The Members of Allcargo Logistics Limited
Your Directors take pleasure in presenting the Twenty Second Annual Report on the business and operations of the Company together with Audited Financial Statements of the Company both on standalone and consolidated basis, for the year ended March 31, 2015.
STATE OF THE COMPANYS AFFAIRS
Allcargo Logistics Limited, a part of the Avvashya Group, is a leading Indian multinational Company providing integrated logistics solutions worldwide. The Company offers specialized logistics services across global Multimodal Transport Operations (NVOCC, LCL and FCL), Pan India Container Freight Stations (CFS), Inland Container Depots (ICD), Project & Engineering Solutions (P&E), Ship Owning & Chartering and 3PL & Warehousing services. Our benchmarked quality standards, standardized processes and operational excellence across all our service verticals and facilities, have enabled the Company to emerge as a leading player across these segments.
Your Company has a strong global footprint through its multinational Multimodal Transport Operation Arms-Ecu Line (headquartered in Belgium, Europe), worlds largest Less than Container Load (LCL) service provider, Econocaribe Consolidators (headquartered in Miami, USA), NVOCC leader and Rotterdam based Full Container Load (FCL) Marine Agencies specializing in FCL services.
The Company currently operates out of 200 plus offices in 90 plus countries and is supported by an even larger network of franchisee offices across the globe. Presently, your Company is one of Indias largest publicly owned logistics Company, listed on BSE Limited (BSE) and National Stock Exchange of India Limited (NSE) and is categorized under S&P BSE Midcap and CNX Nifty 500 indices. Your Company has a fleet of 784 Equipments comprising of 143 Cranes, 584 Trailers, 36 Reach Stackers and 21 Forklifts.
Your Company has made remarkable progress in achieving a major milestone of its mission plan of being a USD 1 Billion Company during the year under review. The year under review was good for the Company as micro and macro-economic situation improved during the year, thus boosting the Company's performance. The performance was further strengthened on account of the robust measures undertaken by the Company at all levels such as focus on pricing and aggressive marketing strategy, disciplined project executions, focused management approach, prudent financial and human resources management, better control over cost and consistent follow-up for receivables.
Detailed information on the Business overview and outlook of the Company is provided in the Management Discussion & Analysis Report which forms part of this Annual report.
Your Companys financial performance for the year ended March 31, 2015 is summarized below:
|(Rs. in Lakhs)|
Consolidated Results for the year ended
Standalone Results for the year ended
|March 31, 2015||March 31,2014||March 31, 2015||March 31,2014|
|Sales and Other Income||568,141||489,593||117,921||102,204|
|Profit before Interest, Depreciation/Amortization and Taxes||52,798||42,781||27,434||23,371|
|Depreciation and other Amortization||15,737||17,546||11,086||13,475|
|Profit Before Tax||31,714||19,603||12,548||7,033|
|Provision for Tax||6,996||4,159||2,799||1,421|
|Profit After Tax||24,718||15,444||9,749||5,612|
|Profit attributable to Minority Interest||(923)||(511)||-||-|
|Share of Profit of Associates||194||-||-||-|
|Profit after minority interest||23,989||14,933||-||-|
|Profit brought forward from previous year||93,615||81,422||57,113||54,322|
|Profit Available for Appropriations||117,197||96,406||66,560||59,886|
|Proposed Final Dividend||1,765||1,891||1,765||1,891|
|Tax on Final Dividend||359||321||359||321|
|Tax on Interim Dividend||129||-||129||-|
|Transfer to General Reserve||-||561||-||561|
|Transfer to Tonnage Tax Reserve||42||18||-||-|
|Transfer to Capital Redemption Reserve||-||-||-||-|
|Profit Carried to Balance Sheet||114,146||93,615||63,551||57,113|
During the year under review, your Company achieved total revenue of Rs. 568,141 Lakhs against a total revenue of Rs. 489,593 Lakhs during the previous year, representing a year-on-year growth of 16%. The growth was mainly attributable to the increase in revenues across all lines of business.
The Company's Earnings before Interest, Tax and Depreciation (EBITDA) stood at Rs. 52,798 Lakhs as at March 31, 2015 as compared to Rs. 42,781 Lakhs in the previous year, a growth of 23%.
