Deepal Shah, Deputy Group CFO, Allcargo Logistics, says recessionary headwinds are likely to continue leading to a lack of growth in the market. “However, we remain confident of increasing our business volumes by expanding our market share despite all adversities,” he says, adding that as economic revival begins, starting next year, volumes will also grow.

Can you explain how your EBITDA went up 24.2% YoY even as revenues grew just 6.5%? 

The company has seen robust growth through transformational initiatives over the last couple of years. During this quarter, the volume in the main international supply chain business increased despite headwinds on the back of market share expansion. In addition, the share of incremental value-added services also increased, thereby leading to a revenue expansion despite a decline in ocean freight rates. Ocean freight is largely a pass-through cost, and hence decline in costs was higher the company improved operating margins and reported the highest ever EBITDA margins facilitating a much higher growth rate in EBITDA as against lower revenue growth. Revenue comprising ocean freight is not the best driver to gauge business performance and hence gross profits, volumes and EBITDA are better indicators of financial performance.

 

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