About Tejas Cargo India Limited

Business Overview

Tejas Cargo India, based in Faridabad, Haryana, specializes in long-haul supply chain transportation services by road across India, primarily under the Full Truck Load (FTL) model. Catering to industries such as logistics, steel and cement, e-commerce, industrial chemicals, FMCG, and white goods, the company ensures efficient freight management through a mix of owned and hired fleets. As of September 30, 2024, over 61% of trips were completed using owned vehicles, with the remainder sourced from the open market.

With a strong focus on technology-driven logistics, services include shipment planning, route optimization, fleet selection, documentation, tracking, communication, and performance evaluation. During Fiscal 2024, the company completed 98,913 trips, with 58,943 trips recorded in the first half of the year. Operations span a pan-India network of 23 branches, with nine also functioning as maintenance and repair hubs.

A strategic network with multiple logistics providers enhances fleet utilization and service reach. The expanding Indian third-party logistics (3PL) market, driven by e-commerce growth, government initiatives such as GST, relaxed FDI norms, and the National Logistics Policy, presents significant opportunities. Small and medium enterprises (SMEs) increasingly rely on 3PL solutions to streamline operations and reduce costs, making logistics outsourcing a preferred choice in a competitive market.
As of September 30, 2024, the Company's workforce consists of 284 personnel. The Bankers to the Company are Kotak Mahindra Bank Limited, HSBC Bank, State Bank of India and HDFC Bank Limited.

Industry Analysis

India's Thriving Third-Party Logistics (3PL) Market

The Third-Party Logistics (3PL) market involves outsourcing key supply chain functions—including transportation, warehousing, inventory management, and order fulfillment—to specialized providers. This enables businesses to focus on core operations, improve efficiency, reduce costs, and enhance customer service. Leveraging advanced technology and economies of scale, 3PL providers optimize logistics, ensuring seamless coordination among manufacturers, suppliers, and retailers.

India’s 3PL sector is witnessing rapid expansion, driven by the growth of e-commerce, evolving consumer expectations for faster deliveries, and government initiatives such as the Goods and Services Tax (GST), relaxed FDI regulations, infrastructure status for logistics, and the National Logistics Policy. Small and medium enterprises (SMEs), which often lack in-house logistics capabilities, rely heavily on 3PL services to remain competitive without investing in logistics infrastructure.

Market Size & Industry Growth

India handles 4.6 billion tonnes of goods annually, with a logistics expenditure of ₹9,50,000 crore. Freight movement is dominated by:

• Road Transport (71%) – A major mode of freight transportation, significantly higher than the global average of 25%.
• Railways (24%) – Primarily used for bulk cargo over long distances, lower than the global average of 60%.
• Waterways & Pipelines (5%) – Account for a smaller share but offer cost-effective transport solutions.

The number of trucks on Indian roads stands at approximately 1.5 million, increasing at an annual rate of 10%. The expansion of the national highway network—from 91,287 km in 2014 to 1,46,145 km in 2023—has significantly enhanced connectivity and logistics efficiency. Additionally, the growth of FMCG, manufacturing, and retail sectors has fueled the demand for specialized logistics solutions.

Technological Advancements & Sustainability Initiatives

The logistics sector is undergoing a digital transformation with the integration of:

• Artificial Intelligence (AI), Machine Learning, Big Data Analytics, and IoT for enhanced supply chain visibility and operational efficiency.
• Automation & Digital Initiatives such as e-way bills, FASTag, and e-invoicing, improving real-time tracking and cost management.
• Green Logistics initiatives aimed at reducing carbon footprints, in alignment with India’s commitment to net-zero emissions.

Challenges in the 3PL Sector

Despite strong growth, the industry faces hurdles including:

• Inadequate infrastructure & congestion in key transportation networks.
• Limited warehousing facilities, affecting storage and inventory management.
• Fragmented market structure & high operational costs.
• Third-party handling inefficiencies, leading to supply chain disruptions.

Future Outlook

Between 2019 and 2023, India's 3PL market expanded at a CAGR of 19.5%, growing from ₹763.9 billion to ₹1,557.3 billion. Driven by rising healthcare logistics, e-commerce boom, and expanding manufacturing operations, the market is projected to grow at a CAGR of 13.2%, reaching ₹3,278.2 billion by 2029.

Key growth drivers include:

• Increasing adoption of AI, IoT, and big data analytics to enhance supply chain efficiency.
• Expansion of cold chain logistics for perishable goods and pharmaceuticals.
• Rising demand for last-mile delivery services, fueled by e-commerce growth.

With businesses shifting focus to core activities, outsourcing logistics to 3PL providers has become a strategic imperative. As technology, infrastructure, and government support continue to shape the industry, India's 3PL market is poised for sustained expansion, offering opportunities for both domestic and global logistics players.

