CHARTERED LOGISTICS LTDCHARTERED LOGISTICS LTDChartered Logistics Limited is into logistics sector and the company is on a phenomenal

growth path. Company has been expanding at a rapid pace. It is undervalued in comparison to it's peers and the Government's commitment towards implementing

HBJ Capital, IndiaWeb: www.hbjcapital.comE-Mail: info@hbjcapital.comCall: +91 98867 36791

HBJ Capital’s “Business Insight” stock for the month of September 2010

comparison to it's peers and the Government's commitment towards implementing Goods and Services Tax will favour the company in the long run.

Best Buying Price…

2 Phase Buying Strategies Suggested [Always buy in SIP ways]

1st Phase : Buy at the current price range Rs 11-12.5 [40% of investment]

2nd Phase : Add if the price falls down to Rs 9-10 [60% of investment]

>>>Expect at least 10-12 times returns in next 3 years time frame!!!

Note:- The above Best buying price is based on the E-mail communication sent to the “Penny Stock Package” subscribers on 20th Sep’10.

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Table of Contents

From the Desk of CEO, HBJ Capital – (Page –5 )

Overview : Chartered Logistics Ltd. – (Page –7 )

The $125 Billion Indian Logistics Industry – (Page –10 )

EIC Framework – (Page –16 )

Chartered Logistics Ltd – (Page –17 )

Group companies of Chartered Logistics Ltd – ( Page –19 )

Network of Chartered Logistics Ltd – (Page –20 ) Network of Chartered Logistics Ltd – (Page –20 )

Intellectual behind Chartered Logistics Ltd – (Page –22 )

Peer Comparison – (Page –25 )

Financial Analysis – (Page –27 )

Investment Rationale – (Page –32 )

SWOT Analysis – (Page –35 )

Supply Chain Management of India is weak which gives an

opportunity for the companies which operate in

Logistics segment to flourish. Out of the whole logistic

industry only 10% is organized. The companies

have a huge potential to grow in this area by tapping the

unorganized sector.

From the desk of CEO, HBJ CapitalFrom the desk of CEO, HBJ CapitalDear Investors,

Logistics is still a nascent and fragmented industry in India.It is estimated that while outsourced logistics accounts for54% of total logistics spending in India, organized playershave only 10% of the pie.

In road transportation, which accounts for the biggestportion (36%) of logistics spending, 74% of operators aresmall-time players owning a single vehicle.

In outsourced warehousing, 92% of players are from theunorganized sector. Even among the organized logisticsplayers, few have offerings across multiple modes (air,water, rail and road) and services (transportation,water, rail and road) and services (transportation,warehousing and value-added services such as packaging,cold chain and customs clearance).

A lack of adequate infrastructure and complex taxation andregulations are big hurdles. Government is taking initiativesto improve all this elements. Infrastructure investment inIndia is set to grow dramatically. As per Union Minister forFinance, Mr Pranab Mukherjee, India would require todevelop a rupee-denominated long-term bond market forfunding the infrastructure sector that requires an investmentof around US$ 459 to US$ 500 billion by 2012.

Contd..

As per the latest reports, US$ 218.3 million road project from the Gujarat government has been awarded to Reliance Infra, which indicates the improvement of infrastructure of Gujarat.

The company which has been selected as the Business Insight pick for the month is from Logistics Industry, which is very promising and the company has recently bought 221 trucks which gives an idea about the expansion plans of the company. There are many players in this industry but very few could sustain for so long and CLL has managed to do this with good margins.

The stock has been selected considering the area of operations i.e. Logistics, expansion program in place, undervaluation in comparison to it's peers and the Government's commitment towards implementing Goods and Services Tax which will benefit the Logistics industry the most.Goods and Services Tax which will benefit the Logistics industry the most.

MPS is proud to bring you the “Business Insight” pick of the month – Chartered Logistics Ltd.

Regards,Kumar Harendra, CEO, HBJ Capital, www.hbjcapital.com & www.multibaggerpennystocks.com#912, 1st "F" Main Road, Girinagar 2nd Phase, BSK 3rd Stage, Bangalore – 85 Call : +91 98867 36791, 080 6568 1133/34 Mail : Info@hbjcapital.com Web: www.hbjcapital.in

Overview

Chartered Logistics Ltd – Overview

Some key stats.. PE = 15.3 - On the basis of annualized forward earningsthe stock is available at a PE of 12-13 which is a discountcompared to the industry standards.

