Aegis Logistics Q4FY18 Concall Summary

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Financial Highlights

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  • Total revenues for the financial year ending 2018 March were Rs. 4,791 crores versus Rs. 3,939 crores in FY17
  • A rise of 22% for consolidated Aegis group revenues seen
  • Total EBITDA for FY18 was Rs. 306 crores versus Rs. 247 crores in FY17, rise of 24% year-on-year. 
  • Profit after tax for the group was Rs. 214 crores versus Rs. 136 crores in FY17, a rise of 57%
  • Earnings per share reached Rs. 6.38 for the year versus Rs. 3.97 in FY17, a rise of 61%
  • Board has approved a Rs. 75 paisa final dividend
  • Total dividend for the year to Rs. 1.25 per share

Business Updates

  • Very strong growth in imports over the next 10 or 15 years
  • Domestic production is operating at full capacity right now
  • All the refineries have the full capacity of LPG right now
  • Domestic production of LPG always will be less expensive than imports
  • Aegis is at the full domestic production of LPG, 
  • There might be some small debottlenecking of refineries, etc. 
  • Already seeing rising imports from the oil companies
  • Trend is clear for rising imports 
  •  Expect to maintain the throughput volumes in Pipavav and Mumbai terminals and more Autogas stations are in the pipeline

Liquid Terminal division

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  • The revenues for the year reached a record Rs. 168 crores versus Rs. 154 crores in FY17. Saw a rise of 9% year-on-year
  • The EBITDA for the year for the division was Rs. 103 crores versus Rs. 91 crores in FY17. A rise of 13% year-on-year
  • Steady overall performance for this division.
  • The future growth will depend on new capacity, in Kandla, Haldia, and Mangalore 

Gas Terminal division

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  • Revenue for the year was Rs. 4,622 crores versus Rs. 3,776 crores in FY17
  • The EBITDA for the division for the year was Rs. 203 crores versus Rs. 156 crores in FY17. A year-on-year rise of 30% in the EBITDA
  • Expect a major boost to the LPG terminal volumes in FY 2019
  • Due to full year operations of the Haldia terminal
  • Haldia terminal was commissioned in Q3 of FY 2018
  • In FY 2019, full year benefit of the Haldia sales volumes will be seen
  • Sales volumes are currently running far above the budget in Haldia. 
  • The one year budget was mentioned to be around 0.5 million tonnes. That would be the full year annualized budget for sales volumes in Haldia. 

LPG volumes

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  • Most important segment in the LPG volumes is the LPG throughput terminal logistics volumes
  • For the year it was 1,742,467 metric tonnes versus in FY17 reached 1,349,899 metric tonnes
  • A rise of 29% in the volumes of LPG handled at the 3 terminals in Mumbai, Haldia and Pipavav
  • LPG sourcing volumes for the year were 1,176,598 metric tonnes versus in FY17 1,043,067 metric tonnes, a rise of 13%
  • The Packed LPG Commercial Cylinder business was 13,504 metric tonnes for the year versus 12,521 metric tonnes in FY17, a rise of 8%
  • Bulk industrial distribution sales of LPG was 40,232 metric tonnes versus 23,539 metric tonnes in FY17, a rise of 71% 
  • Autogas was 24,150 metric tonnes for the year versus 23,217 metric tonnes in FY17, a rise of 4% 
  • Key driver of rising LPG profit in the division was the LPG terminal logistics volumes 

    Autogas Stations

    • All new stations of Autogas are unified petrol, diesel under the Essar brand and Aegis Autogas - Aegis Auto LPG.
    • New stations constructing are selling petrol, diesel under the Essar brand as well as Aegis Autogas. 
    • Dealers are selling 3 products rather than 1
    • Around 11 of the old 107 stations have already been petrol
    • Diesel has already been added and continuing to see each of the current 107 stations more can be petrol and diesel. The main benefit is that getting more traffic in the station
    • Apart from LPG, petrol and diesel vehicles also coming through
    • That is the focus for the future that all new Autogas stations of Aegis are under unified stations
    • In the Essar petrol stations around 5 or 6 of Aegis Autogas pumps have been put
    • A limited amount the main focus will be on our all Autogas network to put Essar branded petrol and diesel

      Top-Line Growth

      • It is misleading because international LPG prices go up and down
      • Focus should be on actual metric tonnes rather than LPG prices because they go up and down
      • In Q1 because of rising oil prices and gas prices a sudden jump is there 

      LPG import

      • There are fluctuations from time-to-time in import volumes
      • Do not see that as any major trend, major change in trend
      • The trend is very strong import growth continued for the year because of the penetration of LPG rising in the rural areas under the Ujjwala Scheme, etc. 
      • In Aegis imports Haldia has very strong imports, etc. 
      • When the oil companies schedule their deliveries of LPG imports or domestic production, there are fluctuations with that
      • Expect continued growth, strong growth in imports

      Domestic Production

      • Fluctuates depending on the production schedule
      • Domestic production expansion will be flattish or low single-digit kind of growth
      •  There is limited capacity on domestic production
      • The incremental growth in satisfying the increased LPG demand is going to come from imports
      • Quarter-by-quarter, there are sometimes fluctuations
      • Trend is very strong growth in imports as the Government of India continues to increase penetration particularly in the rural areas of LPG

      LPG prices

      • International LPG prices are rising
      • Impact on demand is not there due to LPG prices rising
      • Even though prices are rising, they are still from a fairly low base
      • Demand continues to be strong and expect that to continue.

