About GB Logistics Commerce Limited

Business Overview

GB Logistics Commerce Limited operates across two verticals: logistics and trading of agricultural commodities. The company provides full-truckload freight services for large and medium-sized enterprises, leveraging both proprietary and third-party transportation. Key offerings include:

• Regular Full-Truckload Transportation: Extensive domestic coverage with flexibility to manage volume surges.
• Special Handling: Efficient preparation and distribution for seamless product delivery.
• Godown-to-Godown Transportation: Comprehensive warehouse logistics with value-added services for various industries.
• Delivery Above Ground Floor: Capability to deliver goods efficiently to higher floors.
• ODA Deliveries: Specialized services for remote and challenging locations, reducing RTO occurrences.

The fleet comprises light, heavy, closed-body, and trailer trucks, ensuring extensive reach and timely deliveries.

Additionally, the company diversifies through trading agricultural commodities, enhancing revenue streams and supporting both agricultural and logistics sectors. Its strategy emphasizes market expansion, operational efficiency, and specialized handling to serve as a comprehensive logistics partner.

GB Logistics Commerce Limited operates a wholly owned subsidiary, GB Hospitality (India) Private Limited, engaged in a similar business. The Company have a qualified and professional employee base of 39 full time employees (excluding Whole-Time Director and Key Managerial Personnel) as of the latest data. The Principal Bankers to the Company is DBS Bank India Limited.

Industry Analysis

THE TRANSPORTATION AND LOGISTICS INDUSTRY
Logistics Industry is crucial to both enterprises and the economy. In today's interconnected world, shipping and logistics are at the heart of the economy, acting as vital gateways for international trade and business. A nation with a strong and effective logistics sector offers an efficient forward and reverse flow of goods and services, which eventually translates to fast-paced growth. The Indian logistics industry includes all inbound and outbound components of the manufacturing and service supply chains.

Significant factors that will increase the demand for India's logistics sector include the country's anticipated GDP growth of US$ 26 trillion by fiscal year 2048 (US$ 6 trillion by 2030) and its objective to accelerate merchandise exports to US$ 1 trillion by 2030. This would open a huge opportunity for India's transport and logistics sector, which is expected to increase at a CAGR of 4.5% from 2022 to 2050, reaching 15.6 trillion tonnes kilometres. The Indian transport and logistics business is expected to be around Rs. 13- 16 lakh crore (US$ 156.18-192.23 billion) in 2022. By 2030, India wants to lower its logistics expenditures from 13-14% of GDP to 8-10% of the GDP. It is projected that a 10% reduction in indirect logistics costs is expected to result in a 5% to 8% increase in exports. According to the Logistics Performance Index (LPI) of the World Bank, India has climbed six positions to reach the position of 38th rank out of 139 nations. The improvement is attributed to a variety of factors, including technological advancement, datadriven decision-making, and legislative initiatives targeted at promoting world-class infrastructure. The National Logistics Policy (NLP) and the PM Gati Shakti programme are significant overarching policy moves taken by the central government in this area to deliver outcomes by 2024-25.

Transport and logistics refer to the procedures involved in the manufacture, storage, inventory, delivery, and distribution of specific commodities or services. The logistics sector in India was predicted to account for 14.4% of GDP in 2022. It is the primary source of income for more than 22 million people. The overall logistics sector in India includes 37 export promotion councils, 40 Participating Government Agencies (PGAs), 20 government agencies, 10,000 goods, and 500 certifications. Between the financial years 2015-16 to 2019-20, India invested approximately US$ 10.2 trillion in the development of infrastructure. The freight movement in India is significantly prejudiced towards road transportation, which transports 66% of goods (in ton-kilometres). This is followed by rail (31%), shipping (3%), and air (1%). To facilitate cargo transportation, India has a vast network of support infrastructure, including 129+ inland container depots, 168+ container goods stations, and 300 m sq. ft. of warehouse capacity.

