Delhivery Ltd

We are unlocking the true power of logistics for India

Dear Shareholders,

We welcome you to the Delhivery family and are delighted to write to you here as part of Delhivery's first Annual Report after our public listing.

Large economies have always been serviced by large, efficient logistics companies around the world. While the Indian economy has progressed remarkably in recent decades, be it in retail, information technology, telecommunications, consumer financial services or consumer internet, logistics remains unorganised, fragmented and under-developed. Delhivery aims to address this gap through world-class design, automation and technology that is uniquely conceived in and relevant to India.

An Indian model for India

At the heart of our operations is our distinctive mesh network model that is asset light and uniquely designed for scale, reliability and efficiency in markets like India, inspired from our management team's prior experience in telecommunications network design. The power of this model is further enhanced by self-designed automation systems, infrastructure and cutting-edge, proprietary technology to solve uniquely Indian problems like routing through complex city topographies, address quality and geographical constraints.

Today, we operate the largest automated integrated parcel and freight terminals in India and have established automated parcel sortation capacity of close to 4 million packages/day across 21 gateways. Building for a market as large and rapidly evolving as India will require us to stay continuously ahead of our customers' needs by investing in future-ready capabilities. We will continue to enhance our existing automation capabilities while also introducing pioneering technology into our operations, like AGV/AMR, ASRS systems exoskeletons, machine vision and UAVs.

Creating shareholder value out of customer value

The Indian market has historically been serviced by monoline logistics players focused on specific capabilities or industry verticals. In 2015 we took what was then seen as a bold step, of building multiple complementary and reinforcing capabilities concurrently, when we launched fulfilment and PTL freight services alongside our existing Express Parcel service.

This required considerable investment in building operational, automation and technology capabilities, but was fundamentally based on putting customer needs for resilience and efficiency in their overall supply chains at the heart of our design. Between FY15 and FY22, as we have scaled these new services, our business has grown at a CAGR of 64.4%, making us the largest independent, integrated logistics company in India. We are happy to report that customers have embraced our integrated approach, with over 58% of our revenues contributed by customers using two or more services in FY22.

As our customers' needs evolve, our aim will be to continuously test and launch new value-added services and capabilities to meet their needs. This year, for example, we launched Primaseller and Unified Customer Portal, aimed at omni-channel and direct-to-consumer e-commerce retailers and Delhivery Direct, for individual consumers and microenterprises. We also started helping small LTL clients by providing an option to cover the damage/loss risk arising from transportation of goods.

Enablement over control: technology for inclusion

The top 10 organised logistics players in India have a minuscule share (~1.5%) of the overall market. Asset owners and operators in India continuously struggle with issues like poor utilisation, access to basic technology solutions, poor asset maintenance and lack of cost- effective access to capital. Over 85% of fleet-owners own and operate less than 20 trucks and over 90% of warehouses are less than 10,000 square feet in size.

We have chosen to remain asset-light and focused on creating access to demand as well as improving operational capabilities of asset owners and operators like delivery agents, fleet-owners and warehouse owners by enabling access to our technology systems and thereby including them in the growth and evolution of Indian logistics. Everyday our proprietary applications empower nearly 10,000 partners and over 34,000 agents, who in turn power our network across the country. We are also operationalizing our proprietary OS1 platform and application marketplace to enable other LSPs, enterprises, logistics-tech companies and individual developers.

Stronger together

Over 94,000 people make up the Delhivery team and form the backbone of our organisation. Our approach has always been and will remain to recruit people who exhibit judgement, teamwork, integrity, courage and customer centricity and grow them within the organisation - a preference for stem-cells over transplants.

This is reflected in the long tenure of our experienced management team, broad-based ownership created through ESOP schemes across all levels of the company and the diversity of our workforce.

Going forward we will continue to invest in strengthening our talent development through initiatives including the Delhivery Academy, scaling up targeted training, recruiting programs for women in logistics and expanding our talent pool with offices in Tier-1 and Tier-2 cities.

In conclusion

At this juncture we look back at our journey to the public markets with pride and at the road ahead with optimism and confidence.

We firmly believe that Indian logistics is in the midst of a fundamental transformation, in which we will have a defining role to play. We at Delhivery remain deeply committed to solving the customers' most challenging problems and are equipped with the organisational capability, technical and engineering skills, financial resources and the passion to build an iconic Indian enterprise.

We are deeply grateful to our customers for giving us the opportunity to service them, the families of the Delhivery team for their support and inspiration. And finally, to you, our individual and institutional shareholders for the faith you have reposed in us. Our aim is to continue to be mindful fiduciaries of your capital and, more importantly, the trust you have placed in us as shareholders.