide a strong impetus for growth.

3. Agriculture: The agriculture sector remains a cornerstone of the Indian economy. Government initiatives aimed at improving agricultural productivity and ensuring fair prices for farmers are expected to enhance rural incomes and drive consumption.

4. Infrastructure and Construction: The infrastructure sector is set to witness accelerated growth with significant investments in roadways, railways, and urban development projects. This is further supported by the governments focus on improving logistics and connectivity.

External Sector

Indias external sector remains resilient with a healthy balance of trade and foreign exchange reserves. The governments emphasis on diversifying export markets and enhancing trade relations with key global economies is expected to boost export growth. Additionally, the revival of global demand post-pandemic bodes well for the export-oriented sectors.

Employment and Workforce Development

Employment generation remains a priority, with the government and private sector working towards creating job opportunities across various sectors. The focus on skill development, particularly in emerging fields such as technology and renewable energy, is expected to enhance workforce employability and productivity. Initiatives like the National Employment Policy and support for start-ups and MSMEs are critical in addressing unemployment and underemployment.

Challenges and Risks

While the outlook is largely positive, several challenges persist. These include geopolitical tensions, fluctuating global oil prices, and potential disruptions in global supply chains. Moreover, managing fiscal deficits and ensuring inclusive growth across all segments of the population remain critical.

Conclusion

In conclusion, FY24 presents a promising horizon for the Indian economy, characterized by strong growth prospects, policy support, and a resilient macroeconomic environment. As we navigate through the opportunities and challenges, the collective efforts of the government, businesses, and the citizens will be pivotal in driving sustainable and inclusive economic growth.

Sources:

1. International Monetary Fund (IMF) World Economic Outlook, April 2024.

2. Reserve Bank of India (RBI) Monetary Policy Report, April 2024.

3. Ministry of Finance, Government of India, Economic Survey 2023-24.

4. Department for Promotion of Industry and Internal Trade (DPIIT), Annual Report 2023-24.

5. Export-Import Bank of India, Export Performance Report 2023-24.

6. Ministry of Labour and Employment, Government of India, Employment Outlook 2023-24.

7. National Infrastructure Pipeline (NIP) Progress Report 2023-24.

8. Ministry of New and Renewable Energy (MNRE), Annual Report 2023-24.

Overview and Growth Outlook of the Construction Equipment Sector in India

The construction equipment sector in India is experiencing significant growth and transformation, driven by robust infrastructure development and increasing urbanization. The market size was valued at USD 7.8 billion in 2024 and is projected to reach USD 17.4 billion by 2033, growing at a compound annual growth rate (CAGR) of 8.16% during the forecast period (Mordor Intelligence) (Custom Market Insights). The sector encompasses a wide range of equipment types including earthmoving equipment, material handling equipment, road construction equipment, and concrete equipment, with earthmoving equipment holding the largest market share due to its extensive use in infrastructure projects (Custom Market Insights).

Major players in the Indian market include Caterpillar, Komatsu, Volvo Construction Equipment, JCB, and Tata Hitachi, who are expanding their presence through partnerships, new product launches, and enhancing financing options for buyers (Mordor Intelligence) (Mordor Intelligence). The market is also seeing a shift towards eco-friendly and energy-efficient equipment, with the introduction of electric and hybrid models gaining traction (Mordor Intelligence) (Equipment Times).

Growth Drivers

1. Government Spending: The Indian governments significant investment in infrastructure development, with a proposed capital expenditure increase to Rs 10 lakh crore, is a key driver for the sector. This investment focuses on road construction, urban development, and mining (Deccan Herald).

2. Urbanization and Industrialization: Rapid urbanization and the growth of the industrial sector are increasing the demand for construction equipment. The development of smart cities and extensive infrastructure projects are particularly contributing to this demand (Equipment Times).

3. Technological Advancements: The sector is witnessing a technological revolution with the adoption of advanced construction technologies such as Building Information Modeling (BIM), 3D printing, and automation. These technologies are enhancing efficiency, reducing errors, and improving safety and transparency in construction projects (Equipment Times).

