Automotive and Transport Sector in India Monthly Update March 2012
Top Story Inflated PE activity in logistics sector Riding on the possibility of multi brand retail FDI, private equity (PE) investors are increasing their investments in the logistics sector. It comes as an anticipatory move with expectations from the policy which is being perceived as a key stimulant in the sector. A number of big transactions have been doing the rounds in the sector as players believe that opening up of retail market to foreign players would doom growth for the logistics firms. Some significant transactions include investment by General Atlantic LLC in Fourcee Infrastructure Equipment Pvt Ltd wherein General Atlantic would become a minority stakeholder in the concern. Further, TVS Logistics Services is also said to be teaming up with PE investors for a second round of funding. December 2011 witnessed India Equity Partners acquiring the road operations of Dutch freight major TNT Express in India. Other high profile transactions include investments like Ashmore Alchemy Investment Advisors in Siesta Logistics Corp, Blackstone in Allcargo Logistics, Mayfield Fund and Sidbi Venture Capital in Fourcee Infrastructure Equipment. This policy is expected to put logistics firms in a steady position as foreign players come in the Indian retail market. These foreign firms will look towards operating through collaborations with the Indian players present in the market thus spelling good prospect for the overall sector to grow.
News Update General
Four Soft collaborates with Flowerport Four Soft has cracked a deal with Netherlands‐based logistics concern Flowerport Logistics BV. The contract was processed through Four Soft Netherlands BV, Dordrecht, which happens to be the subsidiary of Four Soft limited, India. The deal states Four Soft providing integrated freight forwarding solutions 4S e Trans SME to Flowerport Logistics. Flowerport Logistics is an international Import and Export organization that functions as an agent of transporting goods in conditioned environments. Having expertise in shipments of floral and other perishables, it provides complete supply chain solutions including import and export, customs and freight handling across Russia, Africa, Asia and Latin America. This deal would mark entry of Four Soft into service provider offering solution for floral logistics market domain. Automotive and Transport – Monthly Update
Marg looks at selling stakes in Karaikal Marg Ltd, the infrastructure and property developer is considering selling a controlling stake in Karaikal Port in Puducherry. The value derived at this sell‐off is INR 20 bn. Presently, around 26‐49% stake in Karaikal Port is available for sale to any strategic or financial investor. However, a controlling stake of more than 50% can also be discussed if there is interest from the acquirer’s side. Marg and its promoter GRK Reddy holds about 81% stake in the special purpose concern Karaikal Port Pvt Ltd which is formed to develop and operate new port. Though Marg has operated the port fairly well, it is now looking for a strategic partner who can bring forth some operational strength. It might also consider divestment as the port has already achieved a certain scale and has the potential to attract good valuation. Moreover, Marg has not yet been able to raise funds for its Phase II expansion which might as well cause some financial stress and vent out a stake sell plan. DHL to develop three FTWZs Logistics giant DHL is all set to develop 3 FTWZ (Free Trade Warehousing Zone) in India. DHL is looking at increasing its warehousing capacity in a bid to expand in the Indian market. DHL’s global forwarding division has already set up a FTWZ in Chennai. It is now considering setting up more such FTWZs to increase its pan‐India presence through new warehouses. The concern has zeroed in on places like Delhi, Mumbai and Hyderabad to develop the FTWZs. This comes at a time when foreign logistics giants in the likes of Fedex and UPS are considering acquisitions to bolster their positions in the country. Indian Shipyard uncertain to grow without government support Indian shipping sector is bracing itself for tougher times ahead with depressing freight rates adding more woes. Factors like high cost of steel and other inputs, high interest rates added with tax burden have resulted in making the sector highly non‐ competitive in the international arena. This is evident in the receding order books for most of the shipyards and even those slated to begin its operations are apprehending disastrous take‐off. Both private shipbuilders as well as government‐owned are facing failures when it comes to compete with their counterparts in South Korea and China. Further, with the expiry of subsidy scheme, domestic shipyards witnessed falling of their market share from 1.2% in 2007 to that of 0.1% in 2011. Domestic players are of the belief that stringent tax regime in the country makes their shipyards non‐competitive and if foreign exchange is to be earned then subsidy scheme needs to be revised. A 15‐20% payback scheme for every export delivery is another aspect that Government might consider in order to bring back life to the fallen shipping sector. Automotive and Transport – Monthly Update
