Article

The fascinating story of an entrepreneur who painstakingly built a small cargo handling enterprise,
established on Mumbai’s shores, into the world’s second largest LCL (less than container load)
consolidator now with direct presence in 59 countries. Jayashree Kini-Mendes traces the journey

Shashi Kiran Shetty, the chairman and managing director of Allcargo Global Logistics, caught the notice of
many in the Indian and global mainstream press on February 16 this year when he was given the Ernst &
Young (E&Y) Entrepreneur of the Year award in the services category for 2009.

This first-gen logistics entrepreneur has taken his company from a small outfit formed in 1993, along with a
motley group of peers and Rs 25,000 of his own savings, to make it the second largest LCL consolidator in
the world. Incidentally, the Rs 532-crore company also is being dubbed as India's first true multinational
logistics corporate – also a sign of the growing ambition of India’s logistics players.

Seizing opportunities

Seated behind a large wooden desk in his plush corporate office located a few yards away from Mumbai
University, Shetty, 52, looks well in control. To an observer, Shetty’s suave demeanour completely belies his
formative years shaped at India’s chaotic and mind-testing port terminals.

Right after his education, Shetty came to Mumbai to begin his career and worked for four years with
shipping agencies — Intermodal Transport Services and Gokak Patel Volkart Ltd (erstwhile Forbes Gokak
Ltd) were the two he worked for — and garnered a good amount of experience working in the challenging
and diverse fields of port operations, cargo handling, also, at times attending to the requirements of ships
coming to the port.

“My experience gave me an exposure to multiple ports and ships that called in various ports in the country.
That was the time when the ports would be very congested, there would be berthing delays. It was quite a
struggle. I worked at entry-level jobs – that’s how my career started,” Shetty reminisces.
To his entrepreneurial eye, the everyday battle waged by shippers and operators in handling cargo was an
opportunity waiting to be tapped. “In those days (early ‘80s) there was a dire need for an organised player in
the transportation and handling business,” he says.

In 1983, Shetty, barely 25, started his company called Trans-India Freight Services, a cargo-handling
enterprise operating at the JNPT (Jawaharlal Nehru Port Trust) port terminals in Mumbai.

To begin with, since Shetty did not have the money necessary to buy cargo-handling equipment, he got the
latter on lease – trailers, forklifts, cranes. The other thing he did was ask people he had known from port
operations to join him in his venture. It helped that Shetty was equally at home with shipping workers and
contractors on the one hand and international clients on the other.

He recounts, “What I did was, bring in the right people, set up the equipment and I was there to make sure
that things worked.” He admits, though, that the struggles were many and growth was slow and painful. “The
struggle was (present) everywhere and in everything. To get the business was not easy. To have the cash
flow in the system was very difficult. But we were able to stay on course since we did a good job on a
sustainable basis.”

The next ten years were eventful in that Shetty grew his business into a medium-size enterprise. Then, along
came liberalisation.

The Big Break

The economic liberalisation of 1991 threw open doors to global trade and investment. Foreign companies
were scouting the Indian horizon for partners to garner a toehold in the local market. In 1993, Belgium-based
AMI International came calling to India. The company was looking for an agent for its LCL (less than
container load) consolidation business. With TransIndia already established, Shetty saw an opportunity to
enter a new business domain. He tied up with AMI International and set up Allcargo Movers India Pvt. Ltd
(that shared its acronym with the former for obvious reasons), as an agent to the Belgian company.

At the time, most MNC shipping companies were not in favour of offering LCL, as the dynamics of rich
European countries demanded large exports and so did not favour LCL – although LCL did offer higher
rentals. “LCL was a very niche market and large foreign companies were unable to pay attention to the
business. Globally, too, the LCL business was moving to intermediary players like us. That’s how I got into
the business,” says Shetty.

According to Rohit Chaturvedi, CEO of i-maritime Consulting, a maritime, port and shipbuilding consultant,
“Indian exporters had realised the cost-effectiveness of the sea route even in those years. Around 1995, port
handling had improved and reduced the turnaround time of ships. With reduced transit time at LCL hubs,
consignments could move faster and proved economical to the exporter too.”

Around the same time, Belgian-based AMI International sought to set up its own office in India. Business
volumes had touched a high and India was a new and unexplored market for the multinational companies.
Sensing that it was time to move on, Allcargo Movers India Pvt Ltd changed its name to Allcargo.

Shetty, by now, had acquired a taste for global markets. Allcargo kept an eye out for another foreign partner.
The Antwerp-based global multinational and a world leader in LCL consolidation and NVOCC (non-vessel
operating common carrier) operations, ECU-Line NV, was looking to tie up with an Indian player. Allcargo
began as ECU-Line’s agent in Mumbai and New Delhi in 1995.

