18th September, 2012
Dear Shareholders,
Firstly, Good Afternoon.
It gives us immense pleasure in welcoming you to this 31st Annual General Meeting of your Company, Arshiya Limited.
We would like to express our warmest greetings and thank you most sincerely for your continuous encouragement, faith and support. On behalf of the board of directors, I thank you all for your kind presence with us today.
The year 2011-12 has been a consolidation year for Arshiya, where we strengthened our operations in our Panvel FTWZ. We also announced the operational launch of our second FTWZ at Khurja, Uttar Pradesh reinforcing our commitment to this space. I would like to present to you the highlights of your Company's performance during the year gone by.
Overview of year 2011-12
The year 2011-12 has seen top-line growing by 29% to Rs. 1057.3 crores from Rs. 821.5 crores and EBIDTA growing 71% to Rs. 271.7 crores from Rs.159.2 crores. At the bottom line level your Company has generated PAT of Rs. 120.8 crores in FY 12 as against Rs. 82 crores in FY 11.
To us, the highlights of the last year have been our achievement in our Panvel FTWZ in terms of customer additions and the incremental services that we have been offering as well as the commencement of our FTWZ in the north zone which also has India's largest private rail terminal, co-located with an Industrial and Distribution Hub (for domestic warehousing) and connected with Rail Freight Services, that will make it one of India's most comprehensive and advanced logistics facilities available in the country today.
Second, we have provided our customers an end-to-end seamless supply chain backbone with a complete range of self-owned products and services. This makes us a Unified Supply Chain and Infrastructure Group with a complete range including international forwarding, first and last mile transportation and handling, international state of the art Free Trade & Warehousing Zones for imports, exports and re-exports, pan India Rail Freight Services and terminal network, domestic consolidation and de-consolidation in Industrial and Distribution Hubs, and all this enabled by the soft layer of Supply Chain Technology & Management that we have a 11 year legacy in.
Third, our ability to make a difference to our clients, across varied sectors such as FMCG, automobile, IT hardware, heavy and precision engineering, chemicals, pharmaceuticals, trading, retail, apparels, electronics, consumer durables and metals and we have done so by not only acquiring customers directly but also by collaborating and partnering with other 3pls & shipping lines – symbolizing the aggregation that this sector so dearly needs.
Financial highlights: Q1 FY13
Your company has kept up the good work and announced consolidated total revenue of Rs 341.8 crores for the quarter-ended June 30, 2012 as against Rs. 222.6 crores in the corresponding period last year; thereby registering an increase of 54%.
Consolidated EBIDTA for Q1 FY 13 was Rs. 93.5 crores as against Rs. 54.6 crores in the corresponding quarter of the previous year thereby registering a 71% increase. Consolidated Net Profit for the quarter ended June 2012 also increased 47% to Rs. 34.6 crores up from Rs. 23.6 crores in the corresponding quarter of the previous year.
Awards & Recognition
During the year 2011-12, your Company was honored with four prestigious awards across various categories Firstly, in an award function organized by 'The CFO Institute' of India, our Executive Director and Chief Financial Officer Mr. Sandesh Chonkar was awarded in the category 'Winning Edge in Growth'. This honor recognizes him amongst the 100 best CFOs in the country by the 'CFO 100 Roll of Honour 2012'. The award recognizes 100 of the country's best finance leaders and their extraordinary contributions to the corporate world.
Then, your Company also won the “Dream Companies to work for - Integrated Supply Chain and Logistics” award at the 2nd Shine Awards 2012. Arshiya today is the only truly Unified Supply Chain and Logistics Infrastructure Company with a unique business model, offering plethora of opportunities to learn and contribute, making it one of the best companies to work for in the space. Arshiya offers a challenging and rewarding platform in a fast growing environment where every individual treats excellence as business as usual.
Next, your Company won the “Best HR Strategy In Line With Business” award at the HR Leadership Awards 2012 organized by Institute of Public Enterprise. After more than a decade of experience in asset light services, Arshiya now has also ventured into several asset heavy businesses and is aggressively expanding its pan India footprint. Human Resource forms an integral part of this expansion process and is a key success factor. The Arshiya Human Resource team has been supporting all the business verticals by providing some of the best talent that exists in India and internationally to meet the business needs and this award stands testament to that effort.
Operationally, Arshiya Rail Infrastructure Ltd. won the Private Train Operator Of The Year' award at the 2nd Indian Supply Chain & Logistics Excellence Awards 2012 organized by the Indian Chambers of Commerce with knowledge partner Deloitte. Arshiya Rail was adjudicated the winner of this award based on performance in terms of Freight Volumes, Customer Satisfaction and most importantly Innovation. The presenters also appreciated Arshiya Rail's perseverance and fighting spirit as Arshiya Rail is the only private container train operator who has stuck to its plans and continued a majority of its services in the domestic segment.
Finally, in an annual poll conducted by Finance Asia magazine, a leading financial & capital markets magazine based in Hong Kong, Arshiya Limited was selected 'Best Managed Company in India' under the 'Small Cap' category.
Moving on from the recognition that your Company has received, I will now take the opportunity on behalf of the management to provide you with an update on two of Arshiya's key logistics infrastructure businesses (the FTWZ and Rail) which will be the engine of Arshiya's growth and evolution in the years to come, starting with:
Arshiya's Free Trade And Warehousing Zones
India's and Arshiya's first 165 acres FTWZ in Mumbai has received phenomenal response since it became operational in December 2010 and is currently servicing leading international and domestic companies across varied sectors. In January 2012, your company announced the operational launch of its 135 acres Free Trade & Warehousing Zone, in Khurja, Uttar Pradesh near the confluence of the planned eastern and western freight corridors. this FTWZ is a part of Arshiya's 315 acres mega logistics hub which also includes a 50 acres rail siding and 130 acres Industrial & Distribution Hub which will be operational soon. This will be the flagship state-of-the-art logistics infrastructure in the north to service the massive manufacturing belt. It will enable efficient warehousing, value optimizing and distribution of EXIM and domestic cargo.
