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Allcargo buys out ECU Hold NV

By Moneycontrol.com
June 23, 2006 14:44 IST
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Allcargo Global Logistics on Thursday announced that the company has acquired ECU Hold NV.

CMD SK Shetty says that the company paid 22.8 million euro for 100% stake in ECU, which had revenues of 185 million euros, as on December 2005.

Shetty further says that Allcargo will implement two new projects by the end of March 2007, one in Mundra and one in Chennai.

Excerpts from CNBC-TV18's exclusive interview with SK Shetty:

What do you think you can deliver next year, particularly with reference to ECU because you now own 100% in that?

Yes, the company is currently in a stage where it is already showing a very positive trend. The first quarter results are very encouraging. We are expecting a PAT of close to about 8 million euro by the end of the financial year ending December 2006.

What about sales for ECU this year on that PAT you spoke about, and why would margins be so low for ECU as a business?

The topline of the company last year in 2005 was closed to 215 million euro. Globally these businesses have a relatively lower margin of somewhere in the region of about 7-8%. In case of Eculine, we expect to develop the bottomline to a more healthier numbers as we find that the S&G expenses are substantially high and the gross margin in the business is better than some of our competitors based in the United States.

As I indicated several times, we are working very closely on setting up the KPOs and BPOs for the company in India. These efforts are currently underway. We have already recruited about 30 to 40 people and we have already signed up with a larger BPO company to take this initiative forward. Once we implement this and consolidate the

business of the company in a year or two, we expect the company's bottomline to improve even further.

What do you expect to end FY07 with, in terms of revenues, and where will your blended margins stand?

Allcargo standalone is expected to earn close to about Rs 270 crore (Rs 2.70 billion). We expect to have a profit close to about Rs 60 crore (Rs 600 million). With this, we hope EPS of the company to be in the region of Rs 45-50.

Are you taking into account ECU profits as well for FY07 while arriving at that EPS number?

Yes, we are.

So consolidated ECU plus Allcargo you would deliver about Rs 45-50 on fully diluted equity in FY07?

That is correct.

How much of the expansion plans that you have in mind will pan out by the end of FY07?

By the end of FY07, we would implement two projects, one in Chennai and the other in Mundra. We would have made significant progress in our project handling division. However, the project transfer division's income would definitely reflect in this year's balance sheet.

Whereas the two projects, that is Mundra and Chennai would get implemented by the end of March 2007. So the revenue will start trickling in the coming months and the year.

How much have you acquired ECU for?

We have paid approximately 23 million euro.

For 100% stake?

Yes, for the 100% stake. To be exact, the acquisition cost is 22.8 million euro.

Since you now own 100%, from next quarter onwards all the numbers would be consolidated?

Yes, we would consolidate the numbers in FY07 balance sheet.

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