AGM Speech Year 2009
Group Chairman & Managing Director's AGM Speech Year 2009

Rising on the Indian Logistics Horizon

29th September, 2009

It gives me immense pleasure in welcoming you all to this 28th Annual General Meeting of the members of Arshiya Limited. On behalf of the Board of Directors, I thank you all for your kind presence here today. The Notice of this Annual General Meeting and Annual Report for the year 2008-09 have been with you for some time now and with your kind permission, I shall take them as read. At the outset, let me take you through some of the important developments for the year ended 31st March 2009.

Year 2008-09 In Retrospect

A significant part of the last year has been testing times for economies and businesses all over the world.

Your Company has also seen the effects of this global economic slow-down - especially in our case - with crashing freight rates (ranging from 60% to even 80% in some trade lanes) and the worst ever drop in international trade over the last few months of 08-09.

Despite the above global economic climate, your Company has done more than just weather the storm by actually exiting this challenging period by registering a net growth of 25% on top-line and an increase of 45% on bottom-line as compared to the previous financial year. This has been possible due to the large volume of business handled by your Company by continual addition of new customers and increasing wallet share with existing customers with our offerings of integrated supply chain services.

Financial highlights for FY 2008-09

Total Revenue registered by your Company in FY 2008-09 is Rs. 514.52 crores, an increase of 25% over the previous year.

EBITDA in FY 2008-09 was Rs. 85.07 crores; up by 48% as compared to FY08.

EBITDA margins for your Company increased from 14% in FY08 to 17% in FY 2008-09, signifying higher value added services and increased wallet share for your Company's customers.

Profit After Tax in FY2008-09 was Rs. 65.62 crores; an increase of 44% as compared to FY08.

Current Year

During the current year, the revenue in the first quarter was lower by 28.5% at Rs. 100.67 crores, compared to the corresponding period in the previous year. However, as compared to the last quarter of 2008-09, the revenues have registered a marginal increase of 5%. The lower revenue is mainly due to the crashing of freight rates during the last few quarters, but the EBITDA margin for the first quarter was Rs. 17.32 crores, which was down by 32% as compared to the corresponding quarter. Our Operating profit for this quarter stood at Rs. 11.82 crores, down by 22% as compared to the corresponding quarter, and 6.2% up from the last quarter.

I would like to add that the last quarter of 2008-09 was the worst period in terms of order booking and global trade. This was attributed to lower revenues in the first quarter of this current year. We are now seeing a gradual recovery with consumer confidence coming back into the global economies and we expect trade and freight rates to stabilize around Q4 2009-10. However, your Company would use this period to develop the FTWZ infrastructure and build on our Rail network by the end of the last quarter of FY2009-10 - to be the only integrated logistics player in the Indian subcontinent, which will enable us to capitalize, in time, when the world economy stabilizes.

Update On Company's Projects

Free Trade Warehousing Zone - Near Mumbai
Your Company has acquired land admeasuring 140 acres at Sai Village Tal. Panvel, Dist. Raigadh, Maharashtra, for the Free Trade Warehousing Zone. Ministry of Commerce, Government of India, has granted formal approval for the FTWZ Project under SEZ Act 2005.

Ministry of Commerce, Government of India, has issued notification for the aforesaid project.

Government of Maharashtra has issued Gazette Notification appointing your Company as a Special Planning Authority (SPA) for the SEZ at Sai Village, Tal. Panvel, Dist. Raigadh, Maharashtra.

Your Company has commenced levelling, grading and terracing of the land and the same is expected to be completed by the 1st week of October 2010. Your Company has awarded the contract to Larsen & Toubro for civil works for five warehouses, allied infrastructure, water supply, electrification and fire protection systems.

Your Company has awarded the contract to Tata Bluescope Ltd. for design, engineering, supply and erection of Pre-Engineered Building system for the warehouses (PEB Structure).

Design and development was undertaken by Stup Consultants.

Debt of Rs. 355 crores was tied up with Axis Bank in lead with consortium of banks.

In the first phase, three warehouses, container yard, etc. will be ready and operational by March 2010 and three additional warehouses would be ready by June 2010.

Free Trade Warehousing Zone - Khurja, Uttar Pradesh
Your Company has acquired approximately 295 acres of land for the purpose of Free Trade Warehousing Zone, Rail Terminal and development of Distripark for domestic cargo.

For FTWZ: 135 acres

Rail Infrastructure: 50 acres

Domestic Distripark: 110 acres

Formal approval for FTWZ project has been received from the Ministry of Commerce, New Delhi.