The NVOCC business was a low-investment, high-returns business, but there was no big Indian player in the
field. Shetty sniffed an opportunity, which was ripe for the taking, thanks to the Ministry of Shipping’s
foresight. In 1993 itself, the Indian government had introduced the Multimodal Transport of Goods (MMTG)
Act to allow shipping agents to issue their own bills of lading, provided they acquired an MTO (Multimodal
Transport Operator) license from the Directorate General (DG) Shipping, thus making them carriers without
owning a ship or vessel, or an NVOCC. Shetty lapped up the opportunity and acquired the license in 1998.
Now Allcargo could provide a whole host of services – right from liaising with shipping lines, port agents,
local carriers etc, for movement of customers’ shipments to issuing bills of lading.

Multimodal operations came with its challenges. Kamal Gupta, chief of operations of Delhi-based Om
Logistics, says, “Port authorities inspected all goods at the ports which led to delays and longer turnaround
period for exporters.” Procedural hassles were plenty and consolidation of cargo at one location was not
possible at, say a large port like Jawaharlal Nehru Port Trust (JNPT), which has several CFS’s and cargo was
scattered across various freight stations.

Though there were several hurdles, Shetty was making progress. Cargo-laden ships require stop overs at
multiple ports and to manage the business better, Shetty set up few offices across the country. However, the
partnership with an MNC did not make anything smoother. It was hard to convince the sceptical Indian
mind-set to entrust his company with cargo worth millions, and especially to an NVOCC. “So we began
offering customers something they were unused to. Quick service, quicker response, competitive rates, a
better credit period – all this helped established our business in two years time,” says Shetty.

Strength to strength

Allcargo’s tie up with ECU-Line offered Shetty time and vigour to seek out more deals. A company needed
to be a complete end-to-end player, it had to offer cargo movement to its customers. Another important
lesson he was to learn was the emphasis on customer satisfaction that led him to constantly employ methods
to gain new customers, while retaining existing ones.

Shortly after turning multimodal transporter, Allcargo began offering multi-city consolidation from its
offices across the country. (The vehicles and equipment came from Transindia.)

It appears, the company’s policy over the years has been to look for both organic and inorganic growth in the
same measure. Other than gunning for business with existing teams, the company has sought to enhance its
position through a series of tie-ups, investments or acquisitions. In 2001, it made strategic investments across
various ECU-Line offices, strengthening its position in the LCL consolidation space and made small
investments in ECU-Line Mauritius, and ECU-Line Middle East. The next year it acquired a 50 percent
stake in Durban-based ACM Lines (Pty) Ltd.

Likewise, in 2003 Allcargo entered into a joint venture with US-based Transworld Logistics & Shipping
Services Inc. Sector observers speculate that the idea to foray into Project logistics, air freight and
warehousing could have struck Shetty through his association with Transworld, considering that the latter
already was a well known player in this field. The same year, it also commissioned its first container freight
station at Koproli near JNPT.

Stay ahead or fall behind

Staying ahead and wide of the competition has been Allcargo’s chief strategy. It has moved fast into related
areas with surprising regularity. This haste also comes from the fact that freight consolidation is a low-
threshold enterprise and one has to relentlessly stay ahead of the competition to avoid getting nipped at the
heels.

In 2004, with various infrastructure projects ready to take off in India, Allcargo saw an opportunity to help
transport large equipment for the power sector, refineries, railways, etc. to the project location, and forayed
into the Project Logistics business. Today the company claims to have the largest Project Logistics handling
business in India.

A prudent policy that Allcargo has always been following was to maintain low debt and healthy cash
reserves to fund its expansion and acquisitions. In 2005, it made its largest purchase by buying a 33 percent
stake in ECU-Line; this was increased to 49 percent in January 2006 – the year Allcargo went public (and
added air-freight capability to the group by acquiring Hindustan Cargo, the freight forwarding arm of
Thomas Cook). The money accrued through the listing helped the 100 percent acquisition of ECU-Line for
Rs 130 crore. The acquisition gives Allcargo dominance in the European and Latin American markets, and a
strong presence in Africa. The takeover brought with it all ECU-Line’s assets and also its 120 offices in 56
countries and a network of agents in 120 countries, and a chance to offer service to over 4,000 destinations.

This decision to continue as an LCL player has stood Allcargo in good stead. LCL’s usefulness was proven
particularly during the global recession that shook the world in 2008-09 and compelled shippers to tighten
costs. “There are customers who prefer LCL because their requirements are small. During the recession last
year, companies drastically cut down on inventory and so LCL became a pattern. Even some full containers
found conversion into less-than containers. This worked well for us. The volumes of our LCL business
dropped by 10 percent last year, while FCL volumes fell by was almost 32 percent,” says Shetty.