4. Electrification: The shift towards electric and hybrid construction equipment is expected to be a significant trend. This transition is driven by regulatory pressures and the increasing focus on sustainable and ecofriendly construction practices (Mordor Intelligence).

Equipment Rental Industry

The equipment rental industry is emerging as a vital component of the construction equipment sector in India. Renting and leasing construction equipment provide cost- effective solutions for construction companies, allowing them to access a wide range of machinery without the high upfront costs associated with purchasing new equipment (Equipment Times). The rental market is poised for growth due to the increasing demand for flexibility in equipment usage and the financial advantages of renting over owning, especially in a market characterized by high equipment costs and fluctuating demand.

Outlook

The construction equipment sector in India is expected to maintain its growth trajectory, driven by sustained government investment in infrastructure, advancements in construction technologies, and the increasing adoption of eco-friendly equipment. The equipment rental market will play a crucial role in meeting the dynamic needs of the sector, providing flexibility and financial benefits to construction firms.

Overall, the outlook for the construction equipment sector in India remains positive, with significant opportunities for growth and development in the coming years (Custom Market Insights) (Mordor Intelligence) (Deccan Herald) (Equipment Times).

Sectoral Overview and Growth Outlook

1. Infrastructure

Overview: Indias infrastructure sector plays a critical role in the countrys economic development, encompassing various sub-sectors such as transportation, urban development, and utilities. The sector has seen significant investments driven by government initiatives like the National Infrastructure Pipeline (NIP) and the Pradhan Mantri Gati Shakti plan, which aim to improve connectivity and boost economic growth.

Growth Outlook: The infrastructure sector is poised for robust growth, with the NIP projecting an investment of INR 111 lakh crore (USD 1.5 trillion) between 2019 and 2025. Increased public-private partnerships (PPPs) and foreign direct investments (FDI) are expected to drive this growth. The sector is anticipated to grow at a CAGR of 7-8% over the next five years .

2. Steel

Overview: India is the second-largest producer of steel globally, with a production capacity of over 142 million tonnes per annum (MTPA). The sector is driven by strong demand from construction, infrastructure, and automobile industries.

Growth Outlook: The Indian steel industry is expected to witness significant growth, with production projected to reach 300 MTPA by 203031. This growth is fueled by government initiatives like the National Steel Policy 2017 and increasing investments in infrastructure and housing projects. The sector is projected to grow at a CAGR of 6-7% over the next decade

3. Cement

Overview: India is the second-largest producer of cement globally, with a production capacity of approximately 502 million tonnes per annum (MTPA). The sector is integral to the construction and infrastructure industries.

Growth Outlook: The Indian cement industry is expected to grow at a CAGR of 5-6% over the next five years, driven by increasing infrastructure projects, urbanization, and housing demand. Government initiatives like the Smart Cities Mission and Pradhan Mantri Awas Yojana (PMAY) are key growth drivers.

4. Railways

Overview: Indian Railways is one of the largest railway networks in the world, playing a crucial role in the countrys transportation system. The sector is undergoing significant modernization and expansion.

Growth Outlook: The railway sector is set to grow significantly, with investments projected to reach INR 50 lakh crore (USD 670 billion) by 2030. Key initiatives like the Dedicated Freight Corridor (DFC) and high-speed rail projects are expected to enhance capacity and efficiency. The sector is anticipated to grow at a CAGR of 6-7% over the next decade.

5. Power

Overview: Indias power sector is one of the most diversified in the world, encompassing conventional sources like coal, hydro, and natural gas, as well as renewable sources like solar and wind.

Growth Outlook: The power sector is expected to grow at a CAGR of 6-7% over the next five years, driven by increasing demand, government initiatives like Saubhagya and UDAY, and the push for renewable energy. The National Electricity Plan aims to add significant generation capacity and improve grid infrastructure.

6. Renewable Energy

Overview: India has emerged as a global leader in renewable energy, with an installed capacity of over 100 GW. The sector includes solar, wind, biomass, and small hydro projects.

Growth Outlook: The renewable energy sector is expected to grow at a rapid pace, with a target to achieve 450 GW of renewable capacity by 2030. Government initiatives like the International Solar Alliance (ISA) and significant investments in green energy projects are key drivers. The sector is projected to grow at a CAGR of 15-17% over the next decade .