SCI sells two of its vessels Shipping Corporation of India has announced that it has sold two of its vessels and has processed the deliveries to their respective buyers. The two vessels include a Handymax Bulk carrier named “m.v. Pataliputra” and a chemical tanker “m.t. Sabarimala”. While the Handymax bulk carrier has a capacity of 47,304 DWT, the other one boasts of a capacity of 33,056 DWT. The former was built in the year 1987 and the latter was built in 1992. SCI is a Government owned concern based out of Mumbai. It operates and manages vessels that service both in domestic and international lines. It has graduated from its beginning of operations as a marginal Liner shipping company with a fleet of 19 vessels to that of its present status of being the largest Indian shipping company. Presently, it owns fleet including bulk carriers, crude oil tankers, product tankers, container vessels, passenger‐cum‐cargo vessels, phosphoric acid/chemical tankers, LPG/ammonia tankers and offshore supply vessels. Four Soft inks deal with Hamacher Logistik Four Soft’s subsidiary Four Soft Netherlands BV, Dordrecht has inked a deal with Hamacher Logistik BV, Netherlands. The contract entails implementation of Four Soft’s freight forwarding application 4S e Trans SME. 4S e Trans SME is a complete freight forwarding application system that caters to automate, streamline and support multi‐modal international freight forwarding operations. The software solution is both flexible and comprehensive and helps in the efficient management of business, increasing of productivity and improvement of overall services. The recipient Hamacher Logistik is a Netherlands‐based 3PL Logistics concern which offers high quality, cost effective logistics solutions for importers and exporters across the globe. DHL Express looks at offering sector specific services DHL Express has developed sector‐specific logistics solutions in a bid to address the challenge to cater to the emerging diversified SME sector. It will meet the demands across verticals including apparel and fashion industry, IT and ITes, engineering and financial services. SMEs account for 45% of total manufacturing output and contribute to over 40% of the total merchandise exports by value. This poses as a chief prospect for DHL to provide customized logistics solutions to the SMEs. For fashion and apparel sector, it looks at providing solutions that include manufacturing and supplier services, origin management, freight management, destination management and in‐country logistics. Further, it provides ‘Textainers’ which is primarily a system of transporting hanging garments to protect garment in transit and BBX which operates as a break‐bulk‐
Automotive and Transport – Monthly Update
shipment that work towards providing transportation and shipment solutions to the apparel sector. The concern has already invested in the augmentation of aviation facility and is poised to invest further in infrastructure, network and people to facilitate growth. Gujarat looks at setting up LNG terminal Gujarat has plans to set up its fourth LNG terminal at Pipavav Port. This will come up simultaneously with the development of the 5‐MT capacity Greenfield LNG terminal at Mundra by 2015‐16. The terminal at Pipavav Port is supposed to have 2.5 MT to 5 MT capacity. The state already has terminals at Dahej and Hazira. The LNG terminal coming up at Mundra is going to the third one. Certain companies including names of Torrent, BPCL and HPCL have shown interest in the Pipavav project. As Hazira and Dahej terminals add up to a combined capacity of over 13 MT, there is enough opportunity for two more terminals to be set up. Mundra being one, the Pipavav port terminal is slated to be launched soon. Four Soft cracks deal with Scan Global Logistics Four Soft, a global leader in software solutions for logistics and transportation industry, has announced that its subsidiary Four Soft Nordic A/S Denmark has cracked a deal with Scan Global Logistics A/S Denmark. Scan Global Logistics is a market leader in transportation and logistics sector with offices in more than 20 countries. Domain expertise of Four Soft in multi‐modal transportation solutions across multiple platforms is expected to improve efficiency by enhancing the operational system of Scan Global Logistics. Through this deal, Four Soft will set a benchmark of how it can deliver ROI for prospective customers in the present economic conditions. SCI takes delivery of AHTS vessel Shipping Corporation of India (SCI) has acquired an 80 T BP Anchor, Handling, Towing & Supply vessel. The vessel named “m.v. SCI Mukta” is taken as a part of offshore fleet replacement program. SCI had signed contracts with Bharati Shipyard Limited for the acquisition of four new 80 T BP AHTS vessels. While the first two vessels “m.v SCI Panna” and “m.v. SCI Ratna” were delivered on August and October 2011, the third vessel “SCI Mukta” got delivered this year. The fourth one is slated to be delivered during June 2012. The vessel “SCI Mukta” has a GT of 2,039 tonnes and deadweight of 1,966 tonnes. Built in compliance with the latest and stringent international regulations, this vessel has been classed with IRS. Automotive and Transport – Monthly Update
GAC International Moving Services enters India With the opening of a new office in Mumbai, GAC has extended its International Moving Services to the Indian subcontinent. This marks its expansion beyond its operations in the Middle East. GAC has been a provider of packing and moving services since the last 30 years. Presently, India has a demand for moving services as there is a lot of to and fro movement of such personnel in the country. Aided with its team of experienced logistics professionals across their network of 25 offices as well as in‐house customs broker license, it has been able to fit into the group’s International Moving network. The Indian chapter is slated to be equipped with packing crews, equipment and warehouses. Further, in addition to Mumbai, the concern is also looking at establishing units in Cochin, Delhi and Chennai.