Freight station foray

Handling container load and cargo at ports require warehouse and container space along with large pieces of
equipment such as forklifts, hydraulic axles, cranes, etc. Freight stations were the exclusive property of the
government. When the government allowed the private sector to set up CFS’s, Allcargo set up its first CFS
at Koproli near JNPT in 2003. Consecutively, the company commissioned expansions in two phases, thus
taking it to a current capacity of 140,000 TEUs per annum.
The cargo consolidator saw an advantage in setting up freight stations and steadily began purchasing land
banks. Today it has freight stations at Chennai and Mundra constructed at an estimated cost of Rs 35 crore
each. There are plans to set up ICD/CFS at Delhi, Kannur, and Kolkata where it owns land banks. Its first
ICD is up and running at Indore and it caters to the hinterland of the northern region through ICD Kheda,
Pithampur in Madhya Pradesh for which it tied up with Hind Terminals. Construction on another ICD has
started, where Allcargo has tied up with Container Corporation of India (Concor). Revenues for the CFS
business are derived from rentals for containers stored on its premises, pending customs clearance, and a
higher dwell time will mean increased benefits.

With numerous sectors in India growing exponentially, the market for warehousing is expected to grow.
Pharma, automobiles, electronics, and cement plants are the sectors the company plans to target. It has two
warehouses in Goa and Mumbai and is expected to set up three more within the next couple of years. The
company has 250 acres of land acquired through years of purchase. It also intends to spend Rs 200-250 crore
this year on expansions in warehousing, CFS’ and acquisitions. A zero debt company holding cash reserves
of Rs 150 crore, the expansions could be sooner than later.

A productive mix

The diversifications of the businesses demanded that the company form various subsidiaries so as to make
handling easy. The company set up AGL Ports, AGL Projects, AGL Terminals, AGL Warehousing, and
Allcargo Logistic Park.

In 2008, it amalgamated Transindia Freight Services to leverage its equipment expertise and multinational
presence to offer equipment lease to projects companies. A fragmented business with plenty of competition,
the company expects growth to come from offering project logistics to power companies, refineries, and
mining companies and has worked with Larsen & Toubro, Siemens, Bombardier, Vedanta, among others. As
the largest in Project Logistics handling business in India, it transported 424 coaches for the Delhi Metro
project. Owning close to 400 trailers, 1200 cranes, and 400 forklifts gives it an edge in providing services to
project companies.

Managing talent

So how does the company manage its staff across its various offices in the world? “After buying over ECU-
Line, there was a lot of work we had to do in terms of culture integration, systems and processes, control,
etc. To maintain the lead in LCL, it was important that we leverage brand. Obviously we needed to put in a
strong development team round the globe. You also have to maintain the quality of service to the customer,”
says Shetty.

For his overseas operations, Shetty and his chief managers ensure that they retain the local talent.

“It is a question of man management. Ours is a service industry. When you buy a company, you are buying
people. If you have the right people at the right place, you can put your agenda to work. We didn’t try to
change too many things. You need the local expertise, the local relationship, the local language, so sending
someone from here to the various offices around the world wouldn’t have made sense. I did send some
people in the area of finance and human resources to integrate ECU-Line cargo better,” he says.

Shetty knew that to set expectations right for acquired units, he would have to maintain the internal
dynamics of the latter. It was important to understand from people what must be done and have patience.
“We did a lot of things (across divisions), but did them carefully, gradually. But when you want work done
strategically, it is a question of winning a war and not battles. So we lost a few battles, but won the war. We
were able to integrate the company. Today it is known to be a far better managed company,” he adds.

Despite this, the company knows that managing talent is one of the two biggest issues for a company in this
sector – the other being soaring land prices. In order to introduce a process-oriented system that encourages
productivity, the company recently signed up with Adrenalin, a Human Capital Alignment tool that enables
alignment across all business-critical systems of the organisation, thereby creating infrastructure to enhance
performance and productivity.

The other thing that Allcargo has done to acquire all the bells and whistles of an international company is to
introduce technological ‘sophistication’ to critical functions. It has begun providing IT training to employees
to manage customised ERP applications, CRM, and runs tailor-made software to track all operational
activities.

Recently, the company raised Rs 100 crore through qualified institutional placement. The money raised will
be used for both capex and acquisitions. With cash in hand reserves of Rs 150 crore, the company says
chances of it raising funds for the next one year is slim.

So 3PLs will be the next logical step for the company. On being quizzed, Shetty smiles, “We have started to
build some warehouses because we have land banks across the country. We are leveraging the land bank and
expect to provide services to local customers who need a 3PL service. Some of the sectors we are looking at
are automobiles, electronics, and pharmaceuticals. However, there are some hurdles we see there. Let’s wait
and watch.”

