Your Directors are pleased to present their fourteenth annual report
together with audited accounts for the 9 months period/ year ended on
December 31, 2006.
Your Company delivered a healthy performance in cash generation during
the period under review driven by the business performance, enhanced
capacity of Nhava Sheva CFS and efficient collection system. In the
context of a significant increase in interest rates, your Company
managed the investments prudently by judiciously deploying cash surplus
in a balanced portfolio of safe and liquid instruments; returns earned
were higher than market benchmarks.
Your Companys performance during the period under review, is
Rs. in million
Particulars This Period Previous Year
Sales & other income 2,293.40 2,748.64
Profit before interest,
depreciation and taxes 512.04 626.73
Interest (11.52) (23.17)
Depreciation (29.32) (62.30)
Profit before exceptional items and taxation 471.20 541.26
Provision for tax (83.11) (46.94)
Profit after tax 430.83 494.32
Profit brought forward from previous year 264.44 195.76
Prior period adjustments for
taxes and expenses (0.90) (8.09)
Dividend (91.15) (103.09)
Tax on dividend (12.78) (14.45)
Transfer to general reserve (45.00) (300.00)
Profit carried to balance sheet 545.44 264.45
The stand alone audited financials of Companys 67 subsidiaries in
India and abroad are not attached to this Report as your Company has
been exempted from doing so by the Department of Company Affairs,
Government of India pursuant to Section 212(8) of the Companies Act,
1956 for the period under review.
Though the figures of the current period are not comparable with that
of the previous year, the Company has witnessed moderate growth in
revenues and operating profit on account of increase in volumes both in
NVOCC and CFS segments.
Post-acquisition of ECU Hold N.V., your Company changed the policy of
charging depreciation on assets from Written Down Value method to
internationally accepted Straight Line method. However, your Company
continues to follow Written Down Value method of charging depreciation
on commercial vehicles given on lease.
Considering good performance, your Company declared and paid two
interim dividends - Rs. 2.50 per share in November 2006 and Rs. 21- per
share in March 2007.
The total dividend payout for the 9 months period/ year ended on
December 31, 2006, works out to Rs. 4.50 per share (45% on the equity
shares of the face value of Rs. 10/-). The Directors recommend that the
aforesaid interim dividends aggregating to Rs. 4.50 per share be
declared as final dividend for the 9 months period/year ended on
December 31, 2006.
Your Company has transferred Rs. 45 million to General Reserve from the
Net Profits After Tax for the financial year under review.
INITIAL PUBLIC OFFER
Your Companys Initial Public Offering of equity shares (Issue)
received a good response from investor fraternity as a result of which
the Issue was oversubscribed by 7.64 times. Your Company raised Rs.
1403.33 million through the Issue in June 2006, the amount utilized as
March 31, 2007, as per the Objects to the Issue is Rs. 1284.62
million and the balance amount of Rs.118.71 million has been invested
in permissible securities pending utilization.
The Company vide special resolution passed at the Extra-ordinary
General Meeting held on January 5, 2007, has permitted the Board of
Directors to utilize IPO proceeds for financing or part financing
acquisition of land at various strategic locations in India other than
those mentioned in the IPO Prospectus dated June 12, 2006 and for
setting up of Container Freight Stations, Inland Container Depots,
Warehouses (Bonded or otherwise) and other similar projects thereon.
Multimodal Transport Operations:
Since 1998, when your Company commenced Multimodal Transport
Operations, it has emerged as one of the leading consolidators for Less
Than Container Load (LCL). Your Company also handles sizable volumes of
Full Container Load (FCL) cargo. As a Multimodal Transport Operator,
your Company offers end-to-end freight services for export and import
cargo, utilizing multiple modes of transport like sea, road and rail.
Your Company pioneered Multi-City Consolidation (MCC) which involves
movement of cargo from hinterland locations to the CFS at gateway ports
for exports and vice versa for imports.
After acquisition of ECU Hold N.V. (ECU) in June 2006, your Company has
emerged as a true Indian MNC and has strengthened its position to serve
its customers logistics needs across the globe. ECU is a transnational
organization with tried and tested systems and quality procedures that
ensure the highest standards of cargo handling across its network of
110 offices in 56 countries and franchisees and agents at 203 locations
in 120 countries. ECU acquisition has benefited your Company in terms
of achieving enhanced operational efficiency due to reduction in
transit time and multiple cargo handling and in getting best freight
rates for its clients.
Your Company also has a joint venture with the Transworld Group in New
Jersey, USA to cater to the US markets in MTO segment.