News Update Expansion Plans
Kerala Shipping ventures into bunkering business The Kerala Shipping and Inland Navigation Corporation (KSINC) is slated to make a foray in the bunkering business. It would primarily cater to supply fuel to the ships in the outer harbour and international shipping channel off Kochi. This venture is marked as a part of its expansion program in an unexplored area of operation. It is looking at a tie‐up with a chartered barge from Ocean Bunkers Private while Bharat Petroleum Corporation Limited has already shown its interest in co‐ operating with KSINC in this venture. The concern is riding high on facts like reduced VAT on furnace oil along with positional advantage of Kochi of being the closest port in India to the International Shipping Channel in order to develop the largest bunkering port in India. Following this objective, the concern has zeroed in on bringing an IRS Class Barge of 1,000 MT with an International Load Line Certificate which happens to be a large and better supply vessel to supply fuel. Future Group to set up logistics parks Future Group’s real estate wing Future Market Networks is looking at establishing eight infra logistics parks with each covering up to 2 mn sq ft of space. The project is expected to continue till the next three years. The concern has entered into an equal joint venture with IL&FS and has plans to spend INR 12 bn for establishing such parks across cities like Mumbai, Pune, Chennai, Bangalore, Kolkata, Vapi and Baddi. Each of these parks will span across 50 to 100 Automotive and Transport – Monthly Update
acres of area within a radius of 20 to 30 km of these cities. The group’s logistics concern Future Supply Chain will be operating as the anchor tenant at all these parks and the investment will be processed through a mix of equity and mezzanine finance. DHL eyes investment in warehouses Express and logistics concern DHL is looking at expanding its air capacity and invest in warehousing capacity. While the industry is slated to grow at 15%, DHL is eyeing a growth of 17% implying a growth of 2% ahead of the market growth. Keeping this as an objective, it has zeroed in on investments in areas like air capacity, facilities, improved service quality through touch points, enhanced distribution and industry specific product innovations. SMEs constitute its key focus area of growth primarily because they play an important role in the country’s manufacturing growth and international trade. DHL is also looking at expanding its air facility in cities other than tier II and tier III. It is also planning to construct its second free trade warehousing zone in Mumbai and a third in Delhi. Second CFS to come up at Vallarpadam Infrastructures Kerala Ltd (INKEL), VKL Group from Bahrain and resort chain Mfar Hotels & Resorts Ltd have collaborated to form a joint venture (JV). Together they have decided to invest INR 650 mn to set up a second Container Freight Station (CFS) at Vallarpadam International Container Transshipment Terminal (ICTT). The JV, called MIV Logistics, will develop the CFS on 18.5 acres at Vallarpadam ICTT. The project is slated to be completed by April 2013. APM Terminals India Pvt Ltd will be setting up and operating the CFS as per the agreement to be signed with INKEL. Additionally, INKEL is also developing a logistics park and commercial space in Angamaly on a plot of 25 acres of land. Dubai Ports World eyes expansion in India Global maritime terminal developer Dubai Ports World is looking towards expanding its operations in the India chapter. Presently it operates container terminals at major ports in India and is now focusing on minor ports in the country. Promoted by the Government of UAE, the concern has an operational terminal at one minor port at Mundra in Gujarat. However it is on the lookout for other operating terminals and allied business functions across minor ports in India. The decision to expand is triggered by the enormous potential perceived in minor ports category as they are expected to grow when major ports get choked in terms of capacity. Traffic at minor ports are fixed by the state government while for major ports it is decided by the Tariff Authority for Major Ports (TAMP). The plan to invest in minor ports is also arrived at after TAMP decided to reduce tariff at its facility at JNPT by more than 27%.