NEWS ROUNDUP

Ports / Shipping

New Mangalore port posts growth in container traffic

The New Mangalore Port Trust (NMPT) has witnessed a growth of 251 per cent in container traffic in the
current financial year.

Mr S. Gopalakrishna, Traffic Manager of NMPT, said that the port handled 7,659 TEUs (20-foot equivalent
units) of containers till 26th May as against 2,180 TEUs handled during the corresponding period of the
previous fiscal, recording a growth of 251 per cent which has been facilitated due to infrastructure addition.

Vallarpadam terminal cuts rates to be in line with south ports

The Board of Trustees of the Cochin Port Trust has decided to make vessel-related charges at the proposed
international container transhipment terminal (ICTT) at Vallarpadam competitive, in line with the charges at
other transhipment ports in the South and South-east Asian region.

DP World, promoters of the ICTT through its holding company India Gateway Terminal Private Ltd
(IGTPL), has also decided in-principle to make the terminal handling charges for transhipment containers in
line with that of other international transhipment ports in the region.

Currently, the terminal handling charges fixed for the proposed ICTT is higher by 30-60 per cent when
compared with the prevailing rates at the Rajiv Gandhi Container Terminal.

The Tariff Authority for Major Ports (TAMP) had recently increased the vessel-related charges of Kochi by
40 per cent on an average compared to the pre-revised scale of rates. The tariff hike had affected Kochi port
by making it uncompetitive with respect to its neighbouring transhipment ports.

The decision to make the tariff competitive is a pricing decision taken by the port and DP World with the
objective of developing ICTT as a transhipment port and fulfil the promise of developing Kochi as an
international transhipment hub for cargoes.
Currently, a substantial portion of the Indian container volume is shipped through ports at Colombo,
Singapore and Salalah.

The special tariff for vessel-related charges fixed for ICTT for mainline container vessels with international
ports of call in the continents of America, Europe, Africa, Australia and any port in China are: Port
dues/gross registered tonnage (GRT) – $0.0455; pilotage charge/GRT – $0.0865 and berth hire/GRT/hour –
$0.0022.
The terminal, which is enjoying strategic proximity to international sea route and with excellent hinterland
connectivity, is scheduled for commissioning in August. In the first phase, it will have a 600-metre quay
length.

The emergence of Kochi as a transhipment hub port for India and gateway to south India hinges on the
competitive advantage it can offer to the global container trade vis-a-vis the major transhipment ports in the
region.

Cochin Shipyard delivers supply vessel to Vroon Offshore

The public sector Cochin Shipyard Ltd (CSL) delivered a platform supply vessel to Vroon Offshore
Division, a maritime offshore services supplier. This is the 16th platform supply vessel being built at CSL
and the eighth in the Rolls Royce UT 755 LN series.

The protocol documents of the ship, named VOS Precious, were signed by Mr Jose Mathew, Chief General
Manager (Shipbuilding), on behalf of Cochin Shipyard and Mr Eric Rikken, Technical Director of Vroon
Group BV, on behalf of the owners.

Vroon has been in the business of maritime offshore services for over 40 years. The geographical focus is
primarily on the North Sea, the Mediterranean and South East Asia. Vroon operates and manages a diverse
fleet of over 150 vessels and more than 30 vessels on order, a release said.

VOS is part of the Vroon Group, which has offices in Aberdeen, Den Helder, Genoa, Stokesley and
Singapore. VOS operates five main vessel categories: platform supply vessels, anchor handling tug supply
vessels, emergency response and rescue vessels, subsea support vessels and windmill installation vessels.

Kulpi port project, stuck in limbo

The Kulpi port project in West Bengal is not taking off in spite of no lacking in funds. It has been
about 15 years since the proposal to set up a port at Kulpi on the bank of the river Hooghly was first
mooted.

Meanwhile, the promoter has changed. DP World is now the majority stakeholder in the promoting
company. There were several issues that require to be sorted, some with the Union Government and
others with the State Government.

Port unions want Rajiv Gandhi Container Terminal to be coastal cargo exclusive

Trade unions at Kochi Port have suggested development of the Rajiv Gandhi Container Terminal as a
“dedicated container terminal” to handle coastal cargo, upon commissioning of the International
Container Transhipment Terminal at Vallarpadam.

The unions requested the visiting Shipping Secretary to take appropriate steps to revive RGCT, as
there is scope to develop a dedicated cargo terminal, in view of the recent growth witnessed in the
industrial and agriculture sectors in the country. In a memorandum submitted to the Secretary, the
unions said that 25-30 per cent of the containers handled now by DP World at RGCT is coastal.

The revival of RGCT is important in order to continue to engage the workers, operators and
professionals who are now under deputation in the terminal, they said. The port is also legally entitled
to handle defense cargo, combi vessels (that can also carry bulk cargo) and coastal containers.