Book Value = Rs 3.23 - The current stock price at Rs 15.30 is trading at about 4.73 times its book value price.

Shareholdings : No Of shares [% Share Holding ] Total Non-Institution: 1,16,32,714 Shares[23.42%] Total Bodies Corporate Holding: 7862761 Shares[15.83%] Total Promoters: 3,01,74,525 shares [60.75%]

Total O/S Shares : 4,96,70,000 shares [100 %]

CMP = Rs 15.30 (September 27th 2010) – Thestock was suggested on 20th September’10 whenit was trading at Rs 11.47. Since then the stockhas appreciated by almost 33%, while ittouched a peak of Rs 15.30

52 week’s high/low = Rs 15.31/8.32 – The stockrecently made a new 52 week high. As it is inthe strong bullish phase it can continue to makenew highs.

Peak share price = Rs 15.30 (27th September ‘10)–The stock scaled a new high on 27th September

Total Promoters: 3,01,74,525 shares [60.75%] Total O/S Shares : 4,96,70,000 shares [100 %]

Debt/Equity = 2.4 [Mar’10] ROCE = 18.3% [Mar’10] RONW = 28.6%[Mar’10] Current Ratio = 1.3[Mar’10] Delivered Volume per day = 73.56% BSE Code 531977

–The stock scaled a new high on 27th September‘10. The stock deserves a re-rating and we maysee CLL continue making new highs.

Trading volume = Avg. 1.59 lacs shares(approx) per day – Earlier the volume was lowhowever in the last few days the liquidity hasimproved with investors rushing in.

EPS = Rs 1 – Company has recorded an EPS ofRs 1 on trailing twelve months basis.

The 125 Billion Dollar IndianLogistics Industry !!!

..Logistics Industry..

Globally, the logistics industry is valued at US$ 3.5 trillion.

The U.S., which contributes to over 25% of the global industry value, spends close to 9% of its GDP on logistic services.

The Indian Logistics Industry is presently estimated at US$ 125 billion.

The industry has generated employment for 45 million people in the country in comparison with the IT and ITeS sector which employs approximately 4.3 million people.people.

It is forecast to grow at a Compound Annual Growth Rate (CAGR) of approximately 8% over the next three to five years. (CII)

Third Party Logistics (3PL) Solutions, is slated to grow at a compound annual growth rate (CAGR) of over 16% from 2007-10.

Consequently, 3PL service providers are expected to corner an increased share of the Indian Logistics pie, from 6% in FY06 to 13% in FY11, at a CAGR of 25% (CII).

Contd… The Indian Logistics Industry is presently estimated at US$ 125 Billion and is on a

brink of a very high growth path. The industry is expected to reach revenues of approximately $ 385 billion by 2015.

Consequently, 3PL service providers are expected to corner an increased share of the Indian Logistics pie from 8-9% to 13% in FY 11, at a CAGR of 25%

Indian Logistics Industry will be one of the biggest beneficiary of the introduction of Value Added Tax (VAT) and the proposed introduction of a singular Goods and Services Tax.

The same is expected to significantly reduce the number of warehouses The same is expected to significantly reduce the number of warehouses manufacturers are required to maintain in different states, thereby resulting in a substantial increase in demand for integrated logistics solutions.

A large number of upcoming SEZs have necessitated the development of logistics for the domestic market as well as for the global trade.

About 110 logistics parks spread over approximately 3,500 acres at an estimated cost of $1 Billion are expected to be operational and an estimated 45 million square feet of warehousing space with an investment of $500 million is expected to be developed by various logistics companies by 2012.

Primary Growth Drivers Investments in the infrastructure sector amounting to US$ 350 billion:

Increased efficiency and productivity of the transport system would result in lower transit times.

Streamlining of the indirect tax structure:The introduction of Value Added Tax (VAT) and the proposed introduction of a singular Goods and Services Tax (GST) are expected to significantly reduce the number of warehouses manufacturers are required to maintain in different states, thereby resulting in a substantial increase in demand for integrated logistics solutions.