      Competition

      • Mundra is active on building an LPG terminal.
      • There is enough imports which are projected to happen in West Coast India
      • Going to continue to build for that

      Liquid profitability

      • Different product mixes, chemicals, depends on trade flows
      • Sometimes the more chemicals are bought which are higher values, sometimes more bulk petroleum
      • Should not think too much into quarter-by-quarter figures of operating profit
      • It remains a steady basis
      • Until new capacity on stream,it is a steady business
      • The terminals of Mumbai, Kochi, Haldia are all full and operating at full capacity
      • Pipavav remains at roughly around 20% capacity utilization, that has not changed
      • It is a steady business and there are fluctuations
      • Focus for the future is bringing the new capacity of 100,000 kiloliters in Kandla
      • There is 25,000 kiloliters in Mangalore and the capacity expansion in Haldia of 35,000 kiloliters
      • Full operation in FY 2019 that will significantly add to revenues and profit
      • Gave Liquid terminal marketing team a very demanding target for the next 2 years in terms of revenues 

      Haldia LPG pipeline

      • Latest information is IOC is making good progress on that pipeline that this is the Paradip to Durgapur pipeline via Haldia, 
      • They are making good progress on that pipeline
      • Achieving 2.5 million metric tonnes is not dependent on that pipeline
      • Aegis can handle 2.5 million tonnes both by road and some other work to be done on future Rail movement of LPG
      • Pipeline will come and that will only enhance evacuation possibility
      • HPCL is building the largest bottling plant in Asia in Panagarh
      • They are actually very close to completing that bottling plant
      • Is great news for our progress towards that 2.5 million tonnes figure
      • Still have to lay pipelines from the Panagarh to Haldia terminal which they have committed
      • They have still not even started working on that
      • Aegis can still move by road LPG to that bottling plan
      • After 6 months of operation in Haldia Aegis is so far above the budget in Haldia
      • It is primarily HPCL and there is also BPCL cargoes which are coming in
      • They have completely stopped transporting any LPG from Vizag all the way to the Northeast
      • BPCL is also bringing good cargoes into Haldia. 
      • Growth in Haldia in this year is going to power Aegis earning overall as we have said but much above budget
      • Current run rate is far above the budget far above
      • Figure will be talking about between 3 years to 5 years from start of operation

      Pipavav Liquid Terminal

      • Focus has now shifted to Rail movement of LPG from Pipavav
      • Have been negotiating with Gujarat Pipavav Port
      • Decided that was the priority rather than Liquid Rail movement
      • There is a lot of scope for increased LPG throughput movement by Rail in Pipavav
      • Once contract agreement is signed with Gujarat Pipavav on LPG Rail movement, will again talk to them about Liquid Rail movement
      • Expansion was completed some quarters ago and it is going very well
      • Maintaining good volumes in Pipavav and utilizing all the tanks that put up to in storage.
      •  Also storing other gases like butylene for Reliance in Pipavav
      • Can add another 2-3, 4 but it is always dependent on when the volumes are there
      • Breakthrough on Rail movement in Pipavav would then determine the future.

        Mumbai Terminal 

        • The throughput volumes cannot increase beyond 1.1 million tonnes
        • Everything is on road transport except for the Reliance contract on propane which goes to the pipeline because there is only road tankers can be handled on a daily basis
        • That is the current run rate that doing right now in FY 2019
        • Chakan pipeline is completed to Poona can start moving products in that 1.2 million tonne capacity pipeline
        • That is the only way the company can raise the throughput in Bombay (Mumbai) towards 1.4 million tonnes
        • Completed interconnection of 2.8 kilometers in December 2016

        Timeline On The New Terminal In The West Coast

        • There is no timeline
        • Going for meetings and negotiations on deals are happening
        • Take time because these are very-very large projects deal 

          Demand CAGR

          • Expect to be somewhere between 6% to 8% demand growth
          • Areas like Northeast, it is going to be higher because the penetration is lower
          • Being governed by how fast the public sector companies IOC, HPCL, BPCL are building out that rural penetration distribution network in the Ujjwala Scheme
          • They are growing as fast as possible 

          Aegis Logistics Market Share for Imports

          • That is a dramatic increase being talked about for the last few years which is expected to be 25% to 30% market share
          • Not only the new Haldia terminal but perhaps the next couple of deals
          • Dramatic increase from currently around 15% of handling of LPG imports to around 25% to 30% 
          • It depends on building that terminal capacity the extra terminal capacity

          Tax Rate

          • All Indian Accounting Standards has been implemented as of this year
          • Target an effective tax rate of around 20% to 22% for next financial year
          • Pretax profit irrespective of the increase in the effective tax rate will be growing well
          • Rising post-tax profit in the current year even though there is an increase in the effective tax rate.