Indian Govt may go for corporatisation of 12 top ports in the country

The government has said it is considering corporatisation of the 12 major ports in the country, a move
that will result in greater autonomy for these ports, but stressed that this did not amount to
disinvestment.

“About ports there have been some proposals for corporatisation, but it is not disinvestment. It is
conversion of the legal entity structure to corporate structure,” said Shipping Secretary K Mohandas.

This has been studied by a lot of experts over a period of time, who unanimously recommended that
corporate structure is much better for decision-making and performance, Mohandas said.
He, however, added that a final decision on this is yet to be taken.

India has 12 state-owned ports — Kolkata (with Haldia), Paradip, Visakhapatanam, Ennore, Chennai,
Tuticorin, Cochin, New Mangalore, Mormugao, Mumbai, Jawaharlal Nehru Port Trust and Kandla
— which handle over 500 million tonnes (MT)of cargo annually.

He said the government would prefer a “landlord” pattern for corporatisation, under which the
corporate body will own the port, while the services will be leased out. “Ideally, a landlord structure
has been recommended where the corporate entity will own the port property and the actual
operations would be leased out,” Mohandas added.

Once the structure is changed, the ports will have the freedom to set tariffs and compete with foreign
and Indian private ports as against the current practice where the Tariff Authority for Major Ports
(MTPA) fixes the port charges under the Major Port Trust Act (MPTA), 1963.

Gorshkov to be handed over to India by Dec ‘12

After closely examining the ongoing refit work on Admiral Gorshkov in Russia, the Navy is now
confident the aircraft carrier will be ready for harbour trials by early-2011 to ensure it can be handed
over to India by December 2012 or so. This comes after a naval team, led by controller of warship
production and acquisitions Vice-Admiral N N Kumar, recently visited Russia to examine the 44,570-
tonne Gorshkov at the Sevmash Shipyard.

Along with the fresh Gorshkov agreement, India also inked a contract with Russia for 29 more MiG-
29Ks for $1.46 billion in March this year. These fighters will be in addition to the original 16 MiG-
29Ks ordered through the $1.5-billion package deal for Gorshkov signed in January 2004.

The Navy plans to deploy two carrier-battle groups (CBGs) by 2014-2015, as reported by TOI earlier.
The first CBG will be centred around Gorshkov, rechristened INS Vikramaditya, while the second
will be on the 40,000-tonne indigenous aircraft carrier (IAC) being constructed at the Cochin
Shipyard, which Navy hopes to get by 2014.

Indian Register of Shipping sets up office in US

Indian Register of Shipping (IRS) has entered USA by opening its office in Houston, a major port and
a leading global center of oil and gas that is an ideal location to tap the North American and Canadian
markets.

The society, which is looking forward to becoming a fullfledged member of International Association
of Classification Societies, has offices in Far East, UAE, Europe, UK and Asia. With the US entry, it is
said to have networked the entire world.
INFRASTRUCTURE/NEW LAUNCHES/OPERATIONS

IndiaMART.com to Catalyze B2B Matchmaking Through ‘ACMEE 2010'

IndiaMART.com, India’s largest online B2B marketplace, has decided to sponsor the ACMEE 2010
(Auto Components and Machine Tools Engineering Exhibition) with an aim to synergise B2B
matchmaking. The exclusive trade forum, to be organized by AIEMA Technology Centre in Chennai
Trade Centre, Nandambakkam, Chennai from June 17 – 21, 2010, seeks to provide better exposure to
companies, especially SMEs, in the industrial sector, with over 240 verified suppliers already
registered with the exhibition. Mr. Dinesh Agarwal, Founder & CEO, IndiaMART.com will grace the
event with his esteemed presence as the distinguished Guest of Honor.

Commenting on the association, Mr. Dinesh Agarwal said, “India is a burgeoning global
manufacturing market boasting of exquisite and economical products, quality processes and sought-
after capital engineering. Riding on this, ACMEE, one of the pioneering industrial exhibitions in the
country, provides an ideal forum for exploring business potentiality besides networking and an
opportunity to exchange varied product information and technical details. We, at IndiaMART.com,
believe this is synonymous with our objective. Thus, we are delighted to be the proud sponsors of the
coveted event.”

He added, “We had associated with ACMEE 2008 as well when the event registered business
transactions worth Rs. 250 million. This year too, we are anticipating a huge influx of global buyers
and sellers in the fair. We wish ACMEE 2010 a great success and hope that it exhorts the business
aspects of the Indian SMEs.”