The Net Profit after Taxes and Minority Interest increased by 61% and stood at Rs. 23,989 Lakhs as at March 31, 2015 as compared to Rs. 14,933 Lakhs in the previous year.
During the year under review, your Company achieved total revenue of Rs. 117,921 Lakhs as compared to Rs. 102,204 Lakhs in the previous year, representing a year-on-year growth of 15%. The growth is mainly attributable to increase in revenue across all lines of business.
The Companys Earnings before Interest, Tax and Depreciation (EBITDA) stood at Rs. 27,434 Lakhs during the year as compared to Rs. 23,371 Lakhs during the previous year, representing a growth of 17%.
The Net Profit after Tax of the Company increased by 74% during the year and stood at Rs. 9,749 Lakhs as compared to Rs. 5,612 Lakhs in the previous year.
For detailed segment wise performance, Members are requested to refer Management Discussion and Analysis which forms part of this Annual Report.
CHANGES IN THE NATURE OF BUSINESS, IF ANY
During the year under review, your Company continued to provide integrated logistics services to its customers and hence, there was no change in the nature of business or operations of the Company which impacted the financial position of the Company.
TRANSFER TO RESERVES
Your Company does not propose to transfer any amount to its reserves, except as required under any statute, out of the profits of the Company for the year ended March 31, 2015.
A constant endeavor and one of the primary objectives of the Company is to maximize Members value by achieving sustainable year-on-year growth and to give adequate return in the form of dividend to its Members on their investment made in the Company. Since the Initial Public Offering in the year 2006, your Company has been regularly paying dividend to its Members, including interim dividend based on the profits of the Company.
During the year under review, your Company had declared and paid an interim dividend of Rs. 0.60 per equity share of Rs. 2 each fully paid up, representing 30% on the total paid up capital of the Company amounting to Rs. 756 Lakhs.
Considering the profitable performance of the Company for the year under review, your Directors are pleased to recommend a final dividend of Rs. 1.40 per equity share of Rs. 2 each fully paid up, representing 70% on the total paid up capital of the Company. The dividend, if approved by the Members at the ensuing Annual General Meeting, will absorb a sum of Rs. 2,124 Lakhs including dividend distribution tax.
The total dividend payout comprising of interim and final dividend, if approved, to the Members, for the financial year 2014-15 would be 100% (' 2 per equity share of Rs. 2 each fully paid up) on the total paid up capital of the Company as compared to 75% (' 1.50 per equity share of Rs. 2 each fully paid up) in the previous year.
The final dividend payout is subject to approval of the Members at the ensuing Annual General Meeting.
During the year under review, your Company has not accepted, invited and/or received any deposits from the public within the meaning of Sections 73 and 76 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014, as amended from time to time.
SHARE CAPITAL AND LISTING OF SHARES
During the year under review, your Company has not issued any class of shares and hence, there has been no change in the issued, subscribed and paid up share capital of the Company. The issued, subscribed and paid up share capital of the Company as on March 31,2015, amounted to Rs. 252,095,524 (Rupees Twenty Five Crores Twenty Lakhs Ninety Five Thousand Five Hundred and Twenty Four only) consisting of 126,047,762 Equity Shares of Rs. 2 each fully paid up.
Your Companys equity shares are listed and traded in compulsory dematerialized form on BSE Limited and National Stock Exchange of India Limited. The Company has paid the Annual Listing fees for the financial year 2015-16 to the respective Stock Exchanges. Annual Custody/Issuer fee for the financial year 2015-16 will be paid by the Company to National Securities Depository Limited and Central Depository Services (India) Limited on receipt of the invoices from them.
AWARDS AND RECOGNITION
Your Company has consistently delivered and exceeded customer expectations in its deliverables and performance. Our achievements in maintaining quality are evident from the credentials and recognitions that have been awarded over the years. During the year under review, your Company has been conferred with many accolades and appreciations for significant contribution made in development and growth of the logistic industry.
Allcargo Logistics Limited ("Allcargo") is among Indias top 4 companies in the Logistics sector to have been featured in Dun & Bradstreets edition of Top 500 Companies in India;
Allcargo was conferred with the following three awards at Maritime and Logistics Awards 2014 (MALA) for outstanding performance:
Indian Logistics MNC of the Year;
Project Cargo Mover of the Year;
Women Professional of the Year - Ms. Shantha Martin, CEO - ISC, Middle East, Africa (S & E).