          Future Outlook 

          Aegis Logistics Q4FY18 Liquid Capacity expansion.png
          • The growth in revenues and profits will come from the major capacity increases in the following 3 projects.
          • • Kandla   
            • First, the 100,000-kiloliter project in Kandla. 
            • Project was completed in Q4 of FY 2018
            • Project is complete, waiting for the final permission to fully start the operations.
          • •  Mangalore Port   
            • The second project is a 25,000-kiloliter project in Mangalore Port. 
            • Project should be completed in Q1 of FY 2019 and then, the final permission to start operations
          • •    Haldia
            • The third project the 35,000-kiloliter expansion in Haldia
            • Expected to complete project in the first-half of FY 2019
            • Q4FY18 was much better than Q3FY18 for Haldia port
            • Current run rate, is far above 40,000 tonnes to 50,000 tonnes per month budget
            • Budget was 0.5 million tonnes for the first full year operation
            •  3 years to 5 years is a realistic time frame to achieve 2 mn to 2.5 mn 
          • There was very good throughput in all the terminals as far as Haldia, Bombay (Mumbai), and Pipavav
          • Expect that resulting in 29% growth in overall LPG volumes in those 3 terminals
          • Will maintain the full kind of full results in Pipavav and Mumbai going ahead
          • Can increase throughput further is that Uran pipeline connection
          • Waiting for HPCL to finish their Chakan project, might be the end of calendar year 2018 to complete that project
          • Connected into that Uran pipeline some time ago but they are not using that
          • Road evacuation from the Mumbai terminal for the LPG
          • Expect greater volumes in Mumbai
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          • Growth in FY19
            • Lot of it depends on Haldia volumes
            • Bombay (Mumbai) and Pipavav to continue the current run rate which is
            • Going to be the major incremental volume growth on last year’s 1.74 million tonnes
            • The growth rate depends on whether the customers tender and whether they on their own requirements and whether they import themselves or whether they tender more
            • The company makes $3 to $4 per tonnes in Singapore
            • If IOC, HPCL, BPCL, want to bring product then bidding would be done
            • If they find that they can import themselves through the national oil companies of Saudi Aramco and others, cannot force them to come up with them
            • Main focus is how much LPG can be handled in terminal
            • FY 2019 will see continued strong growth in imports for India as a whole and in Aegis terminal
          • Scenario by FY 2020
            • The gap is rising between domestic production and domestic consumption, which means more imports
            • Gap is going to be increasing because domestic production is stagnant
            • More imports mean more terminals
            • Indian Oil is trying to build 1 terminal in Kochi, which is a 30,000 terminal
            • Got into some problems with National Green Tribunal
            • BPCL is trying to construct 1 more terminal in Haldia a 30,000 tonnes terminal which is under construction
            • Apart from those 2 public sector projects, only Aegis is building LPG terminals
            • Currently planning another 2 LPG terminals in collaboration with the public sector
            • Bulk of the incremental import capacity is going to come from either public sector or Aegis
            • India should then be able to handle the imports by FY20

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          Gati Q1FY18 Concall Summary

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          Macro Environment

          • Cumulative growth in the IIP index for the period April to June 2017 and 30% over the corresponding period last year.
          • GST law came into effect on July 1st 2017.
          • Gati made a zero downtime transition to GST across all their operation subsidiaries.
          • E-Way bill rules are anticipated shortly.

          Financial Highlights

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          • Consolidated revenue for Q1 FY18 stands at INR 4,267 million or 426.7 crores.
          •  Consolidated net profit rose by 258% to 18.3 Cr for Q1 FY18 from 5.1 Cr for Q1 FY17.
          • Core express business volumes grew by 5.6% year-on-year and reverse historical seasonality with 4.6% quarter-on-quarter growth.
          • The standalone revenue for Gati is 119 Crores in Q1FY18 , 122 Crores in Q4FY17 and 127 Crores in Q1FY17
          • Standalone EBITDA is 27 Million this quarter against 26 Million last quarter, and YOY it was 108 Million.
          • On the EBITA side, the Firm is flat versus the last quarter and the firm is having a bit of a dip. The reasons for this are as follows
            • e-commerce business has been a bit slow relatively,
            • Cold chain business which is in the building up stage where the firm is building up fleet in their house has given the firm a bit of an EBITDA drag.
          •  PBT has grown versus last year 324% and versus last quarter 116%.
          • Overall debt position has come down versus last year in March we were at 493 crores and in June we have finished at 4,271 million.
          • Foreign currency loans are completely out.
          • The Firm had about $22 million of FCCB that was outstanding and one-third of that has been repaid and two-third have been converted into equity.
          • The other income is somewhere between 25 odd crores whereas consolidated is 26 odd crores.
          • CAPEX plan in the range of 30 to 50 Crores.
          • The firm owns 4 fuel stations.
          • The firm has regrouped FCCB reversals and interest related items
          • Loan given to subsidiaries : 19 Crores
          • In august the firm will convert FCCB loan into equity shares, with 10.8 Million shares.

          Business Updates

          • Expects e-commerce business in terms of topline and profitability to change track almost immediately going forward
          • Last quarter the parcels with weight more than 5kg were about 20% and this quarter this increased to about 26%.
          •  6% increase in large packages
          • 70:30 ratio of less than 3 kg and more than 3kg for last quarter, and for this quarter this ratio is 65:35 (65% less than 3 kg, 35% more than 3 kg).
          • Larger packages are strength for the firm and provide more profit.
          • The margins have reduced due to Kausar Business and E-Commerce business

          Express Business

          • Volumes have grown by 5.6% year-on-year and 4.6% quarter-on-quarter despite historically the business actually having a seasonal dip in this quarter.
          • Contributes to about 70%-75% of the total business.
          • A business vertical of retail which caters to many SMEs, has grown by 20% in Q1FY18. It has actually grown quarter-on-quarter by mere 7%.
          • The GKE business had an EBITDA of 15 Crores and for Q1 FY17, it was 17 Crores.
          • As per the management this segment is extremely healthy

          Retail Business

          • Grew 279 Crores in Q1 FY18 against 265 Crores in Q4 FY17.