Your Company has also gained expertise in handling project cargo, which
is a specialized activity requiring detailed planning and technical
knowledge. The comprehensive project handling service includes
designing and execution of customized solutions tailored to meet
specific customer requirements for the transport of high value
specialized equipments such as oil field equipments, power plants and
similar projects from one location to another using multiple modes of
transport. These assignments are generally handled on a turnkey
Container Freight Stations:
Your Company provides port-related logistics support services through
its Container Freight Station (CFS) located at Nhava Sheva, Indias
largest container port. Our CFS, which is a custom notified area, is
equipped with sophisticated technology, high quality equipment, an
advance fire fighting system, comprehensive generator back-up, CCTV and
VHF for round-the- clock security. It has a closed warehouse, designed
as per international warehousing standards and a four acre area
reserved exclusively for parking of trucks and trailers. At CFS, range
of services such as storage, handling, stuffing, consolidation, customs
duty assessments, etc. are provided in addition to allied services like
sorting, bar coding, shrink-wrapping and palletalisation.
During the period under review, your Company has completed third phase
of the CFS at Koproli, which now has a capacity to handle 120,000 TEUs
Your Company has set up two more CFSs each at Chennai and Mundra. Each
of these CFSs has been set up on 9 acres of land having a capacity of
handling 52,000 TEUs per annum in the first phase. The Customs
Authorities have issued notifications declaring both these CFSs as
customs notified area and both these CFSs have become operational in
April 2007. Going ahead, your Company has a very ambitious plan of
setting up few more CFSs/ICDs at various other strategic locations in
the country. Towards this end, your Company has already acquired land
in Hosur, Goa, Nagpur, Andhra Pradesh, Madhya Pradesh and is on look
out to acquire more in northern region.
At the beginning of the financial year under review, your Company was
holding 49.99% stake in ECU Hold N.V. (ECU), a Belgian global Non
Vessel Owning Common Carrier (NVOCC) player having presence in 56
countries. During the period under review, your Company acquired the
balance 50.01% stake in ECU, through Allcargo Belgium N.V., a wholly
owned investment subsidiary of your Company incorporated in Belgium.
Thus, from June 20, 2006, ECU has become a wholly owned subsidiary of
Your Company also acquired 100% equity stake in Hindustan Cargo Limited
(HCL) from Thomas Cook (India) Limited with effect from January 9,
2007. HCL is predominantly into air freight business. Your Company was
always aspiring to grow in this challenging high growth business and
the Board of Directors felt HCL as an ideal vehicle to fulfill its
1. Contech Transport Services Pvt. Ltd. (CTSPL) was incorporated in
1993, to carry on the business of international freight forwarding,
clearing and shipping agents, multimodal transport operator and owning
of various transport equipments.
2. ECU International (Asia) Pvt. Ltd. (EIAPL) was incorporated in
2005, to provide BPO and KPO services to ECU International N.V., a 100%
subsidiary of ECU Hold N.V.
3. Hindustan Cargo Ltd. (HCL) was incorporated in 1993. HCL is
predominantly into air freight business. Your Company acquired entire
paid up share capital in HCL on January 9, 2007.
