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Allcargo Logistics Ltd.

BSE: 532749 Sector: Others
NSE: ALLCARGO ISIN Code: INE418H01029
BSE LIVE 15:40 | 11 Dec 177.60 -1.00
(-0.56%)
OPEN

179.15

HIGH

180.00

LOW

176.80

NSE 15:54 | 11 Dec 177.20 -1.00
(-0.56%)
OPEN

179.00

HIGH

179.90

LOW

176.50

OPEN 179.15
PREVIOUS CLOSE 178.60
VOLUME 39416
52-Week high 198.90
52-Week low 155.25
P/E 39.38
Mkt Cap.(Rs cr) 4,364
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 179.15
CLOSE 178.60
VOLUME 39416
52-Week high 198.90
52-Week low 155.25
P/E 39.38
Mkt Cap.(Rs cr) 4,364
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Allcargo Logistics Ltd. (ALLCARGO) - Chairman Speech

Company chairman speech

Dear Fellow Shareowners

I take immense pleasure in sharing with you all the highlights of our Company'sperformance for the financial year ended March 31 2017.

With ‘Innovation and Reinvention' as the crux of our operations we as a companyhave constantly strived for improvement instead of perfection. We feel improvement issomething that automatically brings about perfection as a by-product over time. We haveconstantly tried building a better tomorrow knowing what it takes to make one. ‚roughthis process we have tried integrating innovation and reinvention as an active part ofour growth strategy. ‚is has helped us bring out the best in us as we adapt to thechanging business environment to meet the growing market needs and demands. Last year ourperformance was what we envisaged. ‚is was a result of an excellent team work quickresponsive thinking to the best ideas that we discovered as opportunities. Innovation andreinvention is born from creativity. But its sustenance depends on right movement at righttime.

Let us take a look at the year that was.

Withstanding macro-economic challenges

Last year witnessed a host of geo-political changes. Events like Brexit USPresidential election policy announcements thereafter and the after eˆects of theshipping crisis played a major role in macro-economic scenario. However we managed tosuccessfully maintain a good momentum. Despite all the challenges we maintained a goodbalance and our business performance demonstrated optimism. We frame-worked our strategicsteps well. ‚is was coupled with good initiatives and well laid-out plans whichhelped us navigate successfully. Hence achieving a long-term sustainable growth.

We proudly share that today we stand as India's only logistics multinational providingintegrated logistics services. Over the years we have emerged as a leading and competentplayer across businesses that we operate in.

Today we are:

• World's largest LCL consolidator

• Amongst the largest Indian CFS operators

• Only Indian Company with significant presence across the country's all threemajor container ports. We look forward to further consolidate our position with theopening of a new CFS at Kolkata – the East coast of India

• Among India's leading Project and Engineering solutions provider and vesselowner in bulk coastal shipping

• Among very few Indian companies specializing in contract logistics a businesswith significant growth opportunities

Indian Logistics Industry – at the cusp of transformation

The Government of India has been making consistent efforts for an integrated approach.It has been trying to bring various Government organisations state Governments andlogistic operators to a common platform. The Indian logistics industry is moving towards aphase of major transformation. The Government's plans to cut logistics costs from thecurrent 14-15% of GDP to 9_10% through a modal shift towards water and railway andefficiency improvement the sector is all set to experience a positive growth trajectory.The

2017–18 Union Budget laid an emphasis on infrastructure growth with plans todevelop highways railways and rural roads and revive unused airstrips and airports. TheGovernment also announced Sagarmala project for port modernisation and augmentationdevelopment of multimodal logistics parks smart cities project and dedicated freightcorridors. Successful and timely completion of these proposed projects will ensure costeffectiveness and operational efficiencies in the transport and logistics sector

GST – a favourable bet for the industry

The GST will help create a common Indian market improve tax compliance and governanceand boost investment and growth; It is also a bold new initiative in the governance ofIndia's cooperative federalism. With the effect of GST instead of maintaining smallerwarehouses in each and every state companies like ours will be able to set up fewer andbigger warehouses. We can follow hub and spoke model for freight movement from warehousesto manufacturing plants distributors and retailers. Hence a bigger opportunity awaitscompanies like us - that can manage bigger routes and deliver accurately and efficiently.We have evolved from traditional service delivery systems to highly integrated andtechnically advanced service providers. We are constantly striving to meet the dynamicmarket needs. GST provides us with ample opportunities to expand the contract logisticsbusiness in India.

Innovate and Reinvent

One of the important things going forward for our Company is to constantly Innovateand Reinvent. The theme is an inspiration and reiteration that we are ever ready toadapt to changing business environment and build a culture that adheres to timelyimplementation of business plans. We constantly strive to overcome business uncertaintiesby bringing in innovative ideas introducing alternative business models and eliminatinginefficiencies that exists in the organization.

