Currency factor will not impact margins: Allcargo Logistics

Allcargo Logistics's consolidated revenues grew 16% last year. Amortization of goodwill for the company was worth Rs 35 crore last year.The company’s revenues were impacted by a weak Euro, Shashi Kiran Shetty, executive chairman, Allcargo told CNBC-TV18. But the currency factor will not impact near term margins, because no long term contracts have been signed, he said.The company’s profit after tax (PAT) rose 37 percent to Rs 56 crore year-on-year (YoY), Shetty said. He expects this quarter to be sluggish because of Chinese New Year, and momentum picking up by the second quarter, he said.

Below is the edited transcript of Shashi Kiran Shetty's interview with Sonia Shenoy & Reema Tendulkar on CNBC-TV18.Sonia: What lead to this good performance and could you break it up segment wise?A: The company has done considerably well and it is as per our plan and projection. All our businesses have contributed to the significant growth. One of the reasons the number is looking good is because of the amortization of goodwill, what we did last year, which is equivalent to Rs 35 crore – the project and engineering (P&E) division, so that has also significantly impacted the result in this quarter.However, in the last quarter, the consolidated revenue has grown by 11 percent to Rs 1,434 crore and the EBITDA had grown by 23 percent to Rs 125 crore. The margin has expanded by 84 basis points (bps) to 9 percent; the profit after tax is at Rs 56 crore which is a year-on-year increase of 37 percent but if you take Rs 35 crore, the real reported number is 380 percent which is because of the Rs 35 crore of goodwill that we wrote of in the last quarter. So when you take a look at FY15, the full year revenue and profit have grown in all the three businesses and the consolidated revenue stands at Rs 5,681 crore, an increase of 16 percent and EBITDA is at Rs 528 crore, a year on increase of 23 percent.Sonia: The multimodal segment has disappointed in its growth this quarter, take us through that, do you expect the growth to remain muted there and what kind of growth rates do you expect to see in the multimodal segment in the first half of FY16?A: As a matter of fact, the EBITDA increase is reasonably good compared to the same quarter previous year. Euro depreciation, has impacted the revenues to some extent. Rest profitability of the company has grown significantly compared to the previous quarter of the same period last year. Generally the first quarter is always slightly sluggish because of Chinese New Year and also because of the shorter month of February; the impact of Chinese year is always very significant and at the beginning of the year the volume of business also low. So generally, the Q1 in multimodal transport Operations (MTO) business is always slow and the momentum starts picking up in the last three quarters. Therefore, we are not worried about that. Our container freight stations (CFS) and the other businesses, they have done well in the last quarter.

Reema: For FY16 your revenue growth is 16 percent but it is falling short of what you had earlier told us. You had spoken about revenue growth of 28 percent in the year gone by. For FY16 what would be the revenue growth that you are looking at? A: The currency factor is making a big impact on our revenue although it doesn’t impact to our margins so much because our freight rates are charged on day-to-day basis.

There is no long-term contract, so there is no currency impact on the profitability or on the margin, not significantly, it can go up little bit or it can come down marginally, but the revenue impact is high because the Euro depreciated to 20 percent and we are consolidating in Euro, the entire reporting and the revenue performance, so that’s where you see the impact and we are not concerned on that because what we are finally interested in is margin, profitability and EBITDA and that continue to grow and volume continue to grow.