Strong economic growth and liberalization have led to considerable increase in Strong economic growth and liberalization have led to considerable increase in domestic and international trade volumes over the past five years. Consequently, the requirement for transportation, handling and warehousing is growing at a robust pace and is driving the demand for integrated logistics solutions.

Globalization of manufacturing systems coupled with advancements in technology are increasingly compelling companies across verticals to concentrate on their core competencies and avail the cost saving potential of outsourcing. This is expected to contribute to an increase in the need for integrated logistic solutions, which is the niche of every Third Party Logistics Service (“3PL Services”) provider.

FDI Regulations A snapshot of the FDI regulations governing the industry is as under:

1] 100% FDI under the automatic route is permitted for all logistic services except services mentioned in points ii and iii below.2] FDI up to 100% subject to FIPB approval is permitted for courier services.3] FDI up to 49% under the automatic route is permitted for air transport services, including air cargo services.

The industry has been at the receiving end of increasing interest from the private equity sector. The year 2007 witnessed just under US$ 1 billion in private equity investments in this industry, representing approximately 7% of total private equity investments during the year, against 3% in the previous year.investments during the year, against 3% in the previous year.

Major Demand & Growth Drivers

EIC Framework..

Expected GDP growth for 2011 is 8.75%

Spending on infrastructure development for the year 2010-11 is more than 170k

3PL market is expected to grow at a CAGR of 25% for

the next two years. Good opportunity to tap huge

unorganized market.

Company has started its expansion plans and they are

planning to expand to several other regions.

Company has bought 221 2010-11 is more than 170k crores, gives a boom to

logistics industry.

unorganized market. Company has bought 221 trucks for 40Cr.

The Indian economy is expected to grow at 8.75%. The company’s growth is directly proportional to the growth of the country & industry.

Company has taken a step towards expansion and trying to tap the unorganized sector. Well diversified companies have less risk and forward & backward integration makes the

company more efficient in its operations and profitability.

Chartered Logistics Ltd.

Basic Details..

Chartered Logistics, incorporated on Jun. 16, 1995, provides road transportationthrough a well integrated multi-modal transport system. Earlier known as Charteredthrough a well integrated multi-modal transport system. Earlier known as CharteredCarriers, it got its present name on Nov. 30, 2007.

The company is part of the group formed by Gyanchand Gandhi, which manages thebusiness through a large fleet (approx. 900) of owned and attached vehicles and hasbeen expanding it’s fleet at a rapid pace.

The company offers transportation throughout India. Its own vehicles carry goodswithin Gujarat, Maharashtra and Rajasthan.

Mr. Lalit kumar Gandhi is the Chairman & Managing Director of the company.

Group Companies.. Chartered Motors Pvt Ltd: Chartered Motors carries on the tradition of allied transport

business as the quality distributors of TATA motors across the markets of Bhavnagar, Amreli and Surendranagar of Gujarat for their LCV and ICV vehicles range.

Chartered Health Care Ltd: Reading the radar of the growth right, the group has decided to diversify into the ever expanding sector of Pharmaceuticals and healthcare. Chartered Group has become Equity partner in GMbell Healthcare India Pvt. ltd, to partner the synergies of their expertise, and continue with the trend of the excellence.

Chartered Speed Pvt Ltd: Managed by the dynamic duo of Mr. Lalit Gandhi and Mr. Pankaj Gandhi, Chartered Speed has core competence in providing the support to the Pankaj Gandhi, Chartered Speed has core competence in providing the support to the modern roadways and transportation methods. Having recently bagged the contract from Ahmedabad Janmarg ltd, to provide the services for BRTS, the company is set to mark its presence in the industry.