Automotive and Transport – Monthly Update
Reduced tariffs are slated to make the company run into losses. At a time when minor ports are registering double‐digit growth figures and major ports showing only 0.38% growth during Apr‐Dec, move by DP World is being considered to be prospective. The company is also looking at investing in setting up container freight stations and inland container depots in India.
News Update Financials Ennore Port to raise INR 10 bn Ennore Port is looking at raising INR 10 bn through tax‐free bonds. This is done primarily to fund its expansion and infrastructure development. India’s first corporate port, Ennore, has approached the Shipping Ministry to raise the money which had in turn asked for approval from the finance ministry and Central Board of Direct Taxes. The port had earlier looked at diluting 10% in order to raise INR 4‐5 bn but it got delayed owing to poor market conditions. The amount would help in supporting infrastructure projects in likes of INR 15 bn. The port has 14 projects in the pipeline which is valued at INR 64.66 bn. The projects slated include 3 dredging projects, 7 terminals and 4 connectivity rail and road projects. Allcargo Logistics initiates corporate restructuring Allcargo Logistics has started its corporate restructuring move in order to de‐merge its Indian and global business arms. This would result in categorizing them into 2 separate entities with each of them representing its individual business and market position. The de‐merger is slated to be completed within a period of 4‐5 months and will witness changes in their listings also. The parent concern would retain its listing in India and the new entity which will focus on global less‐than‐container‐load (LCL) operations will either get listed separately in India or overseas. However, the head quarter for the new organization is to be positioned in Mumbai in India. A committee of directors has been composed who would look into the modalities including valuation of the LCL business and share entitlement ratio. This exercise will render more clarity to investors and analysts about the 2 businesses which in turn can draw their independent growth and fund raising plans.
Automotive and Transport – Monthly Update
Industry Expert Speak Increased PE activity in logistics sector – Ranjit Pandit, Managing Director, General Atlantic “Logistics and transportation for important products are key strategic elements for India’s infrastructure development and continued growth,”
Transactions (January 2012 – March 2012)
Date
Buyer
Target
Deal Size (INR mn)
% stake
Deal Status
Type of Transaction
24th Feb 2012
Macquarie Bank
ABG Shipyard
124.12
0.57%
Completed
Buy
13th Feb 2012
Kintetsu Express
Gati Ltd.
2670
30
Expected
Buy
9th Jan 2012
General Atlantic
Fourcee Infrastructure Equipments
6675
NA
Expected
Investment
Annual Financial Results – Revenue (INR mn) Companies
FY ‘08
FY ‘09
FY ‘10
FY ‘11
ABC India Ltd.
1,400.2
1,585.7
1,466.1
2,059.1
ABG Shipyard Ltd.
9,668.4
14,130.0
18,124.4
21,369.0
Allcargo Logistics Ltd.
23,140.8
20,609.3
28,613.4
NA
Aqua Logistics Ltd.
1,089.9
2,134.0
3,220.1
3,808.8
Arshiya International Ltd.
4,011.6
5,033.8
5,258.9
8,215.2
Automotive and Transport – Monthly Update
Bharati Shipyard Ltd.
7,048.5
10,199.0
13,480.0
16,090.0
Blue Dart Express Ltd.
9,766.6
9,075.4
11,499.0
NA
Brahmanand Himghar Ltd.
71.022
66.455
48.855
NA
Chartered Logistics Ltd.
1,058.69
1,356.95
1,235.43
1,841.89
Chowgule Steamships Ltd.
1,927.88
2,376.32
910.927
709.85
Container Corporation of India Ltd.
33,644.8
34,524.0
37,306.0
38,924.7
Essar Ports Ltd.
