Allcargo Logistics should be able to continue to grow volumes at a double-digit rate this year, Group CFO S Suryanarayanan told CNBC-TV18 in an interview.
The company has notched up impressive performances in the multimodal transport operations (MTO) business in the past few quarters, despite the overall shipping market remaining sluggish.
In the third quarter of FY14, Allcargo reported 20 percent quarter-on-quarter volume growth to 91,725 twenty-foot equivalent units (TEU).
Also read: Allcargo Logistics acquires majority stake in FCL Marine Agencies Rotterdam
"Our global MTO business is doing well. This trend should continue," he told the channel's Ekta Batra and Anuj Singhal.
The business' robust performance has reflected in the company's share prices, which rose to a 52-week high of Rs 271 recently, and are up about 113 percent year-to-date.
The CFO added that Allcargo does not have any immediate acquisitions plans and that its two recent acquisitions have been integrated with the company.
In FY14, the logistics firm acquired 100 percent interest in Econocaribe Consolidators, the third-largest less-than-container-load (LCL) consolidator in the United States and picked up a majority stake in FCL Marine Agencies.
Below is the transcript of the interview on CNBC-TV18.
Ekta: There was a brokerage report that I was reading with regards to a management meet that they had with you. One of the things which was spoken about was the Multimodal Transport Operation (MTO) segment, which is expected to do quite well in FY15 and this is despite the shipping industry underperforming. Can you give us guidance on the same?
A: From an overall perspective in the international business that is our global MTO business, we are doing reasonably well. We are growing in double digits in the volume as I compare with the previous year. So I think this trend should continue.
This is in spite of whatever is happening in the shipping industry because we don't own assets and that has been a big advantage for us and we are an aggregator. So therefore, a combination of all of this and the growth that is happening is good for us in our global MTO business.
Anuj: In this MTO business, what kind of guidance can you give us for the rest of the year in terms of revenues and margins?
A: They all depend a lot on the way freight moves. But all I can say is from a volume perspective, I think we should grow in double digits and consequent effect of this growth on the volumes should automatically come into our bottomline. So that is the way, we are looking at it. It is holding steady, we have been doing quite well over the last six months. So I think we are in a good shape in our international business.
Ekta: Any more acquisitions planned?
A: No, there is nothing that is planned in the immediate future. The two acquisitions that we did last year have been quite accretive. They have been fully integrated into our system and I think both of them are doing quite well.
Ekta: Do you have any near-term funding needs?
A: No, there is no such pressure on us because we don't have much of capex to go forward. Our entire focus has been to increase the asset utilisation of all the capex that has happened over the past years. The asset utilisation has also started to improve and I think this year should be a good one if I see the trends that have started to happen in the quarter.
Ekta: There was a lot which was spoken about with regards to the logistic sector from the Budget. Can you give us a sense in terms of one what the implementation of the goods and services tax (GST) would do for Allcargo in terms of your bottomline and secondly, any sort of near-term opportunities, which are coming up for you post the Budget?
A: In terms of the Budget if you see, it has led out conducive environment both financially as well as policy formulation in boosting the infrastructure and the manufacturing sector. Increased spends in these sectors will automatically mean more ExIm trade and therefore will benefit the logistics sector and since we are quite a lot focused on the ExIm trade as well as in the infrastructure in two of our businesses, it should be helpful to our company as a whole.
If you look at the GST implementation, it will address one of the inefficiencies of our entire distribution centre process. So its implementation will only help in the efficiency and make our domestic economy more competitive in the long run.
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