          KWE Business

          • Earning for Q1 FY17 was 282 Crores.
          • EBITDA around 15 Crores for this quarter and 7 Crores for the previous quarter

          Kausar Business

          • Still in Initial Stages.
          • Earnings were 11.1 crores in Q1FY18 versus 10.3 crores 16.18 in Q4FY17 and 11.8 in Q1 FY17.
          •  Delivering a marginal negative EBITDA because it is still building on.
          • The firm is planning to expand their network in the coming time.
          • Marginally negative EBITDA
            E.) E-commerce Business
            •    Earnings were 42.4 crores in Q1 versus 49.9 crores in Q4 versus 58 crores last year’s
          • Q1 has seasonality in the e-com industry given typically the lowest quarter of the four quarters.
          • Through the last 3-4 quarters, a lot of the e-commerce industry had moved towards the smaller weight segments.
          • The firm expects to see change from Q3 onwards when the season hits.
          • Second consecutive quarter where company experienced negative growth in e-commerce.
          • In the year before, the firm has seen 70%-100% growth year-on-year.
          • FY17-18 e-commerce business expected to be around 30%-35% growth.
          • COD share is around 60%.
          • Q1 sale is typically little low but expects Q2 and Q3 to be better as the major players in E-commerce business have got funding

          GIETL business

          • The GIETL is a trading solutions arm or subsidiary of Gati.
          • Offers end-to-end supply chain solution to our customers through this subsidiary
          • This segment grew by 60 per cent.
          • In the GST context, this segment is highly relevant
          • Three company is highly bullish for this segment.

          Gati Fulfilment Services

          • Planned to start the full-fledged service in this quarter
          • But due to the launch of GST , this launch was delayed
          • Due to GST , lot of sellers were very hesitant to move into a new mode
          • The launch has been delayed by around a quarter

          Supply Chain Enhancement

          • Launch of a new product for value-added transportation to complement its existing portfolio of express distribution and warehousing.
          • This helps the company provide an integrated end-to-end supply chain condition which is most relevant in the new GST era.
          • The company is engaged with several marquee customers across industry sectors to bring efficiencies to their supply chain.

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          Aegis Logistics Q1FY18 Concall Summary

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          Financial Highlights

          • Total revenues for Q1 areRs. 856 Crores versus Rs. 739 Crores, 15.8% growth on YoY basis.
          • Total segment EBITDA for Q1 isRs. 66.8 Crores versus Rs. 56.3 Crores, 18.7% growth on YoY basis.
          • Profit before tax isRs. 49.1 Crores versus Rs. 38.6 Crores, 27.2% growth on YoY basis.
          • Profit after tax for the Company isRs. 46.8 Crores versus Rs. 31.7 Crores, 47.6% growth on YoY basis.
          • Profit after tax after all minority interest isRs. 40.4 Crores versus Rs. 27.5 Crores, 47% growth on YoY basis.
          • Q1FY18 is steady in terms of financials but in the second half FY18 from Q3 onwards company expects a steep jump in profits as the new projects like the Haldia LPG terminal will be fully operationalized.

          Liquid Terminal Division

          • The revenues for quarter one areRs. 42.7 Crores versus Rs. 37.6 Crores, 13.5%growth on YoY basis.
          • EBITDA for Q1 for liquid terminal division isRs. 27.9 Crores versus Rs. 21.1 Crores, 32.2% growth on YoY basis.
          • The growth driver is the new capacity which is commissioned in Haldia, which is helping to boost the profits.
          • Other terminals are doing well with the exception of Pipavav,which is still reasonably soft but Q1 FY 2018is better than Q4in FY 2017.
          • Incremental increase in EBITDA in the liquid terminal division of 32% mostly accounted for by the very good performance of the new capacity in Haldia.

          Gas Division

          • Revenues for Q1 areRs. 813.3 Crores versus Rs. 701.7 Crores, 11.6% growth on YoY basis.
          • EBITDA for gas division isRs. 38.9 Crores in Q1 versus Rs. 35.1 Crores, 10.8% growth on YoY basis.
          • LPG throughput volumes in two terminals in Mumbai and Pipavav, in Q1 is 301.5 thousand metric tonnes versus 278.6 thousand metric tonnes, 8%growth on YoY basis.
          • The reason behind not so spectacular growth is company not yet got Haldia coming through which should be coming through in Q3.
          • Sourcing volumes for gas is also up 10% on on YoY basis.
          • AGI sold in Q1 is 232,612 metric tonnesversus 211,371 metric tonnes, 10% growth on YoY basis.
          • Packed LPG Cylinders business is basically static, 2,946 metric tonnes in Q1 versus 2,927 metric tonnes, YoY basis.
          • Bulk industrial sales of LPG industrial distribution is very good in Q1 as  it is 8,836 metric tonnes versus 5,231 metric tonnes, 69% growth on YoY basis.
          • Auto gas is 6,204 metric tonnes in Q1 versus 5,763 metric tonnes, 7.7%, growth on YoY basis.
          • Mumbai debottlenecking is done to the extent of one part, which is the Uran pipeline connection, company completed last December nine months ago.
            • Company expected Chakkan pipeline to be ready by October 2017 but HPCL says that now it is delayed up to the March 2018.
            • Once  it is completed (expected in next financial year), it is expected that HPCL will start using this pipeline facility and cutting down road traffic.