Your Company has the following foreign subsidiaries which are into
1 Allcargo Belgium N.V.
2 RMK N.V.
3 ECU Hold N.V.
4 ECU International N.V.
5 ECU-Line Hong Kong Ltd.
6 ECU Line - Guangzhou
7 ECU Line Philippines Inc.
8 ECU Line Singapore Pte. Ltd.
9 ECU Line (Thailand) Co.
10 ECU Line Middleeast LLC
11 ECU Line Abu Dhabi LLC
12 ECU Line Doha W.L.L
13 Euro Centre - Dubai
14 ECU Line (Johar Bahru) Sdn Bhd
15 ECU Line Japan Ltd.
16 ECU Line Vietnam
17 ECU-Line Panama S.A.
18 ECU-Line Paraguay S.A.
19 ECU-Line Peru S.A.
20 ECU Logistics do brasil itda
21 ECU-Line Canada Inc.
22 ECU Line Chile S.A.
23 ECU Line De Columbia S.A.
24 Conecli International
25 ECU Line Del Ecuador S.A.
26 Flamingo Line El Salvador
27 ECU Line Guatemala
28 CELM Logistics S.A. De C.V.
29 ECU-Line Uruguay
30 ELV Multimodal C.A.
31 ECU Australia Pvt. Ltd.
32 ECU Line New Zealand Ltd.
33 ECU Line Denmark A/S
34 Scanca Finland
35 ECU Line Italy TRC
36 Scanca Norway
37 Scanca Sweden
38 ECU-Line (Germany) GmbH
39 ECU-Line UK Ltd.
40 ECU-Line Polska Sp. z.o.o. UL
41 ECU-Line Romania SRL
42 ECU-BRO N.V.
43 ECU-TECH BVBA
44 ECU-LINE N.V.
45 ECU-LOGISTICS N.V.
46 ECU-TRANS N.V.
47 ECU LINE Rotterdam
48 D & E Transport
49 Eurocentre SCI
50 ECU Line Turkey
51 ECU Line Mediterranean
52 ECU Line Italia SRL
53 ECU Line Jordan
54 ECU Line Kenya
55 ECU Line (IOI) Ltd.
56 ECU-Line Malta Ltd.
57 ECU Line Maroc
58 ECU Line Spain S.L.
59 ECU Line Tunesia
60 ECU Line Egypt
61 ECU LINE SA (Pty.) Ltd.
62 ELWA (GH) Ltd.
63 ECU Line Ivory Coast
64 ECU Line Algerie
65 ECU Line Zimbabwe (Pty.) Ltd.
QUALITY, HEALTH & SAFETY
Your Company follows the practice of conducting in-house seminars and
workshops by inviting well known experts in the respective fields, on
the matters relating to health and safety measures.
Training is being imparted at Container Freight Stations of the Company
for efficient and diligent handling of hazardous, heavy and multi-
dimensional cargo. Your Company also conducts periodic trainings for
testing effectiveness of
Fire Fighting Systems and other Safety Equipment installed at CFSs.
During the year, your Company has not accepted any deposits within the
meaning of the provisions of Section 58A of the Companies Act, 1956.
Your Companys equity shares are available for dematerialization
through National Securities Depository Limited and Central Depository
Services (India) Limited. As of December 31, 2006, 18.56% of the equity
shares of your Company were held in dematerialized form.
CHANGE IN FINANCIAL YEAR
During the period under review, your Company changed its financial year
from April-March to calendar year, to fall in line with that of its
subsidiaries. Thus, this report and accounts is for the 9 months
period/year ended on December 31, 2006.
Mr. Satish Gupta and Mr. Keki Elavia, Directors of the Company retire
by rotation at the ensuing Annual General Meeting and being eligible
offer themselves for re-appointment.
The resolution for the re-appointment of Mrs. Arathi Shetty, Executive
Director is proposed to be moved at the ensuing Annual General Meeting
for the approval of the shareholders.
The brief resume of Mr. Satish Gupta, Mr. Keki Elavia and Mrs. Arathi
Shetty as required in terms of Clause 49 of the Listing Agreement with
the Stock Exchanges, is included in the Corporate Governance Report as
annexed to this Annual Report.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
(a) in the preparation of the annual accounts, the applicable
accounting standards had been followed along with proper explanation
relating to material confirm;
(b) the directors had selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company as at December 31, 2006 and of the profit of the Company
for the year ended on that date;
(c) the directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities;
(d) the directors had prepared the annual accounts on a going concern
ALLCARGO EMPLOYEES STOCK OPTION PLAN 2006 (ESOP 2006)
Pursuant to the applicable requirements of the Securities and Exchange
Board of India (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999 (the SEBI guidelines), your Company
has framed and instituted ESOP-2006 to attract, retain, motivate and
reward its employees and to enable them to participate in the growth,
development and success of the Company. Your Company granted stock
options to be adjusted for the subsequent bonus issue prior to its
Initial Public Offering of equity shares, to its permanent employees
and to few of the permanent employees of its foreign subsidiaries at
varying numbers depending upon their grades.
The Securities and Exchange Board of India (SEBI) has prescribed
certain corporate governance standards vide Clause 49 of the Listing
Agreement with stock exchanges. Your Directors reaffirm their
commitments to these standards and a detailed Report on Corporate
Governance together with the Auditors Certificate on its compliance is
MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis covering the following points is
annexed to this Report :
Industry Structure and Developments
Discussion on financial performance with respect to operational
Human resources and industrial relations
Opportunities and threats & risks and concerns
Internal control systems and their adequacy
The same is appended as Annexure to the Directors Report.
M/s. Appan & Lokhandwala Associates, Chartered Accountants, Mumbai, who
are the statutory auditors of your Company, retire at the conclusion of
14th Annual General Meeting. You are requested to appoint auditors for
the current financial year and to fix their remuneration. The retiring
auditors, M/s. Appan & Lokhandwala Associates, Chartered Accountants
are eligible for re-appointment.
In terms of the provisions of the Companies Act, 1956, the Board also
seeks shareholders approval for the appointment of branch auditors for
the existing branches/divisions of your Company and which may be
opened/acquired in future, in India or abroad.
The Directors thank the Companys customers, vendors, investors,
consultants, business associates and bankers for their support and co-
operation to the Company.
The Directors are thankful to the Government of India, Governments of
various countries, the concerned State Governments and other Government
Departments and Agencies for their co-operation.
The Directors acknowledge the hard work and persuasive efforts made by
every member of Allcargo family across the world and also express their
sincere gratitude to the shareholders for their continuing confidence
in the Company.
For and on behalf of the Board of Directors
Place : Mumbai Shashi Kiran Shetty
Dated : April 24, 2007 Chairman & Managing Director