Financial Management Project

REPORT ON ALLCARGO LOGISTICS

(FINANCIAL MANAGEMENT PROJECT)

Financial Management Project

INDEX:
Sr. No.
1
2
3
4
5
6
7
8

Topic
Indian Logistics Industry- Overview
Allcargo Logistics Businesses
Financial Highlights
Shareholding and Employees
Business Performance
Key Financial Ratios
Factors That May Impact Business
Outlook

Pg. No.
3
6
12
14
15
16
18
20

Financial Management Project

1.

INDIA LOGISTICS INDUSTRY- OVERVIEW

The logistics industry in India is now worth US$100 billion
Generated employment for 45 million people
The industry is expected to grow annually at the rate of 15-20%, will worth
US$385 billion by 2015
As Indias nominal GDP could grow from $1.8 trillion currently to $3.6 trillion
by 2020, the overall export-import cargo at Indian ports is projected to
increase to around 2,800 million metric tonnes (MMT) by 2020 from
approximately 890 MMT now
Several factors helped the growth of logistics industry in India over the
decade that includes changing tax system, rapid growth in industries such as
automobile, pharmaceuticals, FMCG and retail. However, major sectors that
are investing huge amounts in logistics industry are aviation, metal & mining
and consumer durables. With increasing competition and cost, focus on
outsourcing, entry of foreign players is having positive impact on the industry.
One important thing is that India loses Rs44000 crore worth vegetables, fruits
and food grains due to lack of cold chain. India has the capacity of only 30
million tonnes of cold storage and it requires another 62 million tones.
As per the World Banks Logistics Performance Index 2010, India is placed at
54th position out of 155 countries in 2014.
Logistics Performance Index of India

Score

Rank

54
Overall LPI

3.08

Customs

2.72

65

Infrastructure

2.88

58

International
Shipments

3.20

44

Logistics
competence

3.03

52

3.11

57

3.51

51

Tracking
tracing
Timeliness

&

Source: World Bank 2014

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Elements of Logistics Cost

Administrative & Order Processing

10

Inventory

24

Warehouses, Packaging and losses

26

Transportation

40

10

15

20

25

30

35

40

45

Percent Contribution

Source: Sanyal(2009)

Industry Trends:
Transportation: Container cargo represents only about 30% (by value) of India's
external trade-much lower when compared with the global containerized cargo
average of 70-75%. At a growth rate of 12%, India's container cargo traffic is
estimated to reach 15 million TEUs by FY16E from about 7.5 million TEUs now (at 12
major ports). Rising investment in the rail and port spaces also fuels growth in
allied industries like wagon manufacturing, port handling equipment, railway
electrification systems and construction companies.
To reduce the transportation cost and for quicker movement of cargo Multimodal
transport operation is introduced (MTO). MTO helps exporters with less
documentation for instance single document for all modes of transport.
Third Party Logistics (3PL): Outsourcing is everywhere. Logistics industry is no
exception. Logistics services like transportation, warehousing, cross docking,
Inventory management, packaging and freight forwarding all are part of third party
logistic services. Companies in India currently outsource an estimated of 52% of
logistics. 3PL represents only 1% of logistics cost emphasis its significance in the

Financial Management Project

industry. Future is no doubt lying in outsourcing. As the growth in the 3PL market is
expected to be in the range of 25-30% CAGR. As of now, the 3PL activity is limited
to only few industries like automotive, IT hardware, telecom and infrastructure
equipment.
Warehouses: Recently, warehouses have become key growth drivers in the
logistics industry. Apart from conventional storing services, warehouses now
providing value-added services like consolidation and breaking up of cargo,
packaging, labeling, bar coding and reverse logistics etc. warehousing and related
activities account for approx. 20% of the total logistics industry.
Most of the warehousing space in India lies with unorganized players in domestic
front, which is causing wide supply and demand gap in storage space. Currently, the
organized warehousing industry in India has a capacity of approx. 80million metric
tonnes and is growing at 35 to 40 per cent per annum.
Government Initiatives and regulations:

To emphasis the significance of transportation in logistics industry and to

increase the competence in the sector government introduced private
participation, especially in port sector.
The major initiative in transport infrastructure is introduction of National
Maritime Development Program (NMDP) with an investment of Rs 568bn.
NMDP would be addressing the challenges of the growing international traffic
demand of the country along with developing the port facilities at par with
world standards.
While liberalizing the railway services, government opened the doors of
container business to the private parties. A total of 15 players immediately
entered the market.
To remove the differential state-level taxes that are causing higher unit and
inventory carrying costs, government introduced uniform Goods and Services
Tax (GST). As a result, there is expected to be significant reorganization in
warehousing system in the country.
FDI regulations