7. Oil & Gas Refining

Overview: India is the third-largest consumer of oil globally, with a refining capacity of over 250 million tonnes per annum (MTPA). The sector is dominated by major public sector undertakings (PSUs) and private players.

Growth Outlook: The oil and gas refining sector is expected to grow at a CAGR of 4-5% over the next five years, driven by increasing demand, capacity expansions, and the governments push for energy security. The National Policy on Biofuels and the expansion of strategic petroleum reserves are key initiatives .

8. Metals & Minerals

Overview: India is rich in mineral resources, with significant reserves of coal, iron ore, bauxite, and other minerals. The sector plays a vital role in the countrys industrial and economic development.

Growth Outlook: The metals and minerals sector is expected to grow at a CAGR of 5-6% over the next five years, driven by increasing industrial activity, infrastructure projects, and government reforms like the National Mineral Policy 2019. Investments in mining technology and sustainability initiatives are also expected to boost growth .

9. Residential and Commercial Real Estate

Overview: The real estate sector in India is one of the largest contributors to the economy, encompassing residential, commercial, and retail segments. The sector has seen significant growth driven by urbanization and rising income levels.

Growth Outlook: The real estate sector is expected to grow at a CAGR of 7-8% over the next decade, supported by government initiatives like PMAY, the Real Estate (Regulation and Development) Act (RERA), and increased FDI. The commercial real estate segment is also expected to benefit from the growth of the IT and services sector .

References

1. National Infrastructure Pipeline (NIP) Report, Government of India.

2. Pradhan Mantri Gati Shakti Plan, Ministry of Commerce and Industry.

3. National Steel Policy 2017, Ministry of Steel.

4. World Steel Association.

5. Cement Manufacturers Association of India.

6. Smart Cities Mission, Ministry of Housing and Urban Affairs.

7. Ministry of Railways, Government of India.

8. Dedicated Freight Corridor Corporation of India (DFCCIL).

9. National Electricity Plan, Central Electricity Authority.

10. Saubhagya Scheme, Ministry of Power.

11. International Solar Alliance (ISA).

12. Ministry of New and Renewable Energy (MNRE).

13. Ministry of Petroleum and Natural Gas, Government of India.

14. National Policy on Biofuels.

15. National Mineral Policy 2019, Ministry of Mines.

16. Federation of Indian Mineral Industries (FIMI).

17. Real Estate (Regulation and Development) Act (RERA).

18. Ministry of Housing and Urban Affairs, Government of India.

Company Overview

Tara Chand InfraLogistic Solutions Limited stands at the forefront of Indias infrastructural development and industrial capacity expansion. Your company operates through three key verticals: Warehousing & Multimodal Transportation, Construction Equipment Rental, and Steel Processing & Distribution. With nearly four decades of experience, we have become a leader in Steel Warehousing & Transportation, boasting an execution capacity exceeding 10 million tonnes of steel annually.

Our commitment to infrastructure development is underscored by our extensive fleet of 300 machines, including heavy-duty cranes with capacities up to 800MT, hydraulic piling rigs, aerial working platforms, steel processing machines, and concrete equipment. Our dedicated team of experts and our modern, well- maintained fleet serve a diverse range of sectors such as Power, Oil & Gas, Steel, Cement, Renewable Energy, Railways, Metals & Minerals, and Urban & Rural Infrastructure. We are proud to have a well-balanced and diversified customer base of over 50 clients, ranging from public sector undertakings to multinational corporations.

Opportunities

The Indian economy is poised for continued rapid growth across various sectors, as highlighted by multiple domestic and international reports. This positive outlook has spurred a wave of new investments in Oil & Gas, Cement, Steel, and Infrastructure development, driving demand for our logistic and equipment rental services. The Union Budget presented in February 2024 has earmarked substantial allocations for key sectors such as infrastructure, healthcare, and education. Initiatives like the Production-Linked Incentive (PLI) scheme and the Atmanirbhar Bharat (Self-Reliant India) mission are set to drive industrial growth and enhance the manufacturing sectors competitiveness.