18,424.2
25,830.8
30,077.7
13,919.3
Four Soft Limited
1,715.33
1,945.93
1,329.6
1,219.06
Gateway Distriparks Ltd
2,723.3
4,520.0
5,180.4
6,012.7
Gati Ltd.
7,168.4
7,904.1
9,261.1
12,094.4
Global Offshore Services Ltd.
943.37
1,632.25
2,124.12
1,968.17
Great Eastern Shipping Company Ltd.
36,154.0
41,239.3
30,755.1
25,850.3
Gujarat Pipavav Port Limited
1,673.2
2,207.1
2,839.3
NA
Mercator Limited
14,768.5
22,105.1
18,087.3
28,316.8
NA
2685.86 *
3,247.21
1,023.76
Shreyas Shipping and Logistics Ltd.
2,901.16
2,840.61
1,539.87
1,886.91
Sical Logistics Ltd.
7,129.1
6,745.5
7,220.1
NA
SKS Logistics Ltd.
459.34
328.291
294.24
442.25
The Shipping Corporation of India Ltd.
37,446.8
41,843.5
34,935.3
35,671.4
Transport Corporation of India Ltd.
12,428.2
13,512.6
15,225.1
18,530.2
Varun Shipping Co. Ltd.
9,451.9
9,146.6
6,852.3
4,946.7
Seamec Ltd.
Automotive and Transport – Monthly Update
*Change in financial year
Annual Financial Results – Income (INR mn) Companies
FY ‘08
FY ‘09
FY ‘10
FY ‘11
14.9
43.3
8.0
54.9
ABG Shipyard Ltd.
1,606.8
1,711.6
2,181.2
2,047.1
Allcargo Logistics Ltd.
1,077.0
1,299.5
1,659.2
NA
Aqua Logistics Ltd.
56.3
111.5
205.4
223.9
Arshiya International Ltd.
453.8
656.2
983.1
820.1
Bharati Shipyard Ltd.
1,076.5
1,334.8
1,303.5
1,043.8
Blue Dart Express Ltd.
779.6
611.9
947.0
NA
Brahmanand Himghar Ltd.
6.44
0.68
0.68
NA
Chartered Logistics Ltd.
19.52
15.85
40.26
78.21
Chowgule Steamships Ltd.
1,659.98
1,175.67
766.64
276.93
Container Corporation of India Ltd.
7,340.7
7,791.5
7,776.3
8,763.7
Essar Ports Ltd.
2,774.1
772.0
937.7
362.9
Four Soft Limited
50.485
447.25
76.65
30.942
Gateway Distriparks Ltd
735.6
795.8
791.4
967.5
Gati Ltd.
197.8
(186.6)
95.0
141.0
Global Offshore Services Ltd.
371.55
411.49
412.2
222.24
Great Eastern Shipping Company Ltd.
14,533.5
14,178.3
5,127.6
4,687.0
Gujarat Pipavav Port Limited
(676.0)
(1,163.9)
(547.2)
NA
ABC India Ltd.
Automotive and Transport – Monthly Update
Mercator Limited
3,276.6
3,764.5
532.4
940.0
NA
471.213 *
1,419.55
(671.66)
Shreyas Shipping and Logistics Ltd.
69.316
55.86
(157.05)
127.77
Sical Logistics Ltd.
502.1
180.1
(356.3)
NA
SKS Logistics Ltd.
26.08
0.77
(81.87)
32.65
8,139.0
9,406.7
3,769.1
5,673.5
329.1
332.6
412.7
501.3
2,275.2
1,240.3
(1,528.8)
147.5
Seamec Ltd.
The Shipping Corporation of India Ltd. Transport Corporation of India Ltd. Varun Shipping Co. Ltd.
*Change in financial year
Quarterly Financial Results – Revenue (INR mn) JanMar 2011
AprJun 2011
JulSep 2011
OctDec 2011
678.4
N.A.
623.2
N.A.
Allcargo Logistics Ltd.
7,315.1
8,540.6
8,115.9
9,983.1
Aqua Logistics Ltd.
(150.3)
1,107.5
921.7
762.5
Arshiya International Ltd.
2,370.6
2,226.0
2,453.9
2,688.9
N.A.
