Allcargo Logistics, which recently made a $50-million acquisition in the US, is looking at international markets to offset the slump in the Indian market. The company?s executive chairman Shashi Kiran Shetty tells FE?s Vaishnavi Bala about the challenges in the company?s domestic operations, even as it identifies new growth areas abroad. Edited excerpts:Have you been making a conscious decision to increase the share of international business in the company?

Currently we get about 75% of our revenue from international operations. From the aspect of the bottom line, we get about 60% from international business, while 40% comes from domestic operations. This was the other way round some years back. The Indian business is adversely impacted as margins have come under pressure. All our domestic businesses like container freight stations, project engineering, etc, have taken a hit of close to 20%. It has been challenging. This is the reason why we recently did an acquisition in the US.

As you look abroad for growth, which geographies are you targeting for growth?

We did not have our own set-up in the US, so we acquired our vendor Econocaribe last month. It has nine offices in the US and 22 container freight terminals in the US and Canada. There are opportunities to grow in a few other markets, like China and Germany, Australia and New Zealand. These markets will be in our focus for growth.

Over the last four years, the company?s revenue has doubled, but net profit has not jumped much. What is the reason for this?

Yes, that is true. This is mainly due to depreciation and higher interest costs as a result of higher investment by us. Once the debt is repaid, the interest cost will go down, resulting in lower depreciation. So, we will now see a spurt in net profit over the next two years. Currently, we have a debt of R700 crore and we are comfortable with it.

With payment issues surfacing in the infrastructure sector, has screening of customers become stricter at Allcargo?

We have an internal process where we look at the financials of the company, including its cash flows, debt etc. This has become more stringent now. Except for some infrastructure customers, we do not have any issues with customers on payment.

Looking at the macro-economic scenario in India, how are you foreseeing things for the logistics sector?

We have seen some positive movement in the last one month or so, but it is still not very encouraging. There are negative sentiments in the market. Except for the rupee that is slowly stabilising, we are not seeing any major liberalisation or a bold policy decision taking place. Especially in the Infrastructure sector, there is hardly any movement taking place, which in turn affects us.

The company has some interests in shipping. Can you tell us more on that?

We are involved in coastal shipping where things had been slow in the last 12 months. But now cargo flow is happening again. But we do not have a high investment in this business. We have three ships with an investment of R60 crore. We bought ships when the rupee was at 50, so the costs have not been very high too.