<p class="MsoNormal"><span style="font-size:14.0pt;line-height:115%;font-family:
"Times New Roman",serif">Ratings agency <b>CRISIL</b> has issued a warning that
potential diesel price hikes could significantly escalate freight and logistics
costs across India. The agency estimates that for every <b>₹5 per litre</b>
increase in diesel prices, freight rates may need to rise by <b>2.5 - 2.8%</b>
simply to protect transporter margins and maintain cash flows.<o:p></o:p></span></p>
<p class="MsoNormal"><b><span style="font-size:14.0pt;line-height:115%;
font-family:"Times New Roman",serif">Cost Structure & Margin Pressure<o:p></o:p></span></b></p>
<ul style="margin-top:0cm" type="disc">
<li class="MsoNormal"><b><span style="font-size:14.0pt;line-height:115%;font-family:"Times New Roman",serif">Fuel
Dominance</span></b><span style="font-size:14.0pt;line-height:115%;
font-family:"Times New Roman",serif">: Diesel accounts for <b>50-60%</b>
of total operating expenses for Indian fleet operators. <o:p></o:p></span></li>
<li class="MsoNormal"><b><span style="font-size:14.0pt;line-height:115%;font-family:"Times New Roman",serif">Vulnerability</span></b><span style="font-size:14.0pt;line-height:115%;font-family:"Times New Roman",serif">:
Given this high dependence, transporters - especially small and mid-sized
operators—are highly susceptible to even modest fuel price fluctuations. <o:p></o:p></span></li>
<li class="MsoNormal"><b><span style="font-size:14.0pt;line-height:115%;font-family:"Times New Roman",serif">Thin
Margins</span></b><span style="font-size:14.0pt;line-height:115%;
font-family:"Times New Roman",serif">: Free cash flow before EMI
obligations stood at just <b>21.6%</b> in April 2026, leaving little
cushion for rising costs. <o:p></o:p></span></li>
<li class="MsoNormal"><b><span style="font-size:14.0pt;line-height:115%;font-family:"Times New Roman",serif">Additional
Costs</span></b><span style="font-size:14.0pt;line-height:115%;font-family:
"Times New Roman",serif">: Beyond fuel, transporters are grappling with
elevated expenses for tyres, maintenance, toll charges, and driver wages. <o:p></o:p></span></li>
</ul>
<p class="MsoNormal"><b><span style="font-size:14.0pt;line-height:115%;
font-family:"Times New Roman",serif">Market Conditions & Demand Softness<o:p></o:p></span></b></p>
<ul style="margin-top:0cm" type="disc">
<li class="MsoNormal"><b><span style="font-size:14.0pt;line-height:115%;font-family:"Times New Roman",serif">Index
Decline</span></b><span style="font-size:14.0pt;line-height:115%;
font-family:"Times New Roman",serif">: The <b>CRISIL Pan-India Freight
Index (CRISFrex)</b> moderated to <b>100.5</b> in April from 101.4 in
March, reflecting weakened industrial movement. <o:p></o:p></span></li>
<li class="MsoNormal"><b><span style="font-size:14.0pt;line-height:115%;font-family:"Times New Roman",serif">Oversupply</span></b><span style="font-size:14.0pt;line-height:115%;font-family:"Times New Roman",serif">:
High fleet availability has intensified competitive pricing pressure,
making it difficult for operators to pass on cost increases to customers. <o:p></o:p></span></li>
<li class="MsoNormal"><b><span style="font-size:14.0pt;line-height:115%;font-family:"Times New Roman",serif">Geopolitical
Impact</span></b><span style="font-size:14.0pt;line-height:115%;
font-family:"Times New Roman",serif">: Prolonged uncertainty from the <b>West
Asia conflict</b> continues to impact global trade flows and cargo
sentiment across the broader logistics ecosystem. <o:p></o:p></span></li>
<li class="MsoNormal"><b><span style="font-size:14.0pt;line-height:115%;font-family:"Times New Roman",serif">Patchy
Pass-Through</span></b><span style="font-size:14.0pt;line-height:115%;
font-family:"Times New Roman",serif">: Due to weak demand and limited
pricing power, transporters are currently unable to recover nearly <b>80%</b>
of fuel cost increases in contracted arrangements. <o:p></o:p></span></li>
</ul>