Today's Top Gainer
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Mr. M.S. Sayad, Vice Chairman, Aqua Logistics Ltd. is a commerce graduate from the Rajasthan University. Mr. Sayad has two decades of experience in the field of operations, finance and strategy across sectors such as Steel, Engineering and Electronics. He plays a vital role in the financial management at Aqua Logistics Ltd., and has been instrumental in streamlining the financial and accounting systems and controls within the organization. He oversees the business strategies of Aqua Logistics Ltd.
Aqua Logistics Ltd. is a full-scope 3 PL (third-party logistics) service provider, delivering end-to-end solutions in the logistics and supply chain area. Its capabilities include supply chain consulting, logistics execution and project logistics. Its operations and consulting teams deliver logistics solutions to the clients’ by aligning the strategic and the operational perspectives. As an external service provider Aqua's ambit of services covers critical services which are required to execute end-to-end logistic needs. These include Multimodal Transportation, Contract Logistics, Regulatory Compliance, Warehousing, Value Added Services and Project Logistics. Founded by technocrats with decades of experience in Domestic Distribution of FMCG, Pharmaceuticals & Consumer Electronics, Star Distribution Logistics Pvt. Ltd. is the preferred partner in Distribution & Reverse Logistics by providing Last Mile Logistics Solutions. Head quartered in Chennai, Star Distribution spans over 20 cities in reach and coverage and delivers to 300 towns.
In an exclusive interaction with Hemant P. Maradia of IIFL, Mr. Sayad says, "In developed countries 55-60% logistics requirements is outsourced as compared to only 3% in India, which represents a huge growth opportunity."
What led to doubling of net profit in Q1 while sales and EBIDTA were up 63% each?
For the first quarter ended June 2010, our net profit grew by 99.17% at Rs86.9mn as against Rs43.7mn in the same period previous year. Meanwhile, the Company posted a 62.93% rise in net sales at Rs1.25bn compared to Rs769.1mn in the corresponding quarter last year.
Higher revenue is mainly due to increase in contribution from freight forwarding services and increased focus on project logistics.
We have been consistently building our capabilities to cater to various verticals like power, heavy engineering, pharmaceutical, telecom, retail and sports more effectively. Also, addition of new clients over time has also helped in the growth that the Company has witnessed.
As an integrated supply chain services company, we provide end-to-end logistics and supply chain solutions across various industry verticals. We provide knowledge driven services to our client rather than merely reactively fulfilling their logistics requirements. This has helped us in consistently winning long term contracts from big size clients.
What were your operating margins in Q1? Are you able to pass on higher costs to your clients?
EBIDTA during the first quarter of FY11 increased by 63.40% to Rs143.2mn as compared to Rs87.6mn in the corresponding quarter last year. The price hike is mainly due to increase in fuel prices, which is covered by fuel adjustment clauses in the long term contracts.
Are you confident of maintaining the momentum in the coming quarters?
Ans: In developed countries 55-60% logistics requirements is outsourced as compared to only 3% in India, which represents a huge growth opportunity for the domestic players. In addition, the Indian Logistics Industry is in high growth phase with gross domestic product (GDP) growing at over 8%.
We are well equipped to take advantage of the growing potential of the domestic logistics industry. We are quite confident of maintaining the current momentum in the coming quarters as well.
Traditionally, logistics in India has been an in-house activity for companies. But this is changing, with more companies opting for outsourcing to take advantage of the accruing benefits.
What is going to be the driving force for future performance?
It is a combination of factors that ultimately drive the future. A CRISIL Research has estimated the 3PL market in India is expected to grow at a CAGR of 27% to Rs162-165bn by 2013-14. The share of 3PL in the overall logistics market is expected to increase from around 1.5-2.0% in 2008-09 to around 3.5-4% by 2013-14. And with the growing awareness amongst companies of the benefits of outsourcing logistics requirements, the industry as a whole is poised on the brink of major spurt in growth.
Apart from the burgeoning domestic demand, there has been an increase in infrastructure activity and investments in India. This would give a boost to the domestic logistics industry.
With the acquisition of three companies in Hong Kong and plans for further acquisitions in pipeline, along with well built in-house capabilities, Aqua Logistics is well positioned to benefit from these opportunities in the logistics industry.
What is the status of your fund raising plan? How do you plan to utilize the money? What will be promoters’ stake post the fund raising?
We raised Rs1.5bn through an IPO which came out in January 2010. The issue proceeds were primarily used to purchase specialized equipments, expansion of offices, acquisitions in Hong Kong and to meet working capital requirements.
Recently, the Company’s Board approved plans to raise US$70mn. The process to decide the route through which this money would be raised is still under consideration and would be finalized in the next 3-4 months.
Any of the financial instruments available in the market - ADRs/GDRs/QIP/FCCBs can be used to raise the required funds.
Currently, the promoters’ stake in the Company is around 44%, Non-Institutions hold 45%, and Foreign Institutional Investors hold 7%. Other entities have the remaining stake of 4%. After the completion of fund raising activity, the promoters’ stake would get dilute by 15-17%.