Allcargo received Container Freight Station Operator of the Year (Specific) Award and Most Diversified Logistics Company of the Year Award at the Gujarat Star Awards, 2014;
Allcargo ranked at #209 in Indias Biggest Non-Financial Companies category across 500 companies, whereas your Company ranked #10 in the category Most Subsidiaries across 50 companies. Allcargo is also ranked at #49 in the category Biggest Donors across 70 companies in India by Business World in the Top 500 companies across India list;
Allcargo was awarded with the Best Project Logistics Company of the Year and Mr. Shashi Kiran Shetty, Chairman & Managing Director of the Company was felicitated with the Lifetime Achievement Award at the 8th Express Logistics & Supply Chain Conclave;
Mr. Shashi Kiran Shetty, Chairman & Managing Director, was conferred with highest civilian honour from the Royalty of Belgium the Distinction of Commander of the Order of Leopold II by H. M. King Philippe of Belgium;
Allcargo has been awarded Asias Most Promising Brand in the logistics space for 2013-14 by World Consulting & Research Corporation (WCRC), a leading brand consulting firm and KPMG India; and
Ms. Shantha Martin, CEO - ISC, Middle East, Africa (S & E), has been awarded the Business Leader Award at the annual World Women Leadership Congress & Awards, 2015 (WWLCA).
Your Company believes that our awards and recognitions are due to the hard work, enthusiasm and spirit of team work of the employees and thoughtful leaders whose novel thinking and innovative approach have led them to attain excellence in their field. These awards are a testimony of our commitment to the stakeholders of the Company and providing seamless integrated logistics solutions to our customers.
BOARD OF DIRECTORS
a. Number of Meetings of the Board of Directors
Your Board of Directors (Board) meet at regular intervals at least four times in a year with a maximum time gap of not more than 120 days between two consecutive Meetings. Date of the Board Meetings are decided and communicated to the Directors well in advance. In case of exigencies or urgency of matters, resolutions are passed by circulation for such matters as permitted by law. The Board takes note of the resolutions passed by circulation at its subsequent Meeting. Additional Meetings of the Board are held as and when deemed necessary by the Board. Board Meetings are generally held at the Registered Office of the Company.
The agenda of the Meeting along with the explanatory notes and relevant papers thereof are generally sent 7 (seven) days in advance to the Directors to enable them to take informed decisions pursuant to the provisions of Companies Act, 2013 and the Listing Agreement with the Stock Exchanges.
During the year under review, 5 (five) Board Meetings were held on May 24, 2014, June 12, 2014, August 7, 2014, November 13, 2014 and February 12, 2015. The details of attendance of each Director at the Board Meetings is given in the 'Report on the Corporate Governance' which forms part of this Annual Report.
b) Director Retiring by Rotation
In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Shashi Kiran Shetty (DIN:00012754), Director of the Company, retires by rotation at ensuing Annual General Meeting and being eligible, offers himself for reappointment. The Board recommends his reappointment as Director liable to retire by rotation at the ensuing Annual General Meeting.
c) Appointment/Reappointment of Chairman & Managing Director
Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges and applicable provisions of the Companies Act, 2013, the performance evaluation of Mr. Shashi Kiran Shetty, Chairman & Managing Director was carried out as per the criteria set by the Nomination and Remuneration Committee and based on its recommendation, the Board of Directors of your Company reappointed Mr. Shetty as the Chairman & Managing Director of the Company for the period of 5 years w.e.f. April 1, 2015, subject to approval of the Members at the ensuing Annual General Meeting.
As per Clause 49 of the Listing Agreement with the Stock Exchanges and Secretarial Standard-2 issued by the Institute of Company Secretaries of India, the brief profile and other relevant details of Mr. Shashi Kiran Shetty is given in the Explanatory Statement to the Notice. The Members are requested to refer the same.
d) Appointment of Independent Directors
Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges and provisions of Section 149 of the Companies Act, 2013, your Company has requisite number of Independent Directors on its Board. Thus, the Company has complied with the requirements of the said provisions for appointment of Independent Directors during the year under review.
e) Statement on declaration given by Independent Directors u/s 149 (6) of the Companies Act, 2013
The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under Sub-section (6) of Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement with the Stock Exchanges.
f) Directors/Key Managerial Personnel appointed/resigned during the year
During the year under review, Mr. Kaiwan Kalyaniwalla, Non-Executive Director of the Company resigned from the Board w.e.f. October 30, 2014 and Mr. Umesh Shetty, Executive Director of the Company, resigned from the Board w.e.f. November 6, 2014. Your Board of Directors would like to place on record their appreciation for the valuable contribution of Mr. Kaiwan Kalyaniwalla and Mr. Umesh Shetty during their association with the Company.