The uneven distribution of modes of transport has resulted in low operational efficiency, causing the GOI to launch a number of logistics-specific programmes, including GatiShakti and the National Logistics Policy. These initiatives seek to improve India's logistics sector by making it more environmentally friendly, agile, transparent, and integrated. The logistics management regimen is capable of overcoming infrastructural disadvantages in the short term while providing cutting-edge competitiveness in the long term. Physical transporters that execute their business processes manually and offline can use various technologies such as AI, Big data, and IoT to improve their service and compete in an international market by delivering real-time and end-to-end connections. To realise the full potential of the sector, stakeholders such as service providers, customers, and the government of India must work and complement one another. The sector is experiencing significant infrastructural expansion, a stronger emphasis on digitalization, and a larger emphasis on sustainable logistics. The launch of numerous start-ups, as well as the Government's digital initiatives such as "Make in India," Unified Logistics Platform (ULIP), and others, are assisting in bringing greater transparency to the logistics sector. The digitization of work processes to enable paperless processing of paperwork and clearances, as well as improved shipment tracking, aids in increasing the pace of goods movement and lowering logistics costs.

WAREHOUSING AND LOGISTICS SECTOR IN INDIA
The warehousing, industrial, and logistics (WIL) sectors are projected to be crucial for attaining India's vision of being a US$ 5 trillion economy by FY25. The warehouse and logistics industry has benefited the most from the COVID-19 epidemic, increasing its share from 2% in 2020 to 20% in 2021. Because of the growing shift from discretionary to essential internet buying during the COVID-19 epidemic, the e-commerce industry became more appealing and attractive.

The expansion of this industry is likely to be aided by a robust economy, government efforts to improve infrastructure, and a favourable business environment. Increasing consumerism and a huge consumer base are fostering the growth of retail and ecommerce in India. The Indian retail sector's market size is predicted to increase at a CAGR of 9% between 2019 and 2030, totalling more than US$ 1.8 trillion. Large international funds and corporations have invested in warehousing developers and operators to grow their reach and geographical footprint, which are the sector's key differentiators. The Government of India has taken many initiatives to strengthen the sector's infrastructure, including the establishment of dedicated freight corridors and the extension of road and rail networks, to improve connectivity and decrease travel times. Another critical governmental intervention has been the sector's digital transformation, projects such as Digital India, Bharat Net, and the National Logistics Portal would aid in the industry's digitization. Furthermore, the government has announced the establishment of logistics parks and warehouses across the country to provide appropriate storage facilities for enterprises. The warehouse sector has grown rapidly in recent years, fuelled by the expansion of e-commerce, solid infrastructure, the adoption of GST, and the advent of organized retail. The recently implemented National Logistics Policy intends to reduce India's logistics costs from the double digits of GDP to the single digits by 2030.

Overview of the Logistics Industry
The Indian logistics industry is growing, due to a flourishing e-commerce market and technological advancement. The logistics sector in India is predicted to account for 14.4% of the GDP. The industry has progressed from a transportation and storage-focused activity to a specialised function that now encompasses end-to-end product planning and management, value-added services for last-mile delivery, predictive planning, and analytics, among other things. One of the key drivers of this expansion is projected to be the rise of India's logistics industry, which employs 22 million people and serves as the backbone for various businesses. The logistics sector in India was valued at US$ 250 billion in 2021, with the market predicted to increase to an astounding US$ 380 billion by 2025, at a healthy 10%-12% year-on-year growth rate. Moreover, the government is planning to reduce the logistics and supply chain cost in India from 13-14% to 10% of the GDP as per industry standards.
The industry is crucial for the efficient movement of products and services across the nation and in the global markets. The logistics business is highly fragmented and has over 1,000 active participants, including major local players, worldwide industry leaders, the express division of the government postal service, and rising start-ups that focus on e-commerce delivery. The industry includes transportation, warehousing, and value-added services like packaging, labelling, and inventory management. With the advent of technology-driven solutions such as transportation management systems (TMS) and warehouse management systems, India's logistics industry has witnessed tremendous development in recent years (WMS). These solutions have assisted logistics firms in increasing operational efficiency, lowering costs, and improving customer service.
As depicted in the below pie chart (left), representing the segment-wise breakup of the logistics sector in FY21. Roads have the largest percentage share of 73% followed by rail (18%), water (5%) and air (5%). The below pie chart (right) represents the fragmented structure of the Indian logistics industry.