In general 100% FDI under the automatic route is permitted for all logistic
services
FDI up to 100% subject to FIPB approval is permitted for courier services.
FDI up to 49% under the automatic route is permitted for air transport
services, including air cargo services.
100% FDI is permitted in Ports and Harbors under automatic route
100% FDI is permitted under the automatic route for storage and
warehousing including warehousing of agricultural products with cold storage.
100% FDI is permitted in transport and transport support services through
automatic route

Financial Management Project

2. ALLCARGO LOGISTICS BUSINESSES
A) Multimodal Transport Operations:
Allcargos Multimodal Transport Operations includes NVOCC (Non Vessel
Operating Common Carrier) which constitutes LCL (Less than Container
Load), FCL (Full Container Load) and other value added services. Allcargos
wholly owned subsidiary ECU-LINE is one of the global leaders in LCL services.
With network across 90 plus countries and 200 plus offices, connecting over
4,000 port pairs globally.

Business Description
Allcargo receives Less-than-Container-Load (LCL) cargo from various freightforwarders
Cargo for each destination is consolidated into containers at bonded
warehouses, to be shipped to either final destination or to hub ports from
where it is trans-shipped to final destination
After consolidating the LCL cargo into Full-Container-Load (FCL)
consignments, Allcargo forwards the consignments to shipping lines for
transportation to the final destination
Besides LCL consolidation, Allcargo has also forayed into FCL freightforwarding through acquisition of FCL Marine, a Netherlands based FCL
freight-forwarding company
Some of the acquisitions made by Allcargo to expand and consolidate network, gain
footprint in major
economies of the world and add more product lines for customers are as follows:
Econocaribe Consolidators (2013) 3rd largest NVOCC in the US with 9 offices
and 22 receiving
locations in the US and Canada
FCL Marine Agencies (2013) Leading neutral NVO service provider in Full
Container Load segment in
Europe, USA and Canada
2 NVOCC Operators in China (2010) With extensive operations in Hong Kong ,
China and other parts of the eastern region
ECU Line (2005-06) One of the Largest NVOCC in the World and 4 times larger
than Allcargo, at the time of acquisition

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MTO Business Volume and Financials

Global Vollumes (000's TEUs)

Volume Split as per Geography-FY14

400
337

335

318

285

300

Europe; 25%
200

Africa; 2%

Asia Pacific; 55%

Americas; 19%

100

15M FY12

FY13

FY14

9M FY15

Revenues (INR Cr)

EBITDA (INR CR)

280

4950
4125
3386
3300

3591
3182

210

207

201
165

140
1650
70

15M FY12 FY 13

FY 14

9M FY 15

15M FY 12

FY 13

FY 14

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B) Container Freught Stations (CFS) & Inland Container Depots (ICD ):

Allcargo is one of the leaders in CFS & ICD operations pan India with six
world class facilities across JNPT (Mumbai), Mundra (Gujarat), Chennai, Dadri
(near Delhi) and Kheda (Indore). It has a capacity to handle over 500,000
TEUs per annum. Allcargos infrastructure comprises world class equipments
such as Rubber Tyre Gantry Cranes (RTGC), Reach Stacker, owned fleet of
trailers etc. Allcargo was one of the first CFSs to implement RFID technology
through chips and kiosks to track containers, thus providing seamless control,
visibility and real time information. Google maps are also used to provide
customers facility to track shipments and containers across facilities.
Allcargo is Present Across Major Container Ports of India:

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CFSs at JNPT, Chennai and Mundra with total installed capacity of 485,000 TEUs p.a.
and ICDs at Pithampur and Dadri with total installed capacity of 88,000 TEUs p.a.
JNPT and Chennai - key ports in India handling bulk of container traffic. The two
ports together handle more 65% of total container traffic of India

CFS Business Volumes and Financials

Volumes (000's TEUs)

Import-Export Mix-FY14

400

300

303
Export; 20%
222
187

200

161
Import; 80%

100

15M FY12

FY 13

FY 14

9M FY15

Revenues (INR Cr)

EBITDA (INR Cr)

450

210
172

352
308
300

312

299

140
110

150

99

70

15M FY12 FY 13

FY 14 9M FY15

15M FY12

FY 13

FY 14

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C) Project And Engineering Solutions (P&E):

Allcargos P&E team has successfully executed numerous project for
renowned organisation across multiple sectors ranging from oil & gas, power,
heavy engineering, urban transportation and others. Allcargo is one of the
few organisation with a fleet of over 1000 world class owned
equipments, that includes complete range of Cranes (Crawler, Telescopic,
Truck Lattice and all
Terrain), Hydraulic Axels & Self Propelled
Modular Transporters (SPMTs), Strand Jacks, Trailers (Low Bed, Semi Low &
High Bed), Fork Lifts & Reach Stackers.
Allcargo provides Factory-toFoundation services from transportation, to erection, to commissioning of
projects. Some of the projects completed by Allcargo P&E includes Lifting
Project and Mangaon, Raigad, Son river bypass, Windfarm Project in Gujarat
etc.