Our logistics services dedicated to the steel sector account for approximately 45% of our revenues. To enhance operational efficiency, we have introduced innovative solutions in steel warehousing and handling with the introduction of Rubber Tyre Gantry (RTG) cranes with magnet attachments. Additionally, 45% of our revenue comes from our construction equipment rental solutions executed through our extensive equipment fleet. In the Financial Year 2023-24, we continued our investments in large-capacity cranes ranging from 200MT to 500MT, ideally suited to meet the needs of industrial capacity expansion projects across India. Moreover, the company expanded its equipment portfolio with the introduction of new Aerial Working Platforms (Manlifts) to meet the rising demands of our customers. Your company became the first company in India to launch the tallest aerial working platform with a working height of 68 meters, which is ideally suited to execute the demanding jobs in the construction of manufacturing plants and refineries.

Threats

Economic volatility that reduces capacity expansion plans in large industries could impact demand for our cranes and ground equipment. Our operations might also be affected by new policies from various State Governments. The dynamic nature of customer needs poses challenges in ensuring the availability of the right equipment as per market demand. Additionally, increased competition and extended receivables cycles may affect our operations.

In the current landscape, it is essential to consider the ever-changing focus on infrastructure investments and potential political volatility. These factors introduce uncertainties that could lead to operational disruptions and financial setbacks. However, these challenges emphasize the need for agility and proactive management. By maintaining this stance, we can not only navigate complexities but also thrive, ensuring ongoing prosperity and advancement.

Risks and Concerns

Tara Chand InfraLogistic Solutions Ltd. acknowledges various uncertainties and challenges that could adversely affect its operations. To mitigate these risks, we have established a robust, multi-tiered risk management infrastructure. Our Board of Directors formulates the overarching risk management strategy and endorses the necessary policies, ensuring alignment with the companys broader goals and ethical standards.

The Risk Management team is tasked with executing these strategies and regularly assessing risk exposure. This ongoing vigilance allows for the timely identification of new risks, ensuring that our protocols remain effective and up-to-date. Through diligent application of this framework, we aim to stabilize revenue streams and enhance shareholder returns, equipping the company with resilience and agility.

Key risks include:

• Economic Growth: Demand for our services is linked to economic and infrastructure development. Any slowdown could impact our growth.

• Client Base: Dependence on a limited number of marquee clients for a majority of revenues poses a risk of client concentration. We continue to expand our client base while maintaining strong long-term relationships with current customers.

• Competition: Increased focus on infrastructure development has heightened competition in logistics and equipment rental.

• Cost Management: Ability to pass on rising costs depends on demand-supply dynamics and competitive pressures.

• Liquidity: Infrastructure development relies on capital availability. Recent NPAs in banks could risk liquidity for our clients and, consequently, for us.

• Monsoon: Above-normal monsoon could affect infrastructure development. However, with normal monsoons and government spending, we expect double-digit growth in logistics and equipment rental industries.

Our diversified revenue stream eliminates reliance on any single customer or sector, ensuring financial stability and resilience. The Internal Control System is meticulously designed to align with the scale and complexity of our operations. The Internal Audit function, reporting directly to both the Chairman of the Audit Committee and the Executive Chairman and Managing Director, continually assesses the effectiveness of our controls. Identified areas for improvement are promptly addressed, reinforcing our control mechanisms.

Operational controls are integrated into our internal procedures, documented comprehensively to guide business activities such as order bookings and consignment deliveries. Our framework of guidelines, policies, and procedures ensures the effective implementation of internal financial controls. These controls promote orderly business conduct, safeguard assets, and prevent fraudulent activities, ensuring accuracy in accounting records and timely financial disclosures.

Built-in review mechanisms within our IT systems, including ERP applications, ensure the adequacy and effectiveness of our control environment, contributing to the overall robustness and resilience of our operations.

Financial Performance Review

During the year under review, total revenue from operations including the other income was Rs. 17485.56 Lakhs against Rs. 14456.08 Lakhs in the previous year. The company has earned net profit of Rs 1613.29 Lakhs in FY2023-24 against Rs. 935.70 Lakhs in the preceding FY.