Slated to be the biggest automobile and mechanical tools trade fair, ACMEE 2010 is the ninth in the
biennial series. The event will see exhibitors display an array of products such as Automotive
Components, Entire range of Auto Components/ Parts & Supplies, Hydraulics & Pneumatics Systems,
Instrumentation & Controls, Automobile and allied services comprising auto components, et al.
Moreover, the approval by the Trade Promotion Organization will allow the event to capitalize on the
duty free import and exhibition of products which are otherwise subject to custom’s rule and
regulations.

DIESL launches 60cr modernization plan

Drive India Enterprise Solutions (DIESL), the logistics arm of the Tata Group, plans to modernise its
facilities in India. A warehouse management system, distribution management system, track and trace
mechanism and import-export management system, all are being put in place. DIESL CEO Ajay
Chopra said the move would provide superior and assured services to clients.

The company has spent Rs 50-60 crore for implementation of these technologies. Tata DIESL has 175
SAP-linked warehouse facilities across India. These are also linked to their customers’ ERP system,
which provides complete visibility as to where their product has reached
India to be among top ten markets for GM by 2011

Buoyed by the increase in sales after the launch of the small car Beat, along with the robust growth in
the Indian automobile sector, car maker General Motors expects India to figure amongst its top ten
markets globally by next year.

As per the information available, in 2009, the total sales of the company in India stood at 69,579 units.
However, with the launch of its global small car Beat it expects to achieve a sale of 100,000 units in the
current year.

GM had launched Beat in the Indian market earlier this year during the Auto Expo and it is now the
highest selling vehicle from its portfolio in the country.

Currently with the sale of over 2 million units, US is the largest market for the Detriot-based company
followed by China at 1.8 million units.

The company expects that as the Indian automobile market is growing at a double digit rate, the
country may soon enter into top ten markets globally by replacing Australia, which is at the 10th place
with a sale of 1.2 lakh units.

Indian automobile industry has reported a growth of 26.41 per cent growth in sales in 2009-10 riding
on the government’s stimulus packages that perked demand, making it the second fastest growing
market in the world after China.

Society of Indian Automobile Manufacturers (SIAM) had forecast 10-14 per cent growth for the
industry during 2010-11.According to the information provided by SIAM, the total Indian market for
passenger cars in 2009-10 rose by over 25 per cent to 1.5 million units from 1.2 million units.

General Motors is operating in India for the last 13 years and it sell cars in the country under the
Chevrolet brand, which was introduced in 2003.

DHL Lemuir Logistics to invest $10 million in Chennai

Supply chain management and logistics solutions provider DHL Lemuir Logistics Pvt Ltd is investing
$10 million in a warehouse facility in the Chennai Free Trade Zone, India’s first free trade
warehousing zone (FTWZ).

The 250-acre FTWZ, promoted by J Matadee Free Trade Zone Pvt Ltd, is coming up at
Sriperumbudur.

DHL Lemuir Logistics Chief Executive Christoph Remund said the major advantage of the FTWZ is
that the goods can be stocked for any length of time unlike in a custom-bonded warehouse that allows
stocking only for 360 days.
DHL Lemuir Logistics operates as a subsidiary of DHL International GmbH and the Lemuir Group.

DHL Lemuir will be targeting auto, garments, life sciences, aviation, oil and gas sectors for business
and the warehouse is expected to be ready by November this year.The total project cost will be around
$250 million.

DIESL ropes in TCS for IT Solution

Drive India Enterprise Solutions Limited (DIESL) is now in the process of building a never – seen –
before Information Technology solution for the Logistics arena in India, with over 30% (around 60
crores) of revenue being earmarked for the technology.

The company has roped in TCS (Tata Consultancy Services) for the technology initiative which aims
to bring in more operational efficiency in the system, while preparing the company for International
competition, set to rise in this sunrise industry. The solution can be integrated with client systems
enabling a seamless flow of information.

The Technology seeks to reduce cost of inventory, bring down duplication and reduce operational
costs and uncertainties through real time information. This will be possible with technology installed
in vehicles that will enable ‘track and trace‘and provide information in real time. The I.T Solution is
also capable to check environment concerns and thereby accelerate DIESL‘s plan to increase the
green quotient in existing supply chain models.

DIESL(50-50 venture of Tata Industries and Tata international )which began as a 30 Crore trading
outfit in 2004 has emerged as a leading Logistics services provider of the country with the highest
number of owned warehouses (176) with over 4 million sq feet of warehousing space and presence in
over 85% of districts in India.

As per the financial results released by DIESL, the company has grown over 125% from 103 Crores to
232 Crores when the industry average has been 12%. DIESL’s Logistics Service has been growing
over 125% in the last 3 years (161% in 07-08, 152% in 08-09 and 125% in 09-10). The company has
registered growth in profit to the tune of 85% this year with 80% of the clientele from outside the Tata
fold. The company operates in diverse industries like Telecom, Automobile, FMCG, Consumer
Durables and Retail and has been able to ride the recession effectively.

