To acquire over 200 trailers to pump capacity: Allcargo

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To acquire over 200 trailers to pump capacity: Allcargo

In an exclusive interview to CNBC-TV18, Shashi Kiran Shetty, chairman and managing director of Allcargo Global Logistics says that the company is now gearing for expansion plan of the contain freight station.

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In an exclusive interview to CNBC-TV18, Shashi Kiran Shetty, chairman and managing director of Allcargo Global Logistics says that the company is now gearing for expansion plan of the contain freight station.

"We are going to build warehouses and are going to put an additional container freight station capacity of about 2,00,000 containers per annum," says Shetty, adding that the capacity will significantly contribute to the growth of the company in the coming years ahead.

"We are likely to acquire over 200 trailers to facilitate the additional capacity and volume that will come up," he added.

Below is an edited transcript of Shashi Kiran Shetty's interview to CNBC-TV18. Also watch the accompanying video.

Q: Could you tell us your plans with respect to any kind of acquisition in India and East Asia?

A: Last year, we had concluded two acquisitions in China - one in shanghai and the other based out of Ningbo. Also, we have also opened our own office in Qingdao, in addition to the offices we already have in other locations in China. These acquisitions have significantly added to the volume growth in the company that is up almost 20% in our overall Local Consumer Lending (LCL) volume out of Asia and rest of the world.

We are not pursuing any further acquisition in China or in Asia but if we have opportunities from strategic targets, we would lookout for further acquisition and consolidation.

Q: Can you breakup the contribution acquired in terms of revenue, EBITDA and profit from Chinese and the Indian company?

A: The Chinese acquisition has contributed close to about 15% to the PAT for our global operation. It doesn't impact the Allcargo's standalone business per se. However, on a consolidated profit the overall impact would be close to about 5-7%. On a standalone global operation, the contribution of Chinese acquisition to the PAT number is close to 15%.

The India acquisition was relatively small but it was strategic for our project and engineering solutions business. The company we acquired called MHTC, is in the project transportation business since last 25 years coming up with a strong management team and lot of marquee customers and this acquisition has added significantly, in terms of the strategic fit into our company into that particular segment of the business.

In terms of contribution to the PAT, the Indian business is slightly above 5% or so. The company is making an all-round progress. Our global LCL consolidation business has contributed significantly. The profit has become almost double compared to the half year ending June last year compared to this year. The CFS business has contributed significantly, not just JNPT all over CFS in Chennai and Mundra included. Our project and engineering solution business has also contributed significantly in the satisfying result this quarter-end, the half year 2011.

Q: On the container freight station, you have some capacity coming up on that front. What sort of growth have you factored in from that segment in particular and what could we expect in FY12 from there?

A: We recently purchased close to about 45 acres of land in JNPT. At present, we are setting up our expansion plan of the contain freight station and the allied services in terms of third party logistic business. We are going to build warehouses there and are going to put an additional container freight station capacity of about 2,00,000 containers per annum that should significantly contribute to the growth of the company in the coming years ahead.

The warehouses to be built in JNPT are going to help bonded warehousing operation, third party logistic business, storage of empty containers and repair of empty containers. It is also going to add significantly for our transportation activities in and around JNPT. We are likely to acquire over 200 trailers to facilitate the additional capacity and additional volume that will come up.

Our transportation division, CFS division, our Third Party Logistics division are going to be benefited significantly by these additional acquisition of the land and building. Also, we have already built our capacity to full in Chennai and in Mundra, hence, those two locations have contributed. Our facility in Dadri is now going to be inaugurated in the next couple of weeks, the Indore facility is already reaching breakeven levels, and hence, all the five locations are going to do extremely well in the coming months and years.