Business Strengths

1. Heavy Asset Ownership Model
As of October 31, 2024, the fleet comprises 1,131 vehicles, including 218 trailers and 913 container trucks. A high degree of asset ownership ensures direct operational control, lower maintenance costs, high vehicle availability, and competitive pricing. Additional vehicles are hired from the open market on an ad-hoc basis to meet fluctuating client demands.

2. Technology-Driven Fleet Management
A proprietary technology platform enhances fleet operations with IoT-based solutions, including Geo-Fencing, GPS tracking, centralized digital locking, and AI-powered rear cameras for trailers. The integration of ADAS+DSM systems improves safety and reduces theft risks. An ERP system automates fleet allocation, route optimization, and real-time tracking, ensuring seamless logistics management.

3. In-House Maintenance and Direct Procurement
An in-house maintenance facility in Gurugram, Haryana, accommodates up to 40 trucks, featuring 12 repair bays, advanced diagnostic tools, and on-site manufacturer support. Regular servicing at authorized workshops and on-route repairs by roadside vendors enhance fleet reliability and minimize downtime.

4. Diversified Client Base
Transportation services cater to multiple industries, including logistics, steel and cement, e-commerce, industrial chemicals, FMCG, and white goods, ensuring a broad revenue stream and market resilience.

5. Strong Growth and Financial Performance
Total revenue grew at a CAGR of 41.97%, from ₹20,967.03 lakh in Fiscal 2022 to ₹42,259.06 lakh in Fiscal 2024. EBITDA increased at a CAGR of 187.05%, reaching ₹6,903.16 lakh, while profit after tax rose at a CAGR of 104.70% to ₹1,322.22 lakh during the same period, highlighting strong financial stability and profitability

Business Strategies

1. Transition to a Hybrid Fleet Model
A shift towards a hybrid model is planned, integrating both owned and long-term leased vehicles. By Fiscal 2026, operations will include a mix of owned and leased fleet to enhance flexibility and efficiency.

2. Optimizing Fleet Composition with More Trailers
Fleet expansion will focus on increasing the number of trailers to strengthen competitive positioning. Currently, the fleet consists of 913 container trucks and 218 trailers, with trailers offering higher tonnage capacity of up to 42 tonnes.

3. Expansion into Rail Logistics
An application has been submitted to lease a train from Container Corporation of India Ltd., enabling entry into rail logistics. This will optimize operational costs, increase cargo capacity, improve supply chain reliability, and provide a more sustainable transportation solution.

4. Investment in Technology for Efficiency and Growth
Further development of in-house technology systems will enhance asset productivity, operational control, and client service. Investments will focus on ERP integration, GPS tracking, fuel efficiency, and safety enhancements to strengthen competitive advantage.

5. Entry into Secondary Logistics and Warehousing
Expansion into secondary logistics aims to complement Full Truck Load (FTL) operations by improving inventory management and supply chain optimization. This will enhance service efficiency and support business growth.

6. Diversification into New Industries
Service offerings will expand into high-margin sectors such as pharmaceuticals, mining, automobile, and waste management. Specialized vehicle deployments will enhance industry-specific logistics capabilities

Business Risk Factors and Concern

1. Dependence on Road Network: Business operations rely on an uninterrupted transportation network. Factors such as weather conditions, natural calamities, political unrest, driver fatigue, accidents, and third-party negligence can cause disruptions, leading to delays, additional costs, reputational damage, or financial losses. Delays in perishable goods delivery may result in compensation claims and business decline.

2. Outsourced Driver Model: The company operates without payroll drivers, relying on outsourced drivers on an ad-hoc basis. Inconsistent driver availability and skill levels can impact service quality, customer satisfaction, and brand reputation. Compliance monitoring with safety regulations and industry standards remains a challenge.

3. Aging Fleet and Rising Vehicle Costs: A fleet of 1,131 vehicles, including trailers and container trucks, has an average age of 2.88 years, with 269 vehicles exceeding 5.66 years. Maintenance costs are rising due to aging vehicles and incremental AMC rates. Expansion and upgrades are necessary to manage operational efficiency and control cost

4. Dependence on OEMs for Vehicles and Spare Parts: Procurement of commercial vehicles and spare parts is concentrated among a few OEMs, exposing the business to risks such as delayed deliveries, non-conforming quality, and supply chain disruptions. Any issues with suppliers can hinder expansion plans and affect service commitments.

Tejas Cargo India operates a logistics business highly dependent on road transport, outsourced drivers, and a growing but aging fleet. Disruptions in transportation, inconsistent driver availability, and increasing vehicle maintenance costs pose operational challenges. Additionally, reliance on a few OEMs for vehicle procurement and spare parts creates supply chain risks that may impact service quality and expansion plans.