RAILWAYS

Sattur Chamber plea on train halt

The Sattur Chamber of Commerce and Industries has made a strong plea for halting trains in stations
such as Sattur, Kovilpatti, Thirumangalam and Kadampur.

Drawing attention to the changes in the new time table, in which stoppage of trains in the above
stations have been done with, Mr P.T.K.A. Balasubramanian, Secretary of the Chamber, in a letter
addressed to the Union Railway Minister, Ms Mamata Banerjee, said the Chennai-Nagercoil sector is
cash-flush sector where double line is in demand to facilitate operation of more number of trains.

Referring to the poor maintenance of trains and lack of facilities for passengers, he stressed on the
need to provide janatha meals in Southern railway and avoid loading excess luggages in wagons.

Rlys hikes iron ore freight by Rs 300/tonne

The Indian Railways has decided to increase the freight charges for iron ore for exports by an
additional Rs 300 a tonne. This will be effective from June 1-June 30. With this, the surcharge on iron
ore for exports will be Rs 1,000 a tonne.

The Railways had increased the fare for iron ore by Rs 100 a tonne for May 1-31, making the
surcharge Rs 700 a tonne.

“The increase in freight rate will have an adverse impact on exports,” said Mr R.K.Sharma, Secretary
General, Federation of Indian Mineral Industries. Since the Railway Budget in February, the freight
rates have been increased by close to Rs 1,000 a tonne, making the iron-ore exports uncompetitive, he
added.

S-E Rly studying options to resume night services

South-Eastern Railway (SER) is mulling several options as to how to run passenger trains at night
along the tracks passing through the Maoist-affected areas.

Right now, the movement of passenger trains remains suspended between Kharagpur and Rourkela
and Kharagpur and Adra between 10 pm and 5 am following the recent train accident near
Kharagpur. But, the restriction cannot be in force for an indefinite period. According to SER sources,
the restriction will continue till 5 am of June 3. After that, night passenger trains on the route have to
be run.

The measures being contemplated include deployment of CRPF (Central Reserve Police Force)
personnel for the patrolling of the tracks, further reduction of the speed of the trains while passing
through the vulnerable zone, restricting the movement of trains in down line when a passenger train is
in motion in up line and vice- versa and replacing the present pandrol clip by anti-sabotage pandrol
clip.

Red Ribbon Express in Kolkata

Red Ribbon Express, the 10-coach exhibition train to promote awareness on HIV/AIDS, will be
available for public viewing at Howrah station new complex on June 2 and 3, between 10 am and 6
pm, according to a release issued by Eastern Railway. The train will be at Sealdah station on June 4
and 5, at Rampurhat on June 6 and 7 and at Malda on June 8 and 9.
Mumbai Derailment Could Have Serious Implications for Security Worldwide

Mineta Transportation Institute

Mumbai train derailment two days ago could point to a growing trend in India. But it also could have
serious implications for other countries. Terrorists make note of methods, taking lessons from all
attempts, whether successful or not. These lessons could be applied to other systems.

Sabotage of the rail line sent the Calcutta-to-Mumbai express hurtling off the tracks into the path of
an oncoming freight train, killing more than 100 people and injuring scores of others. According to
Indian police, a Maoist guerrilla group has claimed responsibility for the attack. Earlier in May,
Maoist guerrillas in India’s Chhattisgarh State detonated a mine under a passenger bus, killing 44.

MTI will be examining this case and other recent attacks in India to see what lessons might be learned
and how these may be applied to other countries.
According to MTI’s comprehensive database of attacks on surface transportation, this death toll
makes the May 28 derailment India’s worst terrorist attack on passenger rail since 2006, and its
bloodiest deliberate derailment in decades. On July 11, 2006 terrorists detonated seven bombs on
Mumbai’s crowded commuter trains, killing 207 people and injuring hundreds of others. The last
comparable derailment occurred in 1989, when sabotage derailed the Bangalore-Delhi Express killing
67.

A recent MTI report on deliberate derailments,

French TGV (High Speed Train) and Quantitative Analysis of 181 Rail Sabotage Attempts
Jenkins, Bruce R. Butterworth, and Jean-François Clair, shows India’s rail system suffering the most
terrorists derailments with 42 incidents or 23 percent of the total number of such incidents. According
to MTI’s database, India also leads the world in the number of terrorist bomb attacks against train
and bus targets with 387 incidents since 1970, or 17 percent of the total.

Mr. Jenkins flew to Mumbai in September 2009 at the invitation of Indian officials to discuss surface
transportation security issues, and he will return to India later this year. MTI also briefed Indian
officials visiting the U.S. in January 2010.
The report may be downloaded at no cost from

ROAD TRANSPORT

Kerala IT cos pitch for ‘wider' national highways

Group of Technology Companies (Gtech), a strategic grouping of software companies in Kerala, is of

the view that reducing the width of the National Highways in the State would not be in its long-term
interests or of its citizens.

