Demerger, stock buyback plans on cards: Allcargo Global

Surya Narayanan, Group CFO, Allcargo Global Logistics, says that the plan to demerge our global LCL business is under consideration both by the board and its committee.

Stock at low level is a trigger for buyback. We believe the stock is undervalued and our buyback will instill confidence in stock holders. Below is the edited transcript of his interview to CNBC-TV18. Also watch the accompanying video. Q: When is the restructuring likely to happen and when you plan to close the process?
A: The plan to demerge our global LCL business is under consideration both by the board and its committee. Once they come up with the plan we will make the announcement. Q: What is triggering a buyback of shares?
A: Stock at low level is a trigger for buyback. We believe the stock is undervalued and our buyback will instill confidence in stock holders. Today later in the day the board will meet to consider this option. Q: As you believe the stock is undervalued. How do you see revenue and growth in FY13?
A: Compared to last year, this year we expect 10-15% growth. We didn't do well in the Q1 but in this quarter we are on track, Container Freight Station (CFS) values have bounced back and we are hopeful to achieve our target. Despite tough macroeconomic global scenario in our LCL business we have achieved a growth of 14% in volume terms last year and we expect to grow strong this year. Q: By when you could ramp up volumes at JNPT facility and what is your overall contribution expectation for the full year?
A: The CFS would start by mid next month, with a capacity of about 100,000 TEUs but the ramp up would happen month-on-month. By next July we should be near 60-70% capacity. Q: Is 10-15% guidance, topline or bottomline level?
A: At the bottomline level. At a consolidated level, the revenues are highly dependent on movement of freight rates. If the freight rates are high, the revenues will move up, if it is low, the revenues will accordingly get adjusted. Q: What was the rationale behind the hive off?
A: The rational was to have the India business in one listed company and then the global business in another company so that investors have a choice between the two companies. Q: What is the relative speed of growth of both entities or both markets, Indian and foreign?
A: Growth in India has been better than global growth. The biggest advantage of business at global level is that it is quite immune to volatility in global markets. Our volumes have been continuously growing irrespective of events at the macro economic level. Q: Are you not looking at inorganic growth at this point despite decent balance sheet, leverage is low and cash to do a buyback?
A: We are looking at opportunities. If there were some opportunities and they fit strategically with our model we will definitely look at them. The ability to leverage on the balance sheet and cash gives us enough flexibility both to invest and also to look for inorganic growth.