Free Trade Warehousing Zone - Butibori, Nagpur
Your Company has acquired approximately 110 acres of land for FTWZ at Nagpur.

For FTWZ: 135 acres

Application for formal approval has been submitted to the Ministry of Commerce, New Delhi and approval would be received in a couple of months.

Containerized Cargo Movement

Your Company's subsidiary Arshiya Rail Infrastructure Ltd. (Arshiya Rail) commenced operations of movement of cargo through its first containerized rakes in the last quarter of FY 2008-09. Presently four rakes are operational in various sectors. It is important to note that the wagons of these rakes are customized to meet different requirements of customers which offer options of side loading and top loading. Further, the wagons are provided with cushioning, to protect materials from damage in transit thereby increasing yield for the customer. The major customers currently serviced by your Company are from the steel, aluminum, and chemical sectors. Since the commencement of operations in February 09, your company's subsidiary made a profit after tax of Rs.22.89 lacs in FY2008-09. I would like to inform you that the State Bank of India, together with a consortium of banks, has sanctioned a term loan of Rs. 400 crores towards the total project cost of Rs. 630 crores. For the rail project your Company's focus is to offer an end-to-end solution through our integrated supply chain services, including freight forwarding, 4 PL, IT and FTWZ infrastructure, and offer customized containers that provide a complete solution for cargo movement to customers in diversified sectors.

The Global Advisory Board

I have a key announcement in terms of an addition of a new member to our Global Advisory Board - Mr. Flemming Jacobs. Mr. Jacobs brings with him over 40 years of experience in the Shipping & Transportation industry.

We are very excited about adding someone like him on to our team, and leveraging his experience in making Arshiya's integrated logistics value proposition a global phenomenon - consistent with India.

Arshiya - Economic Times Convention - Elicit

Your Company has recently completed a pan-India logistics convention in partnership with Economic Times and NDTV Profit titled ELICIT 2009.

While ELICIT literally means 'bring forth' or 'change', it is also the abbreviation for 'Emerging Logistics in India - Changing Infrastructure and Technology'. This initiative is intended to serve as a platform aimed at not only marketing Arshiya's innovative logistics solutions, but also as a forum to raise awareness and create representation for this sector of logistics - and its importance in the development of the Indian economy at large.

This convention has allowed Arshiya to present its value proposition to over 800 decision makers across verticals from the 4 metro cities of Kolkata, Chennai, Delhi and Mumbai. This convention has developed interests from various sectors and our development team has closed on some major accounts.

Way Forward / Business Development

The three projects of FTWZ, Rail Infrastructure, and Domestic Distripark are progressing as per schedule.

Revenues from the FTWZ are expected to be booked in the first quarter of the FY 2010-2011.

The FTWZ at Khurja in Uttar Pradesh will become operational during the second quarter of FY 2010-2011.

In order to meet our growing manpower requirements for our integrated strategy and for handling FTWZ and Rail initiatives, your Company has embarked on an aggressive talent acquisition program and the present market offers your Company an edge in attracting best talents from across various functions.

The Arshiya Brand

Your Company has successfully integrated the branding of logistics and supply chain management - under the Arshiya brand-name as Arshiya Logistics and Arshiya Supply Chain Management respectively. These divisions will augment Arshiya FTWZ, Arshiya Rail Infrastructure and Arshiya Distriparks - that will formulate the infrastructure solutions divisions of Arshiya.

As part of the branding initiative; your Company has chosen SUN LORD as a fundamental theme that will stand testament to the Arshiya name going forward. Additionally, the official tagline or slogan that your Company has taken up consistent with the Arshiya logo going forward - 'There's a way'. This statement demonstrates your Company's vision of providing innovative ways for better logistical solutions across all Indian and Global sectors.

Summing Up

I wish to reiterate that although the economic depression of the last year affected our net profits, your Company could demonstrate to its customers that integrated supply chain is the future in terms of cost reduction and efficiency, an area that has been largely ignored so far.

We have been able to further tie up critical elements in our foray into logistics infrastructure and prove our differentiation through timely execution, especially in these difficult financial times.

For the benefit of our stakeholders who have reposed confidence in us, I can proudly say that your Company will meet the deadlines for commercial operations of the FTWZ and build a profile of customers from across various sectors including global clients.

I would like to sign off by simply saying that the revolution of logistics in India is an opportunity. It is your Company's mission and vision to rise up to that opportunity and play the role of a catalyst.

Thank you

Ajay S Mittal
Group Chairman and Managing Director

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