Information Technology

We understand that Information Technology will play a very important role for us toinnovate and reinvent. We have a formidable team to lead the IT and digitaltransformation. Some digital innovations like auto response to quotations are alreadyunderway. This will help us convert leads faster and cut down man hours. Tools like Trackand Trace is already live while ECU 360 and pricing management tools are in advancedstages of completion. Project TOPAZ - a new operating system for our NVOCC services - isbeing rolled out in many countries. We expect to roll it out to 90% of the export/importvolume generating offices in 2017. All these initiatives shall enable us to collaboratewell serve our customers better and improve on our compliance responsibilities. Alongwith this it will provide insightful data in a much qualitative way.

We reiterate this well through our IT vision - Use world class technology to delightcustomers through superior experiences; leverage technical innovations to increase ourproductivity and scale to new horizons as a company.

Business Performance

Last year our business experienced pressure on margins and volume of business as well.Tough times are going to be around in the foreseeable future. Our business has felt theheat of the global shipping crisis. Consolidation of global carriers has had a hugeimplication on the market dynamics. We have some very important lessons to learn from whathappened in the container shipping industry. Excess capacity creation poor planning lackof cost management and extremely high leveraged companies have always faced the heat whenmarket conditions worsen. Seeing the trend continue we have concentrated our e‚ortson bringing in efficiencies through cross selling investment in human capital processimprovement cost optimization and technology enhancement. In our MTO business we havemade significant growth in FCL services. In LCL we continued to be the global marketleader. We have also expanded the air freight service in select Indian markets. In the CFSsegment we are the only CFS operator with facilities at all major Indian container portsat Mumbai Chennai Mundra and an upcoming facility in Kolkata. Despite the events likedemonetization we were able to increase our volumes. We support our Government's DirectPort Delivery initiatives. . Our Kolkata CFS will soon start operations. Going forward weare working on setting-up a rail-linked logistics park in Jhajjar Haryana reapingbenefits from GST and taking the business to the next level of growth. In our Projects andEngineering Solutions business we have sold two vessels which had completed their usefullife and maintained asset utilization in our equipment business. With a strong order bookwe are hoping for a revival in private capex along with the already increasing publiccapex driving business growth. We also acquired a majority stake in Avvashya CCILogistics - a leading contract logistics Indian Company. In this business we are adominant player across sectors of chemicals pharma auto retail and e-commerce. As agroup we have always focused on enhancing customer satisfaction through studies andsurveys. We are now implementing the insights of our recently concluded national customersatisfaction survey in our business verticals processes. We plan to continue ourconservative capex strategy in the current year but without losing any opportunity toenhance profits and shareholder value. We are focused on revenue and profit growth Returnon Capital Employed (ROCE) asset utilization and cash flows across all our businesses.Strong cash flows generated in the years to come will be used to bring down the existingdebt on the balance sheet as well as to pursue new growth opportunities.

Financial Performance

The consolidated financial performance for the 12 months ended March 31 2017 is asfollows:

• Total income at Rs. 5629 Crore for the year ended March 31 2017

• EBIDTA at Rs. 510 Crore for the year ended March 31 2017

• EBIT of Rs. 344 Crore for the year ended March 31 2017

• EPS for the year ended March 31 2017 was Rs. 9.25 for a face value of Rs. 2 pershare

Future Blueprint

2017-18 is being marked with theme of 'Innovate and Reinvent' which would lead us togrow across all our businesses and markets in terms of revenue volumes increasing walletshare with existing customers and gaining new customers.

Going forward we will continue focussing on our existing businesses. We will alsoleverage our diversified network and products to further strengthen our leadership in LCLbusiness. We plan to set up our first logistics park in Jhajjar Haryana. We will furtherscale-up our contract logistics business with a special focus on chemical warehousing ande-commerce. We will continue to maintain our leadership position in P & E business.Overall the Company's focus will continue on profitable growth and increasing ROCE acrossbusinesses leading to maximization of shareholder value and returns.

Our People

Human capital remains the core of our success and we will continue to investconsiderable e‚orts in this direction across all levels. This year a slew of newinitiatives will look to empower our sales team with the Avvashya way of selling ourservices. Employee engagement is the main pillar of our growth strategy. I believe thatour existing talent pool will enable us to outperform our peers and meet ourresponsibilities as an organization to all our stakeholders.

I thank you all for your immense support and continued confidence in our Company andManagement. I also like to thank all our stakeholders – customers employeespartners shareholders business associates and society at large for their faith in us.As we plan and work towards making our business more innovative by reinventing the way weoperate I look forward to your continued support and encouragement to take our Company tothe next level of success.

Regards

Shashi Kiran Shetty