No heavy burden

There are always opportunities lurking around adversity— the difficult bits of course is to find those opportunities. And it’s the ability to spot and exploit those breaks that separates the men from the boys. Take, for instance, cargo and container handling firm Allcargo Global Logistics, which has been doing its bit—much before the downturn arrived—to stay competitive.

In 2006, Chairman & Managing Director Shashi Kiran Shetty had acquired Belgian logistics firm ECU Line for $29 million. He didn’t waste any time in shutting down its unrelated businesses (like local transportation) and moving out of low-yielding markets (like East Europe). He also laid off some 50 people at a time when no slowdown was in sight—a tough task to pull off, reveals Shetty. AGL also moved some of the back-office work of ECU—IT, human resources and accounting— to India to trim costs. Such measures have gone a long way in hastening the integration of the two companies. They were vital, too; today, ECU Line contributes almost 60 per cent of the total revenues.

Why Allcargo is a winner Minimal exposure to the US Low debt & healthy cash pile helps it in buyouts Branches into equipment leasing Restructured international acquisition to advantage

AGL is also seeking to build a new revenue stream in the related area of equipment hiring—leasing out cranes and other machinery. Shetty says all equipment have been hired, and a few more will be purchased.

Still, the big question is: for how long can AGL continue to register triple - digit earnings growth? Obviously, not for too long. A slowdown is inevitable, and analysts expect the profit growth to come down to 16 per cent in 2009-10 —a fall no doubt, but still it’s the kind of growth that many Indian companies will give an arm and a leg for.

 Everyone may be screaming slowdown, but that hasn’t convinced Shetty to go slow on his plans. AGL is expanding its Container Freight Station (CFS) business by putting up a new facility in Indore with a capacity of 40,000 tonnes. Shetty is also doubling AGL’s Chennai CFS to 90,000 tonnes.

The climate is also perfectly conducive for acquisitions—as is AGL’s financial health. The company has debt of just Rs 125 crore, cash of Rs 50 crore, and expects to receive around Rs 250 crore from private equity firm Blackstone—which held 5.26 per cent of AGL’s equity as of end December— by September on conversion of warrants. One venture that has been put on hold is that of inland containers, which was expected to start in Bangalore. Now that’s what you call a measured growth game plan.