Overview of the Warehousing Industry
A warehouse is an essential component of corporate infrastructure and one of the primary enablers in the global supply chain. the Indian warehousing market is predicted to reach US$ 34.99 billion (Rs. 2,872.10 billion), expanding at a CAGR of 15.64% from 2022 to 2027. Modern warehouse facilities and technology-driven solutions have changed the warehousing sector in India in recent years. With increased demand and supply throughout the years, the Indian warehousing industry is gaining traction. The key players are third-party logistics (third-party logistics) and e-commerce enterprises, which are growing into tier 2 and 3 cities and eventually increasing their proportion of secondary marketplaces. Businesses are transitioning to a hub-and-spoke model while also implementing technology to simplify operations, with an eye on the larger picture of ease, efficiency, and sustainability.
Grade A warehouses are modernized buildings created specifically to meet the needs of warehouse logistics. They feature the most up-to-date technology, superior building materials, a prime location, and a convenient traffic interchange. Grade B objects are outdated buildings that must be rebuilt to satisfy modern warehouse logistics standards.
As depicted in the below chart, India saw a 21% year-over-year increase in the total stock of Grade A and B warehouse space in the top eight cities in 2021. The total warehousing capacity is expected to be 287 million square feet by the end of 2021, up from 238 million square feet the previous year. Grade A stock in India was 134 million square feet, representing a 5-year CAGR of 29.9%. Among the eight major cities, the three largest cities in the country, including Delhi NCR, Mumbai, and Bengaluru, contribute more than half of the warehousing stock.
As demonstrated in the below pie chart, 3PL/Logistics has remained the top segment in terms of warehouse space demand for the last five years. Various e-commerce areas, including retail, groceries, pharmacy, and food delivery, are likely to grow substantially as consumers shifted their purchasing habits from offline to online. COVID-19 has increased eCommerce adoption, increasing demand for online delivery of both essential and non-essential commodities. While the share of manufacturing demand from the Auto & Ancillaries and Engineering sectors has declined during the epidemic, demand from other consumption-based sectors such as Retail and FMCG has increased.

Business Strategies

1. Market Expansion and Coverage
Targeted expansion into new regions while strengthening presence in existing territories. Extensive fleet and logistics infrastructure enable broader Full-Truckload (FTL) services, driving market share growth.

2. Operational Efficiency and Flexibility
Enhancing flexibility by integrating the fleet with selected FTL carriers to address volume surges and urgent needs. This ensures swift adaptability to market demands and sustains a competitive edge.

3. Specialized Handling and Value-Added Services
Focus on meticulous equipment preparation and efficient distribution. Value-added services extending beyond logistics centers create differentiation and foster long-term customer partnerships.

4. Technological Integration for Efficiency
Adoption of advanced tracking systems and real-time monitoring tools to improve transparency, streamline operations, and enhance service delivery in a digitalized logistics environment.

5. Focus on Remote and Challenging Deliveries
Expertise in Out of Delivery Area (ODA) shipments ensures reliable services to remote locations, reduces RTO occurrences, and enhances customer satisfaction through tailored logistics solutions.

Business Risk Factors and Concerns

1. Dependence on the Road Network
The business heavily relies on an uninterrupted road network for goods transportation. Disruptions caused by political unrest, adverse weather, natural disasters, driver issues, or accidents can delay consignments, damage cargo, and increase operational costs. Liability for compensation and potential reputational harm further amplifies the risk, especially for time-sensitive deliveries.

2. Reliance on Freight Brokers
A significant portion of revenue comes from freight brokers, who manage consignment bookings and marketing activities. The company lacks complete control over broker services, leaving it vulnerable to issues like misrepresentation, delayed payments, or fraudulent practices. Loss of key brokers or diminished performance could materially impact revenues and operations.

3. Geographical Revenue Concentration in Maharashtra
A substantial share of revenue originates from Maharashtra, exposing the company to risks from regional economic slowdowns, political instability, natural disasters, and regulatory changes. Such events could severely disrupt revenue and profitability, affecting overall business stability.

4. Regional Vulnerabilities and Catastrophic Occurrences
The concentration of operations in Maharashtra increases exposure to local economic downturns, infrastructure disruptions, natural disasters, and political unrest. Issues like facility damage or supply chain interruptions could significantly impair operations and hinder product distribution.

GB Logistics Commerce Limited faces key operational risks due to its dependence on the road network, reliance on freight brokers, and significant geographical revenue concentration in Maharashtra. These risks expose the company to operational disruptions, reputational damage, and financial instability.