Internal Control Systems and Their Adequacy Key Financial Ratios :

S.No.	Particulars	2023-24	2022-23	% Change	Notes, if any
1	Debtors Turnover Ratio	4.24	2.49	70.3%	Note 1 Below
3	Interest Coverage Ratio	4.03	0.92	338%	Note 2 Below
4	Debt Service Coverage Ratio	1.51	0.96	57%	Note 3 Below
5	Debt Equity Ratio	0.91	1.21	24.8%
6	Operating Profit Margin	33.80%	30.40%	11.2%
7	Net Profit Margin	9.38%	6.47%	45%	Note 4 Below
8	Return on Net Worth	30.40%	12.97%	134%	Note 5 Below

Note 1: Debtors Turnover Ratio improved by 70.3%

In the Financial Year 2023-24, the company made a conscious shift away from its heavy concentration in the infrastructure projects to distribute its revenue from the equipment rental segment in the sectors of steel, cement and petrochemicals. The shift in revenue mix coupled with better controls on receivables and adherence to credit guidelines have led to a drastic improvement in the debtors turnover of the company

Note 2: Interest Coverage Ratio improved by 338%

The company achieved its best ever revenues and profitability in FY24 while maintaining finance costs below the industry average, which has led to a phenomenal increase in its interest coverage ratio.

Note 3: Debt Service Coverage Ration improved by 57%

The company achieved its best revenues and profitability in FY23-24 while repaying its highest ever debt in the said period. The debt repaid was higher than the obligated debt as company had better cash accruals.

Note 4: Net Profit Margin increased by 45%

As explained in Notes 1 and 2 above, the companys shift to higher margin revenue mix and dedicated efforts towards financial prudence has brought by a significant rise in profit margins.

Note 5: Return on Net Worth has risen by 134%

The companys best ever profitability in FY24 has resulted in a stupendous jump in its Return on Net Worth.

Material Developments in Human Relations / Industrial Relations

At Tara Chand InfraLogistic Solutions Ltd., our workforce is our most valuable asset, pivotal to our sustained success. Over the past year, under the guidance of our forward-thinking leadership, we have refined our Human Resource strategy. Building on previous initiatives that have continually energized our team, we have rolled out a series of innovative programs aimed at enhancing operational efficiency.

Safety is our top priority. We have implemented a comprehensive "Safety in Toto" policy, ensuring strict adherence from all stakeholders. This policy includes essential safety practices designed to minimize workplace injuries and illnesses. We encourage our employees to proactively identify and address potential hazards, fostering a culture of safety and vigilance.

Despite the logistical challenges posed by our widespread operations and large employee base, we are proud to report exceptionally harmonious employer-employee relations throughout the fiscal year. Notably, our organization operates without any Employee Union, Trade Union, or similar bodies. As of March 31, 2024,

Tara Chand InfraLogistic Solutions Ltd. boasts a dedicated team of 713 permanent employees.

Risk Management and Governance

We are committed to maintaining the highest standards of fairness and transparency in our governance practices. Our comprehensive governance framework includes well-defined policies on whistleblower protections, nomination and remuneration procedures, and related- party transactions. Our diverse portfolio across multiple sectors positions us as a comprehensive solution provider, offering end-to-end capabilities in designing, executing, enhancing, and optimizing logistics-related activities across the entire value chain.

Our Risk Management Policy serves as a proactive framework for identifying, assessing, and mitigating risks. It underscores our commitment to prudently manage risks—avoiding excessive exposure while embracing calculated risks that align with our strategic objectives. We adopt a multi-faceted approach to risk management, incorporating insurance coverage, internal control measures, and risk avoidance strategies to safeguard our assets and protect stakeholder interests.

Cautionary statement

The statements made in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations may be "forwardlooking statements" within the meaning of applicable securities laws & regulations. Actual results could differ from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand, supply and price conditions in the domestic & overseas markets in which the Company operates, changes in the government regulations, tax laws & other statutes & other incidental factors. The Company assumes no obligation to revise or update any forward-looking statements whether as a result of new information, future events or otherwise.