Your Company has Key Managerial Personnel comprising of Mr. Shashi Kiran Shetty, Chairman & Managing Director, Mr. Adarsh Hegde, Whole Time Director, Mr. Jatin Chokshi, Chief Financial Officer and Mr. Shailesh Dholakia, Company Secretary.
COMMITTEES OF THE BOARD
Your Company has 7 (Seven) Committees of the Board of Directors, as given below, in compliance with the Corporate Governance practices followed by the Company, the requirements of the relevant provisions of the Companies Act, 2013 and Rules made thereunder and the Listing Agreement with the Stock Exchanges.
Nomination and Remuneration Committee;
Stakeholders Relationship Committee;
Corporate Social Responsibility Committee;
Finance, Risk and Legal Committee; and
Details of compositions, meetings, terms of reference of the Committees and attendance of Committee Members at each Meeting are given in the Report on Corporate Governance of the Company which forms part of this Report.
RECOMMENDATION OF AUDIT COMMITTEE
During the year under review, there were no instances of non-acceptance of any recommendation of the Audit Committee by the Board of Directors.
NOMINATION AND REMUNERATION COMMITTEE
The Nomination and Remuneration Committee of the Board has framed a policy on Directors, Key Managerial Personnel and other Senior Management Personnel appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other related matters in accordance with Section 178 of the Companies Act, 2013 read with the applicable Rules made thereunder and Clause 49 of the Listing Agreement with the Stock Exchanges.
The composition of Committee, terms of reference, policy on Directors, Key Managerial Personnel and other Senior Management Personnel appointment and remuneration including criteria for determining qualifications, positive attributes, and independence of a Director are given in detail in the section of Nomination and Remuneration Committee in the 'Report of Corporate Governance' of the Company which forms part of this Report.
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
Your Company has constituted Corporate Social Responsibility Committee and formulated Corporate Social Responsibility (CSR) Policy in compliance with the provisions of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 and Schedule VII of the Companies Act, 2013. The statutory disclosures with respect to the composition of CSR Committee, CSR Policy, CSR initiatives and programs and amount spent on CSR activities are given in the Annual Report on Corporate Social Responsibility of the Company as Annexure 1 which forms part of this Report. The CSR Policy can be accessed on the website of the Company (http://www.allcargologistics.com/investor-relations/ overview.aspx).
PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES, INDIVIDUAL DIRECTORS AND CHAIRMAN
As required under the Companies Act, 2013 and Clause 49 of the Listing Agreement with the Stock Exchanges, the Nomination and Remuneration Committee of the Board has set a criteria for performance evaluation of the Board, its Committees, Individual Directors and Chairman of the Company. Based on the criteria set by the Nomination and Remuneration Committee, questionnaire relating to performance evaluation of the Board, its Committees, individual Directors and Chairman of the Company was circulated to concerned Directors of the Company to provide their frank and unbiased comments/rating. Further, to eliminate biasness and to protect the confidentiality of comments/rating given during the performance evaluation process, an outside firm of experts was appointed to provide a report on the response received from Directors. The report of the expert firm was forwarded to the Chairman of the Nomination and Remuneration Committee for review and further evaluation.
Similarly, formal evaluation of performance of Non-Independent Directors, the entire Board and the Chairman of the Company taking into consideration views of Executive and Non-Executive Directors of the Company was carried by the Independent Directors at their separate Meeting by using questionnaire method and the outcome of such evaluation was sent to the Chairman of the Nomination and Remuneration Committee. Final outcome of formal evaluation carried by the Nomination and Remuneration Committee and Independent Directors was placed before the Board for its review and further actions.
Based on the outcome of performance evaluation, further measures/actions have been suggested to improve and strengthen the effectiveness of the Board, its Committees and contribution and participation by Individual Directors.