          Capex And Expansion Plans

          • New capacity in Haldia Phase II which is 35,000 kiloliters will be completed in Q1 of FY2019
          • New capacity in Kandla 100,000 kiloliters, will come on stream in Q3 and Q4, which will boost the liquid terminal revenues in the second half of the year.
          • For gas capacity, company is adding another 10,200 metric tonnes of LPG capacity in Pipavav.
          • Half of this expansion is completed i.e. three spheres of the six spheres are completed, the balance three spheres will be completed by the end of this September ’2017.
          • This expansion will lead to exponential growth in revenues from Q3 & Q4.
          • LPG Terminal Projects
            • Company is working on the next cycle of LPG terminal projects after Haldia.
            • The company is working on at least two LPG projects going forward and it is reaching a stage where company is getting ready to probably start work .
            • It is expected to put these LPG projects before Aegis board very soon, possibly in next board meeting.
            • Company is very near to signing its next LPG project.
            • Next project is still a little further away as company is still doing some commercial negotiations.
            • Company is making good progress on those next two projects and it will bring it to the board of Aegis for approval and after that details like of size of capacities, location etc will be shared, but it is for the future earnings call.
            • Company has received a bulk of the environmental permissions already for the said two projects
            • Company has already identified three possible anchor customer for the new LPG projects.
            • For new projects company is looking for pipeline connectivity similar to Haldia and also for rail & road connectivity.
            • Working with a public sector client for gas project in South India.

          • LPG Bottling Plant in Haldia

            • Though the Haldia project is a bit delayed but company has received in written from HPCL that HPCL is willing to use Hadldia facility asap.
            • Company has not yet been able to get a sourcing agreement and throughput which will be done at Haldia as HPCL is concernedthat they have not released the tender for the supplies for Haldia.
            • Throughput step up jump from the coming quarters will be much more than the sourcing jump.
            • In The Haldia Probject Company’s subsidiary has been financed through loans by the holding companies so once the subsidiary company issues new shares and gets the money from the JV partner ITOCHU it will be the used to pay back the loans of holding company so there will be no tax effect
            • For Haldia LPG project, the mechanical completion is done and a few days ago company started the commissioning of the project with the gassing up process and that is going on.
            • Though the Haldi a LPG project is delayed, company expects to complete commissioning by end of September’ 2017.

          Future Outlook

          • For liquid terminal division, company expects continued steady growth for quarter two and bigger revenues and profits in the second half of the financial year.
          • ITOCHU deal is expected to be completed as per the legal agreements next month in October, they will be remitting a Rs. 250 Crores for that equity stake.
          • Company expects a very large jump in profits when the new projects of the Haldia LPG terminal, the Pipavav, LPG terminal, the Kandla liquid terminal, Haldia liquid expansion etc., are commissioned in September.
          • HPCL is an anchor customer in Haldia.
          • Company has already identified and reached an agreement in principal with the anchor customer however not yet signed agreement.
          • Since price of petrol is being revised daily, linkage of prices of CP, LPG does not exist anymore. Resulting better margin for auto gas.
          • Provisioning of taxes is low due to implementation of Ind-As and write back of deferred tax.
          • Due to change in income tax rules, change in base year company will see non cash component in the range of 5-6 crores for all quarters of FY 2018.
          • Current throughput at Mumbai about 80000 tonnes a month, expected to grow once Mumbai-chhakan pipeline will be completed. It is expected to grow to 1.3-1.5 million tonnes per year from currently 1million tonnes.
          • As Reliance is planning to replace propane by ethane to there is a change in opportunity for the Aegis and Aegis will propose backup plan to reliance which should be acceptable to reliance.

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          AllCargo Q4FY18 Concall Summary

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          Financial and operational highlights

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          •  Despite the slow growth in global macroeconomic situation, AllCargo has shown growth in volumes by about 13% y-o-y.
          • Last quarter the freight rate growth has been the best and the fastest since 2010.
          • Going forward it is believe that the freight rate shall hold well, even though the capacity remains constant or grows marginally.
          • The company has a very strong presence in pharma, auto and chemicals and a fast growing penetration in the fashion and retail space.
          • ROCE improvement drive is being continued. Low yielding assets without strategic importance are being sold.
          • Have performed better than the global LCL trade, which grew by around 2% to 3%, the company is planning to continue to outgrow the market.
          • Revenue during the quarter stands at 1,161 Cr y-o-y, decrease of about 2% mainly on account of change in currency fluctuation and transfer of the freight forwarding business to ACCI.
          • Despite the low margins because of the increase in volumes growth has been observed in EBIT for the quarter by 5% at Rs.50 Cr
          • The return on capital employed is around 29%.
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          Business performance

          MTO Business

          All Cargo MTO Performance Q4FY17.png
          • The freight rates are strengthening, they are moving across the trade length.
          • Marginal growth in margins is expected.