Raman Roadways

The catalyst group

Chartered institute of technologies

Branch Network (Pan India Presence)..Ahemdabad New Delhi

Mumbai Mehsana

Kolkata Bharuch

Chennai Dahej

Indore Hazira

Thane Vapi

Chiploon Tuticorin

Haridwar Baroda

Udaipur DhungdhraraUdaipur Dhungdhrara

Ratnagiri Baroda

Bhilwara Veraval

Sirohi Road Gandhidham

Abu Road Morbi

Sheoganj Rananav

Kodinar Kolhapur

Nagpur GOA

Clients..Aditya Birla Group JMC Projects

Ambuja cement Ltd JSW Steel

Binani Cement Ltd Kalpatru Power Transmision Ltd

BPCL Nova Petrochemicals Ltd

Claris Life science Ltd Ratnamani Metals

Dalmia Cement(Bharat) Ltd Reliance Industries Ltd

Finolex Industries Ltd Reliance Retail Ltd

Gujarat Sidhee Cement Ltd Saurashtra Cement LtdGujarat Sidhee Cement Ltd Saurashtra Cement Ltd

Grasim Industries Ltd Secure Meters Ltd

Heavy Metals Ltd Shah Alloys Ltd

Hindalco Industries Ltd.(Unit Birla Cooper) Shree Cement Ltd

Hindustan Unilever Ltd Steel Authority of India Ltd (SAIL)

Indian Oil Corporation Ltd Sterlite Industries(India)Ltd

Indo Rama Cement Ltd Tata Chemicals Ltd

J.K. Tyres Ltd Wolkem India Ltd

Intellectual behind CLL

Management..

BOARD OF DIRECTORS

1. Mr. Lalit Kumar Gandhi Managing Director2. Mr. Kishore Kumar Gandhi Executive Director3. Mrs. Nisha Kalyan Whole Time Director4. Mr. Mohib N. Khericha Director5. Mr. Mangilal Bohra Director6. Mr. Ajay C Shah Director7. Mr. Sandeep Shah Director

Mr. Lalit Kumar Gandhi is the Chairman & Managing Director of the Company, is havingmore than 15 years of experience in Transport, Finance & Marketing.He is in the board since 1995 & Company is leveraging on the experience of its MD.

In the year 2008, Mr. Sandeep Shah came to the board, who is currently one of the director ofthe company. By Qualification he is a Chartered Accountant and M.Com.He is a real value add to the company’s panel. He is giving a lot of strength to themanagement by his sound knowledge on taxation and various strategies which helps toreduce tax burden on the company.

Share Holding Pattern.. Promoter holding is more than 60.75% in the company. More than 1% of total shares of the company are held

by following entities:

Raj Raman Transport Pvt LtdWebsmith India Pvt Ltd Skyes &Ray Equities India Ltd Tirupati Shelters LtdHitesh Kekharchand Jain

60.75%

15.83%

23.42%

Promoter

Corporate

Public

Hitesh Kekharchand JainVimal Bipinchandra PatelDhaval Kekharchand JainNikhil Keharchand Jain

The total of the above mentioned holding is more than 19%. The total holding (Promoter & these entities) comes nearly to 80%

indicating the confidence of the promoters and investors of the company.

15.83%

Peer Comparison

Peers Comparison Company Chartered

LogisticsGatiLimited

Transport Corp of India Ltd

Aqua Logistics

Sales/Turnover (crore) 123 751 1451 322Profit (crore) 4 15-20 43 20NPM% 3.26% 2% 2.96% 6-7%Mcap (crore) 50 612 1050 1200PE (Based on 20th Sep’10 Price) 12.5 30-40 24.4 60Jun’10 Profit (crore) 1.56 4.89 12.19 6.93Jun’10 NPM% 4% 2.35% 3.10% 7.53%Expected PE 8.01 31.28 21.87 44.44

Above comparison clearly indicates the fact that the larger counterparts of CLL do not have any advantage in terms of Profit Margins. Rather CLL commands higher margins than most of the industry leaders.

Comparison shows that P/E is usually high in logistics industry. While CLL is trading at a very low P/E, in future company is expected to perform better and would certainly command a high P/E.

Financial Analysis

Income Statement – Last 4 years CLL has been a consistent

performer for the last 4 years with a17% CAGR in revenue and morethan 58% CAGR in Net profit.

In FY 2009-10, the revenuedecreased but because of theimprovement in operationalefficiency, the company reportedhigher operating and net profitmargins.

Phenomenal growth in EPS over Phenomenal growth in EPS overlast four years (Rs.2 to Rs.8)

The improvement in operationalefficiency can be gauged from thefact that the operating cost hasdecreased from 93% to 90.4%.

In the last four years, there hasbeen no major dilution and thegrowth has been funded byinternal accruals and debt.

