AGM Speech Year 2015
Group Chairman & Managing Director's AGM Speech Year 2015

10th July, 2015

Dear Members,

It is 3.00 p.m. and the requisite quorum is present and I now call the meeting to order.

I welcome you to the 34th Annual General Meeting of your Company. The Annual Report for the financial year 2014-15 was sent electronically to all Shareholders earlier who had registered their e-mail IDs and physically to the rest.

India is set to emerge as the world's fastest-growing major economy by 2016-17, as per the recent report by The World Bank. India’s Gross Domestic Product (GDP) is expected to grow at 7.5 per cent in 2015-16, as per the report.

The improvement in India's economic fundamentals has accelerated in the calendar year 2015 with the combined impact of strong Government reforms, RBI's inflation focus supported by benign global commodity prices.

The political instability and the economic slowdown have had an adverse impact on the export - import business during the initial period of FY 14-15. However the strong and planned economic development has certainly given a boost to Arshiya’s businesses.

Potential of our pioneering FTWZ business at Panvel, near Mumbai alone is enormous. Out of 6.5 million containers handled per year at JNPT Port (which will be 10 Million containers soon with the 4th Terminal commissioning), we only bring in about 24,000 containers per year at our Panvel FTWZ, whereas, there is a huge potential for us in near future as the demand is in the range of almost 35-40% of the containers handled at JNPT Port.

With a land parcel of about 150 acres and all infrastructure in place, we have built 6 warehouses, which are fully occupied by major clients of international repute, whereas we can build around additional 30 warehouses at marginal cost and with new technology of multi-storey warehouses. Competition is nowhere near and we have at least a 5 years head start from hereon. During initial stages there have been many issues, which are common to most unique, innovative and pioneering businesses, especially in an environment that our economy has been through over last 3-4 years, let me assure you that most of them are all behind us now and we are on a fast track. A similarity on our future success can be drawn from an example of a major Port in Gujrat which handled about 5 million tons in 2005 and now handles over 50 million tons per year.

As an example, India is importing over 2.5 million tons of polymer alone every year and the demand is growing 10-12% YoY, considering the fiscal and regulatory advantages to the Suppliers of polymers, we expect polymer to continue as one of the major cargo to be handled at our FTWZ besides marble, chemicals, fertilizers metals etc. We continue to focus more on marquee customers with higher revenue realization. Sectors like e-commerce, telecom, FMCG etc. have been our recent target area which shall help us further in developing a sustainable business model for the long term. Our growing appetite to engage into more and more business areas has resulted into commencement of bulk cargo handling operations, focusing simultaneously on ferrous and non-ferrous metals and heavy equipment. We are also exploring possibility of setting up a freezer storage facility at Panvel soon to cater to the demand of the growing food and pharma industry.

For our Arshiya Rail, the growth is phenomenal and certain, rail is the backbone of Indian economy like it is for most big economies of the world, if one has to compare the cost of movement between rail and road, rail will be much cheaper and environment friendly for long haul. Keeping in view the Dedicated Freight Corridor and other technological enhancements, there will be huge potential for Arshiya Rail in the near future with a progressive Government at the Centre. An example of the size and potential can be derived from the steel industry in India which produces around 60 million tons per year and will grow to 100 plus million by 2020, for every one million ton of steel produced a minimum of 5 million tons of raw material is required to move and another 3-4 million tons that converts steel into finished product like cars, washing machines etc. Hence with the enhanced capacity we expect the steel industry alone to cough up additional demand for rail to the tune of about 300 plus million tons per year by 2020. Today the entire rail movement on Pan India basis is a mere 1,100 million tons per year.

Commencement of our Inland Container Depot (ICD) at Khurja, in place of our Industrial and Domestic Distribution Hub during the second quarter of FY 15-16 will surely turn the business around at our Khurja facilities, which consist of a FTWZ, Rail Siding with a Private Freight Terminal and Container Rail Terminal, all of which have been virtually non-operational due to regulatory issues. ICD is the answer and mitigator to the issues and risks that we had faced in the past at Khurja. The in-principle interest already shown by several Customers has increased our confidence multi-fold.

