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A team of top officials from the Port of Antwerp will be in Mumbai later this week to confer an award on Mr Shashi Kiran Shetty of Allcargo Logistics.
Mr Shetty, who made it big in LCL (less than container load) cargo business in India, marked his presence in Europe by taking full control of the Belgium-based ECU Line five years ago.
He has not only turned around the company, but also expanded its global reach through more buyouts. Despite the economic slowdown, the company's bottom line grew by 25 per cent last year.
In an informal chat with Business Line , Mr Shetty explained that though ECU is a European company, only 30 per cent of its business comes from Europe.
“LCL business is recession proof. Volume drop does not happen. During recession, people buy goods in smaller quantities. Full container load (FCL) gets converted into LCL. Even a lot of airfreight gets converted to ocean freight. All these benefit us,” added Mr Shetty, when asked how his European subsidiary could manage robust growth when the economy itself was facing a tough time.
Lower freight rates work in the company's favour, as it does not own ships or containers but buys container space. Mr Shetty noted, “Lower freight means we pay less. Of course, we have to pass it on to our customers.”
While growth in LCL business comes from volume, it also allows flexibility to rationalise or downsize operations and cut cost. The margins are, therefore, stable, says Mr Shetty, Chairman and Managing Director of Allcargo, the Mumbai-based listed company with a consolidated turnover of Rs 3,500 crore.
In 2005, when Mr Shetty took over the Belgium-based company, its revenues were four times that of his Indian company.
Surely, it must have been a tough call?
“I believed in the business. The company had a large network — 140 locations in 56 countries. Unless something went seriously wrong in the way, the business is managed, it could not fail. There will always be LCL cargo,” Mr Shetty reasoned.
Over the last five years, ECU's revenues improved. EBITDA margins grew from 1.9 per cent to 5.3 per cent in 2010. It didn't come about without hard work, recalls the ebullient entrepreneur. From bringing in best practices, getting rid of non-core activities and ensuring that the right people manned the right jobs, there was a lot to be done. More acquisitions in China and other places followed.
The recognition from Antwerp Port comes at a time when Allcargo is increasing its CFS capacity, strengthening third-party logistics, engineering and project transportation services.
Mr Shetty expects at least 15 per cent growth in the bottom line this year. Last year, the company had consolidated a net of Rs 156 crore.
His ambition is to make Allcargo a billion dollar company by 2014.
Mr Shetty remains bullish on the logistics business he entered with freight forwarding 30 years ago, despite ripples of a global economic slowdown rocking the shipping trade.
“World trade is not going to stop; as long as world trade exists, the business will go on,” he surmised.
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