          CFS & ICD Business

          All Cargo CFS and ICD Performance Q4FY17.png
          • Allcargo is in the top three as far as CFS business are concerned across India.
          • Approvals are awaited for the CFS in Kolkata to commence operations.
          • Volumes have grown by 15% y-o-y to 77,021 TEUs for the quarter and 8% y-o-y for the full year at 291,186.
          • Volumes of ICD’s in Dadri and Kheda for the quarter have grown by 2% year-on-year to 8,170 TEUs.
          • The full year volume for ICDs in Dadri and Kheda was 35,670, a y-o-y growth of 17%.
          • EBIT for the quarter has been maintained at Rs.29 Cr despite lease rentals of the CFS at Kolkata and expenses of managing the new CFS in Mundra.
          • The revenue from CFS and ICD’s for the quarter was at Rs.114 Crores a decline of 10%.
          • Business is expected to pick up traction once the government and private sector spending starts to accelerate.
          • Direct Port Delivery (DPD), which was initiated in the third quarter of the last financial year with a focus of ease of doing business, has changed the CFS service offering. This has negatively impacted a traditional CFS but has created a new segment for value added services for end-to-end logistics.
          • A better solution is offered by providing storage facility at the port itself.
          • Transportation, handling and also the ground rent is collected as part of the complete service.
          • Post GST implementation the potential in this business is really very high keeping in mind the existing customers requirement, their planning in terms of inventory movement, warehousing and other thing wherein the company contributes a lot in terms of assisting them or advising them about their entire inventory management across the supply chain.
          • Post GST the company is expected to add a lot more customers in all the sectors that is a chemical, auto engineering, fashions, retail, e-commerce etc., 
          • DPD volume happening at JNPT in overall terms for a port approximately ranges from 25% to 28%.

          Project Engineering Business

          All Cargo Project and Engineering Solutions.png

          In project engineering business, the asset utilization on crane fleet continues to be strong.

          Capacity expansion and growth prospects

          • In terms of progress done in Jhajjar, railways has recently given some direction on the DRFC requirements. Commercial viability of Jhajjar in the first phase could be anywhere around 18 months to 20 months. For land acquisition, title study or title search is complete, subject to getting into future approval from the railways.
          • Net debt risen in this quarter by Rs.60 Cr predominantly because of the capex for the Kolkata CFS, which is under implementation.
          • Net debt has gone up this quarter because term-loan is taken up at a very attractive rates, so it’s not required to lock the equity, which has got a higher cost.
          • Debt market interest rates is very attractive for top rated companies in India, so advantage is being taken of that and extra money is being returning to either shareholder or having a different business fronts, which is earning a higher return than the cost of the debt.
          • Non-controlling interest of Rs.51 Cr is the Ind-AS requirement because the Ind-AS is applicable from current financial year.
          • Restate is needed for three year number to have an apple-to-apple comparison as per the Ind-AS requirement that is up for FY2016-2017 and for FY2016 just to have a correct opening numbers of F2015  which has also been restated and these can be taken as pure Ind-AS adjustments.
          • EXIM trade globally has increased up to 2% to 3% and consumption in India has increased up-to 5% to 6% which in turn has led to the increase in growth.
          • The company is expected to grow the MTO volume by 2% to 3%.
          • Capex for FY2018 would be around 50 to 100 million with maintenance capex around Rs.5 to Rs.7 Crores per quarter

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          Aegis Logistics Q4FY17 Concall Summary

          Aegis Logistics Logo

          Financial Highlights

          Aegis Q4FY17 Financials
          • The revenues for 2016-'17 financial year was Rs. 3,938 Crores versus Rs. 2,213 Crores year earlier, rise of 78% yoy. 
          • Total segment EBITDA for the year was Rs. 246 Crores versus Rs. 225 Crores year earlier, rise of 9%.
          • Profit before tax was Rs. 172 Crores for the year compared to Rs. 153 Crores year earlier, which is a rise of 12%, and net profit after tax was Rs. 134 Crores as compared to Rs. 126 crores year earlier, rise of 6%.
          • Liquid terminal division revenues for FY17 was Rs. 154 Crores versus Rs. 170.6 Crores year earlier, and the EBITDA was Rs. 90.7 Crores for FY17 as compared to Rs. 102.4 Crores year earlier.
          • For gas division, revenues in FY17 was Rs. 3,779 Crores versus Rs. 2,043 Crores year earlier. EBITDA for the year FY17 was Rs. 155 Crores versus Rs. 123 Crores, a rise of 26% yoy.
          • As per the details of investor release, ITOCHU will invest Rs. 250 Crores approximately US$39 million
          • Aegis will use part of funds from ITOCHU to significantly accelerate the building of next two LPG terminals, which will most likely be on the West Coast of India.
          • A change in government pricing for auto LPG and follow where they used to have the auto LPG pricing 40% cheaper than petrol but now started doing 50% cheaper.
          • As Pipavav is concerned, currently expecting at 1.4 million tonnes, and are probably somewhere in the range of 800,000 to 1 million tonnes.
          • Strategic sense made for both the companies (ITCHOU & LPG) which also makes financial sense in good valuation and will use part of this money Rs. 250 Crores to invest in other Aegis projects like the two LPG terminals 

          Key Company Highlights

          • ITOCHU of Japan, will acquire new shares and take a 19.7% stake in subsidiary HALPG called Hindustan Aegis LPG, which is the Aegis subsidiary, developing and building the LPG terminal in Haldia
          • The negotiation carried out with ITOCHU in Haldia on the valuation, was based on discounted future cash flows of their project, taking into account number of years of projections which is around 10 years of future cash flow projections
          • ITOCHU is the second largest LPG company in the world
          • In quarters '16-'17 Aegis Group International Singapore, directly doing the sourcing business and was no more businesses in Hindustan Aegis which is also the only business in Haldia LPG terminal.

