Shreyas Shipping sees huge growth in logistic arm

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Shreyas Shipping sees huge growth in logistic arm

In an interview with CNBC-TV18, Vinay Kshirsagar, CFO of Shreyas Shipping, spoke about the company’s fourth quarter performance and the road ahead.

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In an interview with CNBC-TV18, Vinay Kshirsagar, CFO of Shreyas Shipping , spoke about the company's fourth quarter performance and the road ahead. 

Below is a verbatim transcript of the interview. Also watch the video.

Q: Your quarterly numbers went up by good 25% compared to year ago levels. Would Rs 50 crore be the kind of revenues you can expect in subsequent quarters as well?

A: Definitely. In fact, subsequent quarter we are focusing into the logistic sector. In the logistic revenue, I am seeing a healthy jump of more than about 100%.

Q: What about margins? It is a little difficult to compare with previous year levels because last year was a wash out for several shipping companies. Would EBITDA margin remain about 12%?

A: Yes, EBITDA margin should remain at about 12% and maybe it will increase also. Last year, we have realigned our business strategy and we have given more focus on domestic logistics using land-sea-land. We have concentrated on coastal shipping, which has actually proved correct and which helped us to make a turnaround.

We have made our company immune from shipping market by realigning our business strategy. Going forward, we are concentrating further in developing more logistic verticals - such as rail logistic, transportation, warehousing even domestic air cargo movement and these verticals will further add to the top-line substantially.

Q: You spoke about entering into the logistic space. For all this what is the kind of investment which you will need? Could you tell us the margins in this business versus your traditional shipping business?

A: In fact, in logistic business the investment requirement is generally less because it is asset-light business. What is required is a domain knowledge and expertise. In fact, we have taken many people from industry into the various segments and normally for logistic industry the PAT level margins are between 7-9%.

Q: What about shipping itself?

A: We have achieved about 7 to 8% PAT level.

Q: At an EBITDA level will you be able to maintain 12% in FY12 or will you do better?

A: We will do better. We will try to move EBITDA margin to around 15% level.

Q: What about revenues? You said that Rs 49-50 crore should be possible. What can be possible upside quarterly or for that matter annually for FY12?

A: For FY12, as far as shipping, we had a Rs 120 crore of total top-line. Now in shipping, if we add vessels or take vessel on charter, then only the top-line will increase. But if you see my wholly on subsidiary, Shreyas Relay Systems, it has a top-line of Rs 112 crore. I am confident that by addition of this various verticals this top-line can jump more than 100%.

Q: So growth will really come in the subsidiary you are saying?

A: Growth will come from logistics. We have focus area is logistics because if you see India the logistic cost is highest and there is a huge potential and there is hardly 15% logistic business is with organized sector and now the clients are preferring single window solutions and corporate customer.