P&E Financials and Fleet

Revenues (INR Cr)

EBITDA (INR Cr)

600

240
497

190
429

172

413
375

400

200

160

138

80

15M FY12 FY 13

FY 14 9M FY15

15M FY12

FY 13

FY 14

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Industry Diversification (By Revenue)-FY 2014

6%

Power

Ports & CFS

Infrastructure

Oil & Gas

Construction
4% 14%
& EPS
6% 36%
10%16%
Engineering
9%

Cement &
Metaals
Others

Fleet
Equipmen As on 31st
Strength
t Type
March 14
Trailers
585
Hydraullic
201
Axles
Cranes
143
Reach
79
Stackers
Prime
20
Mover
Ships
3
Others
3
Total
1034

D) Ship Owning & Chartering And 3PL & Warehousing:

Allcargos shipping division is one of the leaders in ship owning and
chartering services with three cargo vessels, i.e. M. V. Allcargo Laxmi, M. V.
Arathi, M. V. Allcargo Susheela, specializing in movement of Bulk, Break Bulk
and Project Cargo. With emphasis of the new government in focusing on
making waterways as the leverage to decongest road and rail network as well
as create new avenues of efficiencies coastal shipping has a much brighter
growth prospects in coming years.

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3. FINANCIALS HIGHLIGHTS
A) Consolidated Financial Highlights

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B) Consolidated Balance Sheet

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4) Shareholding and Employees

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5) Business Performance:
A) Revenue Analysis For The Year Ended on 31 st March 2014 in Rs. Cr:
Businesses
Multimodal
Transport
Ops
Container
Freight
Stations
Project & Engineering
Solution
Vessel Operating Income
Third
Party
Logistics
Income
Total

Revenue
4125.45

As % of Total Revenue
85.14

311.23

6.42

350.96

7.22

48.06
9.50

0.99
0.20

4845.20

100

B) Cost Analysis For The Year Ended on 31st March 2014 in Rs. Cr:
Businesses
Multimodal
Transport
Ops
Container
Freight
Stations
Project & Engineering
Solution
Vessel Operating Income
Total

Cost
3015.32

As % of Total Cost
88.72

128.79

3.79

216.53

6.37

38.23
3398.87

1.12
100

Highlights:
a) MTO business is the most important for the company. Major part of cost and
revenue goes for this business.
b) It can been seen that for container freight stations business, percentage of
revenue is more than that of cost, company should focus more on this business.

Financial Management Project

6) KEY FINANCIAL RATIOS:
Liquidity Measurement Ratios
A) Current Ratio:
Current Assets
Current Liabilities
Current Ratio (C.A/C.L)

March14
1061.24
1098.67
0.96

March13

(In Rs. Cr)

788.48
864.51
0.91

Comments: There is improvement in current ratio from the previous

year. The ratio suggests that the company has enough short-term assets
to pay off its short-term liabilities. The ratio is neither too large nor too
small which is good sign.
B) Quick Ratio:
a. Cash &
Equivalents
b. Short Term
Investments
c. Account
Receivable
d. Current Liabilities
Quick Ratio (a+b+c/d)

March14
164.69

March13

(In Rs. Cr)

138.19

266.90

217.17

571.50

382.45

1098.67
0.91

864.51
0.85

Comments: The quick ratio is a more conservative measure of liquidity

than the current ratio as it removes inventory from the current assets
used in the ratio's formula. If we compare current ratio with quick ratio, we
can say that current ratio is not significantly larger than quick ratio which
in turn indicates that companys current assets are not dependent on
inventory.
Profitability Indicator Ratios
A) Operating Profit Margin
Operating Profit
Net Sales
Operating Profit M.
(O.P/N.S)

March14
196.03
4845.20
0.04

March13

(In Rs. Cr)

233.54
3925.49
0.06

Comments: Basically, operating profit margin is the amount of

profit generated by the company as a percent of the sales
generated. From the above ratio it is clear that there is negative

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trend in operating profit margin which is not good sign. Company
may need to increase its efficiency to improve the ratio.
B) Return On Equity:
Net Income
Average Shareholders
Equity
RoE (N.S/A.S.E)