          Capex

          Aegis capex
          • The whole industry starting from the oil national companies is in a rush to build LPG import capacity.
          • Using Uran, Aegis interconnections into Uran-Chakan pipeline, once infrastructure is ready at Chakan then the total capacity of pipeline is 1.2 million tonnes a year.

          Growth

          • The Aegis Auto Gas business, reached 23,217 metric tonnes for the FY17 versus 21,680 metric tonnes, a rise of 7.1% in sales volume and all the LPG segments growing and contributing to the bottom line, resulting in the good increase in the gas division EBITDA last year
          • Packed LPG Cylinders business under the brand name Aegis Puregas, achieved 12,521 metric tonnes for the year FY17 versus 11,904 metric tonnes year earlier, a rise of 5.2%
          • The significance of the ITOCHU deal announcement that is going to speed up Aegis's process even further because the infusion of these funds is only going to speed up the process of building and the next couple of LPG terminals.

          Key Operational Highlights

          • The Kandla and Haldia capacity expansion along with very strong business in Mumbai terminals and the existing terminal in Haldia and Kochi these are all doing well
          • The proposed deal with ITOCHU for 19.7% stake in the Haldia LPG project and once deal is completed, will significantly speed up Aegis's next phase of expansion in the LPG business specifically for the next two LPG terminals
          • According to Kandla, Pipavav is a new port, in which its difficult to persuade customers to start out and expect this 100,000 kiloliters when it is commissioned from day one to be fully occupied.

          Strategy

          • With BPCL, HPCL had one major contracts with all the other customers and the target for AGI, Aegis Group International in Singapore of 1 million tonnes
          • Planning 100 turns a year in Haldia, which is 100 times, 25,000 Crores to 2.5 million tonnes which already achieving in Mumbai
          • Pipavav, Mumbai started selling gas into North East India through their joint venture in Singapore AGI

          Other Updates 

          • Haldia is over 90% capacity utilization and Pipavav unfortunately is still weak but the Q4 is below 20% capacity utilization
          • The demand forecast for India are much higher than was projected earlier because the penetration of LPG is increasing at a much more rapid pace due to new government schemes like the Ujjwala scheme for below the poverty line

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          AllCargo Logistics Q3FY17 Concall Summary

          AllCargo logistics logo

          Financial Highlights

          AllCargo Q3FY17 Financials
          • Total Revenue from operations stood at Rs 1411 crores for the quarter ended Dec 31 2016. This is an increase of 6%.
          • The volumes have grown both in MTO & CFS businesses
          • EBITDA for the quarter was 99 crores, which is a decline of 13%, this was mainly due to cost arising from rentals from Kolkata CFS, which is yet to start & also for expenses incurred in Q3 FY17 for managing the CFS at Mundra
          • Q3 saw a slowdown in logistics & shipping business, as there were no new projects that really took off ground. 
          • The company has considered moving away from lower ROC business & selling of hazard assets
          • In Q3 the company sold ship which was more than 25 years of its effective life & one ship was under repair.
          • There has been transfer of similar business to ACCI due to the IndAS this is reflected in PAT by way of JV accounting. All these factors affected company’s P&L for the quarter
          • PAT was 49 crores a decline of 10%. This was mainly because of deferred tax impact on account of IndAS guidelines. 
          • Net Worth as on Dec 31 2016 stood at 1894 crores. 
          • Net Debts stood at 259 crores
          • Consolidated Return on capital is at 14%. 
          • Last year, the company the company had announced buyback to reward shareholders. The buyback was completed by January at price of Rs 195 per share. The total buyback size was 64 lakh shares that translate to approx. 2.54% of total number of share outstanding. The total amount of buyback was 124.8 crores
          • There is Other Income of 18.27 crores which includes Dollar to Euro translation income & other income rentals & other miscellaneous & unclassified spread in income
          • There is other comprehensive income which is below net profit which is the share in JV & associates. This is because of new IndAs, which has to be shown separately
          • The company has not able to find out why MTU realization are dropping. The company believes that this phenomenon is temporary & as freight rates start kicking back the company will reap the benefits of the freight rates. 
          • ICD volumes for the Quarter have gone up 13% to 9035 TEU’s
          • Earlier, all the expenses incurred till the facility commenced operation was capitalized, but as per the new accounting standards and in line with the generally accepted accounting principles, the lease rental paid to the Kolkata port has been debited to the revenue expenses and not capitalized, and for the 9 months ended December 2016 the amount is close to 3.5 Crores, and that has been accounted in this quarter as expenses.
          • Decline in EBIT is of 8 crores out of which 3.5 crores is on account of rentals to Kolkata port & 4.5 crores on account of expenses for Mundra CFS.