Arshiya's FTWZ in the north will enable manufacturers to substantially bring down transactional cost and boost EXIM, facilitate imports through implementation of vendor managed inventory and encourage exports by enabling quality check & consolidation before organized shipment. Overall, the FTWZ has helped its customers to substantially bring down EXIM cost through many fiscal, regulatory and operational benefits, thus providing flexibility towards end-distribution through duty deferment, higher inventory visibility, reduced buffer stocks and lower product costs overall.
Among the many big names that we work with and who have leveraged our FTWZs are major Indian and global organizations such as BHEL, L&T, Coca Cola, Volkswagen Group etc. Though there are many more to name, the true testament of what the FTWZ can do for Arshiya and India is evident when Fortune 500 company Cisco announced on 4th June, 2012 that it was nominating Arshiya's FTWZ at Panvel as its Regional Distribution Hub and the first such distribution hub in the Asia Pacific region outside Singapore, thus marking the beginning of a new and great journey of logistics that India is embarking on. Your Company is proud to responsible as a catalyst to that journey.
Moving Onto Our Other Important Business - Arshiya Rail Infrastructure
Arshiya Rail Infrastructure is today the Second Largest Private Container Train Operator in India providing unique and customized solutions to marquee customers with long term contracts. Your Company exited FY12 with 20 rakes. For its further expansion plans, your Company has signed a long term deal with GATX India Private Limited, a subsidiary of GATX Corporation, to lease its rakes to Arshiya Rail. GATX globally is one of the world's leading railcar leasing companies. This relationship will help Arshiya Rail migrate its business to a CAPEX lean model, resulting in lower gearing and improved margins as Arshiya Rail expands its business.
As part of the 10-year deal, GATX India will initially provide 10 newly manufactured rakes, for Arshiya Rail on operating lease. Further, leveraging GATX's 114 years of expertise, Arshiya Rail will be able to introduce world class wagon technology and bring in the highest standards of safety, reliability, efficiency in rake operations, besides expanding its gamut of services in delivery of customized solutions to clients, all vital to growing the Indian rail-freight business.
Now Moving Onto Your Company's Human Resource Initiatives
For your Company, employees are its most valuable assets. Attracting, training, growing and retaining talented professionals continue to be the focus for the Human Resources team of your Company. The focus is on creating an organization which nurtures continuous improvement and innovation in management practices. Over the year, your Company has added key senior management as well as middle management resources across divisions. Additionally, the 'Arshiya Global Internship Program' has helped international management students to work on live projects on a real time basis and get hands on experience of working in India. Your Company will continue its focus on enhancing the service levels of the logistics space in India and on creating a unique culture with an employee friendly environment.
Corporate Social Responsibility (CSR)
Your Company sincerely believes that growth not only needs to be profitable and competitive, but also sustainable in a socially relevant manner. Today's business environment especially in India therefore demands that Corporates play a pivotal role in shouldering social responsibility.
Under the CSR initiative of the company 'Arshiya Cares', your company has pledged to join hands with various organizations who are working towards finding simple solutions to the infrastructure problems that India faces. To enumerate a few CSR initiatives undertaken by your company over the last year:
Emergency Fire Fighting Service
Our FTWZ infrastructure has a 24x7 emergency fire fighting vehicle inside the zone managed by trained personnel. This service is available 24x7 to the residents in the vicinity of the zone, free of charge through a toll free number
Emergency Ambulance Service
Also, the FTWZ infrastructure has a 24x7 emergency ambulance service dedicated for residents in the vicinity of the zone. Stationed in the premise of the zone, it is equipped with expert staff trained in trauma treatment, also available free of charge to the citizens of the vicinity.
Electricity Distribution Facility
At the Mumbai FTWZ at Sai village, Panvel, your Company has created additional capacity in its electrical infrastructure to enable supply of electricity to the surrounding villages.
Empowering Villages Everywhere (eve) - Solar Lamps for Villages
Your Company supported a novel initiative by school children based in Mumbai, for providing solar lamps to villages at a subsidized rate. Under the eve program portable solar lamps were provided to villages where electricity is not available.
By subsidizing the cost, eve was able to offer villagers an opportunity to increase productivity and improve their quality of life. At Arshiya we have pledged to join hands with eve and support them in this initiative to help 'Light' lives across the 'Not So Fortunate' India.
Concluding Remarks
With India's emergence as the second fastest developing economy over the last decade, the country's logistics and supply chain space has also undergone transformation from a mere backend function, to becoming central to the entire economy. Yet this sector is a case of an immense need-gap that is waiting to be tapped. The biggest challenge India's economy faces today is the need for world class supply chain infrastructure, similar to the infrastructure that has led to success stories for the economies of Singapore, Dubai and China, while India has lagged. Your Company, through the journey of creating Unified Supply Chain Infrastructure, has taken this bold initiative to be that change which India & its people are looking for.
On behalf of the Group Chairman and Managing Director, Mr. Ajay S Mittal, I thank you all for your continuous support and goodwill for Arshiya.
Thank You,
Nijay N. Nair
Chief – Strategic Initiatives
Arshiya Limited