Income Statement – Quarterly

A look at the results of the Mar’10 and Jun’10 quarter suggests decrease in operating cost to 88-89% of therevenue of the company against an average of 90.4% for FY 10.

There’s been a sequential growth in revenue for the last 5 quarters. There’s a decline in margins for Jun’10quarter over Mar’10 quarter but that’s on account of increase in interest burden. The company has piled ondebt for expanding it’s fleet size of owned vehicles by almost 100%.

The effect of the expansion will be evident in the numbers of the company from the forthcoming quarters.

Balance Sheet.. The equity dilution has been

insignificant and most of the debt raisedhas gone towards expanding the fleet sizeand warehousing capacity.

Company has invested 94lacs in differentshares, which are highly liquid and in thecurrent bullish trend the company isgoing to leverage on it.

Sundry Debtors have increasedmarginally but the company has receivedmost of its dues extending beyond 6most of its dues extending beyond 6months and these receivables are due forless than six months.

Current Liability of the company is verylow. Current ratio of the company isamongst the best in industry.

The company has recently piled on moredebt but the same has gone towardspurchasing 221 trucks at a cost of Rs 40crores.

Contd.. The company has done well over the years especially since FY 05. The company

has been reporting sequential growth since then and has been able to expand it's margins thus bringing in operational efficiency.

The company has seen an exponential growth in it's bottom-line from Rs 0.23 crore at the end of Mar'05 to Rs 4.02 crore at the end of Mar'10.

In the first quarter ending Jun'10, Chartered has come out with a stellar performance. The revenue for the quarter ending Jun'10 stands at Rs 39.6 crore, a performance. The revenue for the quarter ending Jun'10 stands at Rs 39.6 crore, a 38% increase on YOY basis and 9.3% increase on QOQ basis.

The net profit for the quarter ending Jun'10 stands at Rs 1.56 crore which is almost a 100% increase on YOY basis.

The company is trading at a Forward PE (FY 11 earnings) of 8.64 which is approximately 1/4th of the PE commanded by it's larger counterparts like Gati, TCI, Aqua Logistics Ltd. There’s a high probability of PE re-rating in this counter.

Investment Rationale

Investment Rationale.. The company is a long established player in the Logistics sector and is a part of a well

known group with diversified interests.

The Management holds 60.75% equity in the company while we feel that there cumulative (Direct + Indirect) holding in the company stands at around 71.5%.

Over the period of last 4-5 years the company has not diluted it equity much, however they have been piling on debt. If one is to look at the Balance sheet of the company, then most of the debt of the company has gone towards increasing it's Gross block i.e. for expanding their fleet size and that's the primary reason why they have been able to post a good increase in turnover year on year.

The company has recently bought 221 trucks for approximately Rs 40 crores. They have more The company has recently bought 221 trucks for approximately Rs 40 crores. They have more than doubled their fleet size of owned vehicles and the effect of the same will start reflecting in the forthcoming quarters.

The company is trading at a PE multiple of 8.64 based on it's annualized forward earnings, while the other listed companies like TCI, Gati, Aqua Logistics etc are commanding a PE of 30-40.

Although company is a small player in comparison to the above mentioned counterparts, however it maintains one of the highest margins second only to Aqua Logistics Ltd. The company maintains higher margins than well established players.

Near Lifetime high…

Strong support @ 10.32

It is near life time high & will make new highs with the current trend.

There is a strong support at 10.32. During the last few days the volume has increasedand thus the recent spurt has been supported by heavy buying in the counter.

Huge volume

SWOT Analysis – Logistics Industry in India:STRENTGHS

Extremely critical for Manufacturing Industry and Agricultural Commodity Industry

No dearth in volumes Critical component in operational efficiency Contributes heavily towards customer

satisfaction

WEAKNESS High cost-low margin business. Large number of unorganized players. Low IT penetration. Highly fragmented. High Capital expenditure.

THREATS Increase in fuel costs. Government Policy. Taxation. Recession. Competition.

OPPORTUNITIES Implementation of GST from 1st April 2011. Implementation of Golden quadrilateral and

NS-EW corridors. Heavy investments to improve

infrastructure through developmental projects like Mihan, Delhi-Mumbai industrial corridor and National Maritime Development Projects.

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