We are optimistic towards the proposed policy reforms and expect to get further clarity on certain critical regulatory issues in near future. Policy initiatives in FDI, tax incentives, liberal export-import benefits and to implement various beneficial policies announced for SEZs/FTWZs, will only add to our future success.

The Past year:

Today after 3 plus years of turbulence, I am happy to say that our faith in the business has been validated by acceptance of large/marquee Global Clients getting into long-term contracts. Your Company has turned the corner in many ways and is once again on a positive traction.

Your Company's Panvel FTWZ has become EBIDTA positive and this EBIDTA number is growing month on month. Assets owned by subsidiary entities at Khurja were lying idle for past three and a half years due regulatory reasons - the same have been addressed and we will see them becoming EBDITA positive in FY 15-16. Rail's Rolling Stock Business even with unfavorable policies at this point has become EBIDTA positive.

There are a few challenges that we still need to address like payments to old creditors, full & final settlements of ex-employees, some statutory dues and debt burden. We are addressing all of these challenges simultaneously and are sure in the very near future; these challenges will all be behind us.

During the year under review the Company was not able to fare well in terms of Top Line numbers, mainly due to phasing out of the loss making Logistics (Freight Forwarding) Division. Though total consolidated revenues decreased by 37.23% from Rs.51,655.73 Lacs in FY 13-14 to Rs. 32,423.04 Lacs in FY 14-15, however our EBIDTA increased by 383.55.% from Loss of Rs. 1,387.22 Lacs in FY 13-14 to Profit of Rs. 3,933.46 Lacs in FY 14-15.

With persistent efforts of the Company, the Government has now granted us the approval for setting up of ICD at Khurja, Uttar Pradesh. As mentioned earlier this approval is a booster for the Group as a whole because of its impact of integrating Rail, FTWZ and ICD operations at Khurja. This will become the first Integrated Logistics Hub in the Country. The Company is looking ahead on capitalizing on the state-of-art infrastructure that is already created at Khurja and ready to provide the Clients all logistics infrastructure under one roof. These recent business development that have taken place in the Company, we can look forward to a bright future.

Some challenges as mentioned above that are still staring at us will be mainly addressed through strong growth in EBIDTA numbers and we are also exploring to rationalize the debt/debt costs through various measures.

We have inducted some Senior Members from great backgrounds now, who are making great efforts to attain not only the desired revenues but also to address the pending issues..

The Promoters strongly believe in the prospects of your Company and have voluntarily infused funds for operations by way of subscription to warrants @ Rs.145 per warrant at the beginning of FY 14-15, besides further equity that was inducted recently.

Future for FY 15-16:

While I am not authorized to share numbers at this stage in view of the Board Meeting to be held towards the end of this month to consider the unaudited financial results for the first quarter ending June 2015, I can only indicate that our efforts towards operating efficiencies, improving business by bringing in new Customers and regaining lost ground on the FTWZ concept besides rail efficiencies have started to yield better results. I am confident that few important pending regulatory issues will also be resolved during this year so that business growth is inevitable.

I also want to highlight that our belief of superior returns from business has been reinforced due to promising rent contracts, as our business offers great value proposition to our esteemed Clientele. We believe that when all our business verticals viz. FTWZ, ICD, Rail Rolling Stock and Rail Terminal operate at optimum level, we will be able to fulfill all our obligations and deliver superior returns to all our Shareholders/Stakeholders.

Dear Shareholders, on behalf of my fellow Directors on the Board and all my Team at work, I can assure you that all necessary efforts are being taken to turn around the fortunes of your Company and make it scale new heights. On behalf of the Management, I thank you for your support and reposing your faith in your Company and us.


On behalf my colleagues on the Board I wish to express our sincere thanks to the Lenders, CDR Cell and all stakeholders for their understanding and cooperation during difficult times. I also want to thank all our Employees, both past and present, at all levels for their dedication and integrity. Last but not the least, our heartfelt thanks to all Shareholders and members of the Arshiya family whose continued faith and trust in the Company, its Management and Promoters has been a great source of strength in helping us not only to see through the nadir, but to now soon rise to the zenith.

Thanking you,
Ajay S Mittal
Chairman & Managing Director
Arshiya Limited

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