March14
149.33
1793.12

March13

0.083

(In Rs. Cr)

169.74
1585.66
0.107

Comment: The ROE measures how much the shareholders earned

for their investment in the company. The ratio was less for the year
compared to previous year which indicates that the management is
not effectively utilizing its equity base and hence giving not so good
returns to its investors.
Debt Ratios:
A) Debt-Equity Ratio
Total Liabilities
Average Shareholders
Equity
Debt-Equity Ratio

March14
1790.39
1793.12
0.99

March13

(In Rs. Cr)

1363.95
1585.66
0.86

Comment: The decrease in ratio over the previous year indicates

that the company is using more leverage and has a weaker equity
position.

Financial Management Project

7) FACTORS THAT MAY IMPACT BUSINESS

A) Economic Risk:
A part of business is substantially dependent on the prevailing global
economic conditions. Its obvious that global trade directly impacts MTO
business of the company. Some of the factors that may adversely affect the
company performance include slowdown in the rate of infrastructure
development, inflation, changes in tax, trade, fiscal and monetary policies
etc.
B) Competition Risk:
There is risk that arises from more companies in the sector wanting a
share in the same pie. The
company may face different levels of competition in each segment, from
domestic as well as
multinational companies.
Some of the competitors are Container Corp, Aegis Logistics, Transport
Corp etc.

Profit & Loss account

Income
Sales Turnover
Other Income

Total Income
Expenditure
Raw Materials
Power & Fuel Cost
Employee Cost
Other Manufacturing Expenses
Selling and Admin Expenses
Miscellaneous Expenses

------------------- in Rs. Cr. ------------------Allcar

go
Mar
'14

Container
Corp

Aegis
Logistics

Transport
Corp

Mar '14

Mar '14

Mar '14

989.01
33.03

4,984.55
371.72

370.85
9.02

2,027.27
5.71

1,022.
04

5,356.27

383.01

2,032.98

20.46
32.03
71.64
585.64
0.00
78.56

9.46
33.28
123.51
3,470.04
0.00
246.40

236.99
6.72
29.29
0.00
0.00
53.45

0.00
0.00
112.56
1,641.19
0.00
124.20

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Preoperative Exp Capitalised
Total Expenses
Operating Profit
PBDIT
Interest
PBDT
Depreciation

0.00
788.33
200.6
8
233.71
28.63
205.08
134.75

0.00
3,882.69

0.00
326.45

0.00
1,877.95

1,101.86

47.54

149.32

1,473.58
0.00
1,473.58
189.33

56.56
12.29
44.27
13.44

155.03
29.67
125.36
42.43

Profit Before Tax

70.33

1,284.25

30.83

82.93

PBT (Post Extra-ord Items)

Tax
Reported Net Profit

70.33
14.21
56.12

1,284.25
299.49
984.76

30.83
11.44
19.41

82.93
20.93
62.01

Earning Per Share (Rs)

Equity Dividend (%)

4.45
75.00

50.51
123.00

5.81
52.50

8.50
65.00

C) Trade Risk:
The business of the company can be affected by the rise and fall in the levels
of imports and exports in the country. The company must focus on its CFS/ICD
business which is a relatively high margin segment that is dependent on
imports and exports of containerized cargo in India. With expected EXIM trade
increase along with the growth in containerization, CFS business is expected
to be good in coming years.
D) Regulatory Risk:
The business and operations may be adversely affected, if company is unable
to obtain required approvals and licenses in a timely manner. Any logistics
company requires certain approvals, licenses, registrations and permissions
for operating MTO and CFS/ICD business. Delay by government side may
have an adverse effect on company revenues.
There are also some factors that may have impact on business of the
company. This includes liability risk and execution risk.

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8) OUTLOOK
The economy is likely to expand by more than 5.0 percent in FY2014.
Indias economy is projected to grow at 6.3 per cent in FY16,
according to a United
Nations report. The slowdown seems to have bottomed out and a
mild recovery in
investment as well as stronger export growth will help in the
gradual GDP pick-up.
Indias long-term prospects remain highly favorable.
Key issues need to be addressed are investment in infrastructure, focus on highend manufacturing, increase the investment in bio-technology and bring in
agricultural land reforms that will help farmers with small holdings get greater
access to credit, energy reforms addressing the power shortage in the country,
education amongst many others. The government to a large extent, has started to
take steps to address this. One of the steps that the government has taken is the
continued focus on infrastructure development in the country. Healthy infrastructure
spending holds the key to facilitating economic growth in India.