4,397.2
N.A.
3,249.6
Brahmanand Himghar Ltd.
12.717
9.75
N.A.
N.A.
Chartered Logistics Ltd.
531.429
530.177
575.211
N.A.
N.A.
N.A.
60.7
N.A.
Companies ABC India Ltd.
Bharati Shipyard Ltd.
Chowgule Steamships Ltd.
Automotive and Transport – Monthly Update
Container Corporation of India Ltd.
9,788.6
9,490.3
N.A.
10,462.5
Essar Ports Ltd.
(9,710.9)
2,745.8
9,816.5
88.6
Four Soft Limited
326.825
299.865
305.217
329.297
Gateway Distriparks Ltd
N.A.
1,873.2
1,922.9
1,983.2
Gati Ltd.
N.A.
N.A.
N.A.
2,360.9
Global Offshore Services Ltd.
484.624
N.A.
529.25
620.933
Great Eastern Shipping Company Ltd.
7,537.3
6,818.2
6,787.6
4,259.0
755.4
939.9
924.8
1,041.8
Mercator Limited
7,830.1
7,992.0
7,811.6
1,501.6
Seamec Ltd.
280.059
460.4
N.A.
308.3
Shreyas Shipping and Logistics Ltd.
8,888.5
9,293.6
9,068.4
9,670.1
Sical Logistics Ltd.
492.3
462.9
671.4
770.5
SKS Logistics Ltd.
2,293.1
2,049.2
1,963.2
1,799.7
The Shipping Corporation of India Ltd.
87.108
61.31
N.A.
N.A.
Transport Corporation of India Ltd.
N.A.
4,159.1
N.A.
4,643.7
Varun Shipping Co. Ltd.
N.A.
831.6
725.1
789.6
Gujarat Pipavav Port Limited
Quarterly Financial Results – Income (INR mn) Companies ABC India Ltd.
FY ‘08
FY ‘09
FY ‘10
FY ‘11
16.6
N.A.
2.4
N.A.
Automotive and Transport – Monthly Update
Allcargo Logistics Ltd.
499.3
664.3
559.0
506.2
Aqua Logistics Ltd.
(28.5)
42.0
60.7
8.3
Arshiya International Ltd.
273.3
236.3
318.5
344.5
N.A.
173.1
N.A.
16.2
(0.381)
(2.37)
N.A.
N.A.
1.833
30.403
40.41
N.A.
Chowgule Steamships Ltd.
N.A.
N.A.
8.2
N.A.
Container Corporation of India Ltd.
1,717.6
2,341.5
N.A.
2,412.3
Essar Ports Ltd.
(418.3)
396.1
(1,064.4)
(0.1)
Four Soft Limited
(13.036)
16.166
6.944
27.856
Gateway Distriparks Ltd
N.A.
333.6
335.5
331.0
Gati Ltd.
N.A.
N.A.
N.A.
52.6
(28.34)
N.A.
56.845
109.058
Great Eastern Shipping Company Ltd.
107.8
1,625.9
273.1
287.1
Gujarat Pipavav Port Limited
59.8
109.0
132.2
270.0
(207.8)
147.3
66.8
(192.5)
(252.862)
86.3
N.A.
(272.4)
(61.7)
(58.6)
(1,406.0)
741.0
Sical Logistics Ltd.
17.6
(10.7)
1.6
2.7
SKS Logistics Ltd.
(197.3)
20.8
41.0
25.8
Bharati Shipyard Ltd. Brahmanand Himghar Ltd. Chartered Logistics Ltd.
Global Offshore Services Ltd.
Mercator Limited Seamec Ltd. Shreyas Shipping and Logistics Ltd.
Automotive and Transport – Monthly Update
The Shipping Corporation of India Ltd.
2.486
3.99
N.A.
N.A.
Transport Corporation of India Ltd.
N.A.
134.4
N.A.
135.0
Varun Shipping Co. Ltd.
N.A.
(352.5)
1,004.0
825.0
Events Calendar India Warehousing Show 2012 Date: 26th – 28th April 2012 Venue: India Expo Centre City: Delhi NCR Organizer: Manch Communications Pvt Ltd Website: http://www.indiawarehousingshow.com/
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Automotive and Transport – Monthly Update