          Business Update

          • The board has given in principle approval of acquisition of 49% stake in terminal & combined volume of both the ICD which are growing i.e Kheda & Dadri that is 9000 TEU
          • There is slump sale where in all the business of CFS Transindia Logistic park is taken over by Allcargo. The deal numbers is not included in current quarter as the transfer will be effective from 01/01/2017
          • The CFS volumes have gone up but no increase in revenue due to cost of rentals & other expenses which are as per Ind As for Kolkata is under setup & there is no revenue there. That is the reason cost has gone up
          • Utilization of crane & equipment during the year is 90% upwards
          • Kolkata has approximately 4 CFS & all of them are small size. The Port volumes have been increasing by approximately around 20% in last 2 years. The port activity has been improved because BSA has taken over the operations and maintenance of the port at Kolkata, so the company expects that the volumes should continue to rise. This would increase approximately 65-70% of company capacity. 
          AllCargo Segment breakup Q3FY17

          Industry Update

          • Indian logistics market size is around 130 billion and is expected to grow by 300 billion by 2020.
          • It contributes to 5 – 6% to GDP & has been growing at CAGR of 11-12% 
          • Government has introduced for a selected few importers direct port delivery or commonly called as DPD to improve port clearance
          • DPD has become a new segment of business. DPD has introduced a new mix of business for CFS. Presently DPD volume is in range of 5% of the imports at JNPT & right now DPD is only at JNPT
          • The government has focused on infrastructure development in the budget & with GST implementation it is a positive step.
          • The government has taken decision to improve ease of doing business & came out with new customs regulations in which the ports have been asked to give deliveries directly from the terminals instead of putting it into the CFS. But what the company has seen in recently is that most of the cases the volumes have not been able to be delivered at the terminal because the process with which the trade works is different. 
          • The trade requires in many cases that call should be made of credit terms, the original bill of lading, the clearing process, the factories or the trading houses to have their own storage facilities, these issues have come up from the customer end.
          • Right now the volumes are only 5% but the company says it will have to wait & see how industry adapts to this new policy.

          Impact of Demonetization

          • Demonetization has been a disrupter for the business
          • It did affect the company as a logistic player during the quarter as it was completely B2B. Also for clients it did impact & this may cascade down to company

          Capex

          • The Total Capex incurred for 9 months is 167 crores. This inlcudes:
            • Cost for dry docking of ship - around 4 crores.
            • Addtion of a crane of 600 tonnes at 31 crores,
            • JNPT additional expansion is 43 crores
            • For Kolkata till date the expenses incurred are 31 crores & thereafter other maintenance Capex are pertaining.
          • For full year it will be less than 200 crores

          LCL Business

          • The company is world leader with a global network covering over 80% of the world.
          • The company operates out of 300 offices in 164 countries.
          • Volumes have grown by about 14% Y-o-Y
          • Revenue stood at 1206 crores, a Year on year increase of 11%
          • EBIT for the Q3 was 42 crores. The ROCE was around 28% in this part of segment of business
          • The company’s aim is to continues to maintain global market leadership & focus on growth & strengthening network across all the markets

          CFS & Project & Engineering

          • The company started with CFS & ICD operation & CFS expansion is well on track.
          • The company is still waiting for final approvals from Indian railways for logistics park in Jhajjar
          • DRFC on the western corridor is expected to be ready by 2020, so the Jhajjar project is in line & it is dependent of course in the future on the DRFC.
          • The setting up of CFS at kolkatta is on track & expect to start operations by 1st quarter of next financial year
          • The company has started managing operations of facility at Mundra & this is an asset light model. The company has leased out 40 acres & expecting numbers to be ramped over the coming months.
          • This facility at Mundra will not only add to the volume numbers but will also help in the P&L.
          • In Q3 volumes grew by 14% Year on Year to 75787 TEU’s & this is from all the 5 facilities including new Mundra facility.
          • The volumes of the two ICDs, which are Dadri and Kheda for the quarter, grew by 13% to approximately 9000 TEUs
          • The revenue for the quarter grew by 1% to 111 Crores and the EBIT for the quarter was at 32 Crores, a decrease of 17%. This was mainly on account of lower dwell times which was seen CFS business, rentals booked for the upcoming CFS at Kolkata as per the new IndAS guidelinesand the expenses of managing the CFS at Mundra in Q3.
          • The return on capital employed was 32%.
          • The company bought high tonnage crane of 600 tonnes this quarter against long term contract with a large MNC. Continued slowdown seen in the business
          • However in the past 2 months the company has seen order book developing & there is good traction & expect to close 2 or 3 contracts shortly
          • The company's equipment leasing business continues to do well, in the shipping business the company sold one ship that was around 25 years old & may sell one more.
          • One of other ship is under repair & maintenance last quarter due to engine failure. This ship was out of business for last 2 months & expect this vessel back in sailing shortly.
          • All the above factors contributed to a decline in revenue & profits from the shipping business
          • Revenue for the quarter was 111 Crores, a decline of 21% and the EBIT was at 5 Crores as against 7 Crores
          • The company will continue focus on increasing our market share in CFS, ICD, and P&E business by opening new offices in geographies to increase footprint and scale alongside increasing our product offerings

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