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Sical Logistics Ltd.

BSE: 520086 Sector: Others
NSE: SICAL ISIN Code: INE075B01012
BSE 00:00 | 01 Apr 6.62 0.31
(4.91%)
OPEN

6.62

HIGH

6.62

LOW

6.62

NSE 00:00 | 01 Apr 6.65 0.30
(4.72%)
OPEN

6.65

HIGH

6.65

LOW

6.65

OPEN 6.62
PREVIOUS CLOSE 6.31
VOLUME 22
52-Week high 151.70
52-Week low 4.95
P/E
Mkt Cap.(Rs cr) 39
Buy Price 6.62
Buy Qty 20722.00
Sell Price 5.45
Sell Qty 500.00
OPEN 6.62
CLOSE 6.31
VOLUME 22
52-Week high 151.70
52-Week low 4.95
P/E
Mkt Cap.(Rs cr) 39
Buy Price 6.62
Buy Qty 20722.00
Sell Price 5.45
Sell Qty 500.00

Sical Logistics Ltd. (SICAL) - Chairman Speech

Company chairman speech

SICAL LOGISTICS LIMITED ANNUAL REPORT 2008-2009 CHAIRMAN'S REPORT At first glance, it would seem that 2008-09 was a disappointing fiscal for Sical, with FY09 top-line and bottomline were down from year-ago levels. The fall continued into the first quarter of FY10; that too has seen a drop in year-on-year performance. Our financial results, however, should be seen against the dark backdrop of the current global slowdown. Like it has been for enterprises the world over, the second half of fiscal 2008-09 onwards has been a tough, rough time for Indian businesses. For providers of logistics solutions, a direct play on global and domestic trade, the worst recession since World War 2 has been particularly painful. The macro factor There may be no better measure of the reach and depth of the global economic slowdown than the fortunes of the shipping industry, which moves nearly 90% of global trade. On 20 May 2008 the Baltic Dry Freight Index (BDI), which gauges the cost of shipping resources including iron ore, cement, grain, coal and fertilizer across the world, recorded 11,793 points, its highest level since its introduction in 1985. In less than 7 months, on 5 December 2008, the BDI was at 663 points, its lowest in 22 years, and down 94% from its all time high. The daily rental rate for the largest bulk carriers plunged from over USD 200,000 to less than USD 3,000 in early December, a staggering 99% reduction. As of end-March 2009, 485 container ships totaling 1.42 million TEUs (twenty foot equivalent units) capacity idled, accounting for 11.3% of the global fleet, surging from 70 ships of 150,000 TEUs in late October 2008. In 2005, the average day rate for the biggest container ships was USD 38,500; as I write to you, that rate is down to about USD 6,000. For some time, freight rates for containers shipped from Asia to Europe have fallen to zero for the first time since records began, underscoring the dramatic collapse in trade since the world economy buckled in October. The World Trade Organisation (WTO) recently forecast that global trade in 2009 will drop by an average of 9%, the sharpest fall since World War 2. Amid all this gloom, we refused to buckle under and kept our chins up. We ensured that revenue was only marginally down, and we actually increased our operating profit and margins. To offset the expected drop in container logistics volumes, we focused on bulk logistics-this business involves mostly domestic volumes-in the later quarters of FY09, improving our operations efficiencies and getting our marketing to cross-sell our integrated logistics value proposition aggressively. We consider the resultant improvement in our bulk logistics business as a major takeaway from FY09. The business climate might have been extremely tough; it was also an opportunity for Sical to showcase its differentiated, optimized offering. The fact that we actually increased our margins shows that customers will pay, and pay well, if they see value. Sical's confident show amid the all-pervading gloom has been helped in no small measure by key appointments at the top. Key appointments In May 2009, two major appointments were made to Sical's board: Karthik Menon as Vice-Chairman and LR Sridhar as Managing Director. The appointments signaled the board's commitment to bring in, at the ownership and management levels, strong performers with a track record of strategic, management, and operational success. Karthik Menon, who joins the board in a non-executive and honorary capacity, has been, without doubt, the strategist and driving force behind Sical's successful business and organizational structuring, set in motion in 2005-06. Given his stellar record not only with Sical, but with the promoter group's various companies, the board sees Mr Menon in the role of a facilitator to enhance shareholder value. LR Sridhar has a track record of consistent delivery that inspires confidence. In less than three years of joining us, he transformed the container logistics business (Sical Distriparks) from an underachieving division into one of Sical's most significant businesses. He was given charge of the bulk logistics business less than a year ago; his focused approach to operations and business development has resulted in profitability margins in that segment as well. This annual report's cover is a tribute to Mr Sridhar and the contribution of container logistics-steered by Mr Sridhar-towards realizing our vision of being India's dominant solutions provider of integrated multi-modal logistics solutions for bulk and containerized cargo. We remain confident We are beginning to see some modest signs of stability coming back to the global and domestic economic order. The global container industry is showing signs of improving in the second quarter of this year after more than nine months of a sharp downward trend, recent reports suggest. While container volumes continue to be a source of worry, the various Indian ports are reporting good volumes for bulk cargo. Our core bulk logistics business is for coal and iron ore with a mix of cement, fertilizer, and liquid bulk. Coal handling continues uninterrupted as electricity from power plants is an essential commodity in today's urbanized environment. Iron ore has seen a slowdown as well as huge price dips with the Chinese imports on hold. Cement is slow, in keeping with the slowdown in realty, but fertilizer movement might be stable this year. Sical Multimodal and Rail Transport Ltd, our container rail services company, is now operating from nine locations across India. Currently, four rakes are operating on the north-south corridor and east-central corridor. We plan to increase it to about six rakes, dependent on load factors. None of our plans is on hold; we have focused investments into lower gestation cycles for quick payback even if at lower margins. Cash flow management is a key focus. Annually, we move nearly 570,000 standard cargo containers and 22 million tonnes of bulk cargo, more than any other third-party logistics provider in South Asia. As our infrastructure assets come into play over the next few fiscals, Sical's mission of becoming an end-to-end supply chain enabler will start taking shape. With your encouragement and support, we look forward to strong value-led growth for all our stakeholders: investors, customers, business partners, bankers, and, indeed, Indian industry as a whole. ASHWIN MUTHIAH Chairman