The criteria of formal annual evaluation of the Board, its Committees, Individual Directors and Chairman are given in detail in the Report on Corporate Governance of the Company which forms part of this Report.
Your Company has been benchmarking itself with well-established Corporate Governance practices besides strictly complying with the requirements of revised Clause 49 of the Listing Agreement with the Stock Exchanges. Given the emerging pivotal role of Independent Directors in bringing about good governance, your Company continued its efforts in utilizing their expertise and involving them in all critical decision making processes.
A separate Report on Corporate Governance together with requisite certificate obtained from M/s. Mehta & Mehta, Practicing Company Secretaries, confirming compliance with the provisions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges forms part of this Report.
MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis on the business outlook and performance review for the year ended March 31, 2015, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges, is presented in a separate report which forms part of this Annual Report.
The Company has implemented a Whistle Blower Policy pursuant to which the Whistle Blower can raise concerns relating to Reportable Matters (as defined in the policy) such as unethical behaviour, breach of Code of Conduct, actual or suspected fraud, ethics policy, any other malpractice, impropriety or wrongdoings, illegality, non-compliance of any law, and retaliation against the Directors and employees, etc. Further, the mechanism adopted by your Company encourages the Whistle Blower to report genuine concerns or grievances, provides adequate safeguards against victimization of Whistle Blower, who avail of such mechanism and also provides for direct access to the Chairman of the Audit Committee, in exceptional circumstances. The functioning of the Vigil Mechanism is reviewed by the Audit Committee from time to time.
During the year under review, the Company has not received any complaint through Vigil Mechanism.
None of the Whistle Blowers have been denied access to the Audit Committee of the Board. The details of the Whistle Blower Policy are explained in the 'Report on Corporate Governance' and are available in the section of Investor Relations on the website of the Company (http://www.allcargologistics.com/investor-relations/overview.aspx).
RISK MANAGEMENT POLICY
Your Company is engaged in the business of providing integrated logistics business solutions for National and International Trade, Warehousing, Transportation and handling of all kinds of Cargo, running Inland Container Depots, Container Freight Stations and Shipping Agents. Thus, your Company is prone to inherent business risks like any other organisation. With the objective to identify, evaluate, monitor, control, manage, minimize and mitigate identifiable business risks, your Board of Directors have formulated and implemented a Risk Management Policy.
The Company has adopted ISO 31000 frame work for risk management. Under the guidance of the Board, the Chief Assurance and Risk Executive facilitate dedicated risk workshops for each business vertical and key support functions wherein risks are identified, assessed, analysed and accepted/mitigated to an acceptable level within the risk appetite of the Company. The risk registers are also maintained and reviewed from time to time for risk mitigation plans and changes in risk weightage, if any. The Audit Committee of the Company monitors and manages the risks of the Company and reviews the risk registers
of each business vertical and key support functions at least once in a year. Fraud Risk Assessment is also part of overall risk assessment. In every Audit Committee Meeting, the Chief Assurance and Risk Executive makes a presentation on risk assessment and minimization procedures undertaken as aforesaid.
The purpose of risk management is to achieve sustainable business growth, protect Company assets, safeguard shareholder investments, ensure compliance with applicable laws and regulations and avoid major surprises of risks.
The Policy is intended to ensure that an effective risk management framework is established and implemented within the Company.
SUBSIDIARIES, ASSOCIATES & JOINT VENTURE COMPANIES.
During the year under review, the following companies have become or ceased to be Subsidiaries, Joint Ventures and/or Associates:
COMPANIES WHICH BECAME SUBSIDIARIES/JOINT VENTURES/ASSOCIATES:
|1||Allcargo Logistics LLC|
|2||Allcargo Logistics Lanka (Private) Limited|
|3||Transindia Logistics Park Private Limited (became a wholly owned subsidiary)|
|4||FMA-Line France S.A.S|
|5||S.H.E. Maritime Services Limited, UK (became a wholly owned overseas subsidiary)|
|Joint Ventures & Associates|
|6||FCL Marine Agencies Gmbh (Hamburg)|
|7||FCL Marine Agencies Gmbh (Bermen)|
|8||FCL Marin Agencies Belgium (BVBA)|
|10||Ecu Logistics Peru SAC|
COMPANIES WHICH CEASED TO BE SUBSIDIARIES/JOINT VENTURES/ASSOCIATES: