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Allcargo Logistics Ltd.

BSE: 532749 Sector: Others
NSE: ALLCARGO ISIN Code: INE418H01029
BSE LIVE 15:29 | 06 Dec 165.25 1.05
(0.64%)
OPEN

165.00

HIGH

166.30

LOW

163.15

NSE LIVE 15:31 | 06 Dec 164.55 0.80
(0.49%)
OPEN

162.10

HIGH

166.05

LOW

162.10

OPEN 165.00
PREVIOUS CLOSE 164.20
VOLUME 4562
52-Week high 221.60
52-Week low 135.00
P/E 16.26
Mkt Cap.(Rs cr) 4165.95
Buy Price 165.25
Buy Qty 15.00
Sell Price 166.10
Sell Qty 35.00
OPEN 165.00
CLOSE 164.20
VOLUME 4562
52-Week high 221.60
52-Week low 135.00
P/E 16.26
Mkt Cap.(Rs cr) 4165.95
Buy Price 165.25
Buy Qty 15.00
Sell Price 166.10
Sell Qty 35.00

Allcargo Logistics Ltd. (ALLCARGO) - Chairman Speech

Company chairman speech

Dear Fellow Shareowners

It gives me immense pleasure to write to you after a challenging but satisfactory year.I am delighted to share with you the highlights of our Company's performance for the year2015-16.

Despite challenging economic and geopolitical conditions around the world our Companyhas continued to maintain its leadership across all its businesses - MTO CFS and Project& Engineering Solutions.

Our ability to offer integrated and one- stop logistics solutions through the synergyof businesses has made us a preferred partner to our customers.

Today we:

• Are the largest LCL consolidator in the world

• Are the only logistics company with significant CFS presence at all 3 majorcontainer ports of the country two inland container depots with land banks at othermajor cargo centres to be developed in the future

• Have always looked at opportunities to further consolidate our position byopening new CFS

• Have taken huge steps to become a large player in contract logistics businesswhich is likely to grow significantly post GST

• Are among the leading Project Logistics and Equipment Leasing players in India

We will continue to focus on delivering value to our clients by helping them strengthentheir logistics value-chain provide exciting career opportunities to our employees whilefurther enhancing our profitability and increasing ROCE across businesses ultimatelyleading to maximisation of shareholder value and return.

The global economic scenario remained weak during the year under review. Although Indiahas emerged as one of the fastest growing major economies in the world its growth wasmuted and uneven on account of various factors like policy reform setbacks insufficientrainfall stress in the Indian banking sector and lack of private sector investmentsamongst others. This in turn affected the growth and profitability of companies acrosssectors.

Seeing the trend continue we have concentrated our efforts on bringing in moreefficiencies through cross-selling investment in human capital process improvementscost optimisation and technology enhancements to ensure that we will remain competitive ina volatile and uncertain global environment.

In our LCL consolidation business we have continued to increase direct LCL servicesfrom our offices globally to maintain market leadership. We have taken all the steps toget the best value from all our acquisitions made in the recent past. I am very happy tosay that all of them have created value to help the Company truly become a global playertogether with being in line with the estimated payback period.

In our LCL consolidation business we have continued to increase direct LCL servicesfrom our offices globally to maintain market leadership. We have taken all the steps toget the best value from all our acquisitions made in the recent past.

This year we have consolidated all our international brands into a single brand - ECUWorldwide. The worldwide launch of 'ECU Worldwide' was announced on May 2 2016. Thisstrategic change announced after 29 years of brand ECU Line's existence was supportedthrough a global internal and external communication campaign. The motive of this changeis to re-energise the ECU Worldwide brand and reinstate the message of a single globalnetwork among our stakeholders. Our rationale was to ensure that we simplify geography forour customers through our presence in 160+ countries and 300+ offices.

In the CFS segment we are among top operators at all locations we have our facilitiesin. Despite continued drop in EXIM trade of India and almost no growth in port volumes wehave been able to increase our business. Soon we will have presence in the east coast ofIndia as we plan to open a world-class facility in Kolkata by the end of 2016-17.

We shall also be among the first few to foray into the logistics parks opportunitywhich will be extremely beneficial due to the government initiatives of DFRC and smartcities. In pursuit of this opportunity we have identified a significant piece of land inJhajjhar (Haryana) where we are looking to set up a rail-connected logistic park.Currently we are evaluating to develop this in phases depending on our clients' needs.This facility will cater to Inland Container Depot Silos for Bulk Cargo handlingoffering storage and rail services for domestic Cargo PFT and warehousing anddistribution services etc.

In our Project & Equipment business we continued to enjoy good asset utilisationand have remained conservative in our capex spend; while we see Government infrastructurespend increasing project level investments by our clients are few and far between. Wehave purchased two vessels and at present we are the largest player in break bulkshipments using coastal shipping services. Our ships are reasonably deployed in thecurrent depressed market conditions; and the future looks promising on the back of thecountry's push for such a mode of transportation and the emerging infrastructural spend.

In the past year we have taken major steps in stepping up our freight forwarding andcontract logistic business through a joint venture with a leading company in the Indianlogistic space viz. CCI Pvt Ltd. The new joint venture has been named as Avvashya CCILogistics Private Limited. It is a strong player across diverse sectors offeringvalue-added services to its marquee clients. With the acquisition of a majority stake inAvvashya CCI our emerging business of contract logistics/ supply chain management willundergo a paradigm shift to be among the top 3 supply chain company in the country in theyears to come contributing significantly to the growth of Allcargo.

In this financial year the long awaited GST bill is likely to be approved in the RajyaSabha. This legislation is expected to be a game changer to the logistic industry. We asan organisation are well placed to derive benefits in large scale from this emergingopportunity. We have drawn plans to grow our Contract Logistics & supply chainmanagement business across the country in the next couple of years to offer country wideservices to our existing and new customers.

We plan to continue our conservative capex strategy in the current year whileleveraging every opportunity to enhance profits and shareholder value. We are focused onrevenue and profit growth ROCE asset utilisation and cash flows across all ourbusinesses. Strong cash flows generated in the years to come will be used to bring downthe existing debt on the balance sheet as well as to pursue new growth opportunities.

We are confident that in the coming years along with the growth in domesticconsumption and growth in economy we will not only increase our market share but alsogrow across India.

BUSINESS PERFORMANCE

The consolidated financial performance for the 12 months ended March 31 2016 is asfollows:

• Total revenue from operations stood at Rs. 571424 Lakhs for the year endedMarch 312016 as against Rs. 568141 Lakhs for the corresponding previous period. Thisgrowth was supported by increase in volumes and revenues across all our businesses

• EBIDTA touched Rs. 54832 Lakhs for the year ended March 312016 vis-a-vis Rs.52798 Lakhs for the corresponding previous period registering an increase of 4%

• EBIT was Rs. 39546 Lakhs for the year ended March 312016 compared to Rs.37061 Lakhs for the corresponding previous period reporting an increase of 7%

• EPS for the year ended March 31 2016 was Rs. 11 for a face value of Rs. 2 pershare.

FUTURE PLANS

The Government has declared its unwavering intent to help manufacturing grow in India.On the infrastructure front too the creation of the dedicated freight corridor will helpto boost the trade specially help the shippers based in north-western and northern Indiato be more competitive in the global markets. These initiatives will help boost domestictrade as well and logistics will play a key role.

For us at Allcargo Logistics 201617 is marked as 'The Year of Sales & Technology'.This will drive growth across all our businesses and markets. Besides it will strengthenrevenue and volumes while at the same time increasing wallet share with existingcustomers and help us acquire new customers.

With the aim to build a solid foundation for ongoing digital innovations 4 years agowe decided to invest in developing our ERP This project was named as 'Topaz' the newsystem is integrating four different legacy systems into one global platform to connectall offices worldwide in a seamless manner. In cooperation with leading softwaredeveloper TCS the new software has been built based on the latest technology and iscurrently being rolled out gradually across the ECU Worldwide network.

The new 'Topaz' system is now enabling us to establish a 'two spee'"

IT approach where customer facing new applications can be developed quickly in responseto fast emerging market needs. It also allows a much more effective interaction withcustomers suppliers and other third party systems via modern API technology. Followingthe roll out of Topaz we have plans to build a digital model for our existing businesses.Accordingly we are currently engaged in the conceptualisation and design of such aninitiative.

We see managing information as the core of our business and consider strong digitalinnovation and design knowledge and capability to be the most important strategic assettoday and in the future.

Going forward we will continue to focus on our existing businesses. We will leverageour diversified network and products to further strengthen our leadership in LCL and FCLbusiness. In India we will continue to concentrate on increasing our market share andtargeting newer geographies in CFS and ICD. Besides we aim to further scale-up ourcontract logistics business with special focus on e-commerce and chemical warehousing.Moreover we will continue to retain our leadership position in P&E businesses andstrengthen our coastal shipping business keeping in mind a strong customer base in orderto earn an ROCE which will be higher than the cost of equity.

I believe human capital plays a pivotal role in achieving competitive advantage. Thuswe consistently invest in talent and in nurturing their skills to help them function moreefficiently. Besides we strongly encourage employee- engagement activities. I believethat our existing talent pool will enable us to outperform our peers and meet ourobligations as an organisation to all our stakeholders.

I thank you all for your immense support and continued confidence in the Management ofour Company. I would like to convey my gratitude to our stakeholders - customersemployees partners shareholders business associates and society at large for theirconsistent faith in us. We seek the cooperation of all stakeholders to make the journeyeven more exciting and rewarding going forward.

Thank You.

Dr. Shashi Kiran Shetty

Founder & Chairman

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