The National Highways Authority of India (NHAI) has approved the expansion of about 700 km of
highway in the State at an estimated investment of Rs 10,000 crore over a 30-month period.
But this has come into resistance from almost the entire political class, which has demanded a
reduction of the road width to 30 metres from the NHAI standard of 60 metres, citing the impact of
land acquisition on affected people which has put the entire project at risk and the State could lose the
approved funding and a project vital to its needs, according to the Gtech.

States told to file action taken report on national permit system

The Union Government's bid to introduce national permit system for the road transport sector to
ensure seamless movement of goods vehicles across the country is not making headway as most of the
States have been found laggard in this regard.

The Ministry of Road Transport & Highways in a note to State transport authorities, has pointed out
that some of the States are yet to issue appropriate instructions to their field-level agencies and check-
post officials about the new system.

A monthly consolidated report on the number of permits issued, the payment of consolidated fees
must be sent to the Ministry on the 5th day of every month. The Ministry has convened a meeting on
June 9 to assess the progress made in this regard.

The national permit system, it may be noted, has been introduced on the basis of decision taken by the
Transport Development Council at its meeting held on April 16. Accordingly, the Ministry notified
Central Motor Vehicles (Amendment) Rules 2010 on May 7, for implementation of a national permit
system on payment of Rs 15,000 towards consolidated fee (earlier composite fee).

IVRCL Infra gets Rs 3,100-cr project

IVRCL Infrastructures & Projects Ltd (IVRCL) has announced that it has bagged one of the
country's largest toll road projects on the Goa-Maharashtra border from the NHAI. The project
entails a total investment of Rs 3,100 crore.

The 122.06-km stretch is being taken up for four- and six-lane work on the NH 17 from Maharashtra-
Goa border to Panaji-Goa-Karnataka. The project taken up under the National Highways
Development Programme (NHDP)–Phase III, has a concession period of 23 years. It has a capital
grant of Rs 644.72 crore.

According to a company statement, the project includes a six-lane cable-stay bridge over the Zuari
riverThe project, scheduled for completion in 36 months for the highway section and 48 months for
the Zuari bridge, is being developed to support the industrial corridor. The company expects the toll
to start after completion of the highway portion, which is planned to be ready within 36 months.

Bus rapid systems need proper planning

A Parliamentary Committee has asked the Ministry for Urban Development to ensure that a scientific
feasibility study with inputs from all stakeholders is undertaken before commencing bus-rapid-transit
system (BRTS) projects in States.

It has asked the Ministry to share the shortcomings identified in the implementation of the BRTS
project in Delhi for the benefit of other cities.The Urban Development Ministry has stated, in its action
taken report to the committee, that the BRTS projects sanctioned under the Jawaharlal Nehru
National Urban Renewal Mission (JNNURM) of the Central Government are based on detailed
project reports prepared by the State or city authorities. BRTS is being taken up in nine mission cities
under the JNNURM scheme.

Under the scheme, the Central Government provides financial assistance to State Governments,
subject to certain conditions. The Central financial assistance to States/Union Territories/urban local
bodies is tied to certain reforms, such as setting up of a dedicated urban transport fund, making
changes in bye-laws and master-plans of cities to integrate land use and transport planning and setting
up of regulatory mechanisms to periodically revise fares for all public and intermediate public
transport systems.

GVK Power arm bags Rs 850-cr road project

GVK Power and Infrastructure Ltd has informed the BSE that GVK Developmental Projects Pvt Ltd,
a wholly owned subsidiary of the company has won the bid for four-laning of a road section in
Rajasthan. The estimated cost of the project is Rs 850 crore.

The project is to be executed under the BOT (build, operate and transfer) basis under the National
Highways Development Programme (Phase III).

According to the company, this project will be implemented by GVK Deoli Kota Expressway Pvt Ltd
which has been incorporated as a special purpose vehicle (Concessionaire). The Concession Agreement
was signed with the NHAI on May 17.

AIRWAYS

Emirates orders 146 aircraft to double fleet

With net profit tripling from $325 million in 2008-09 to $1.1 billion in 2009-10, the Emirates Group
has placed orders worth $48 billion to buy 146 new aircraft to double its capacity in 2010-11. The
carrier currently has a fleet of 145 aircraft which connect Dubai with 103 destinations in 62 countries.
The airline also plans to launch five new routes from Dubai, besides the two it has already started this
year: Tokyo and Amsterdam.

The new routes, which will also connect Ahmedabad, via Dubai, will be Prague (from July 1) and
Madrid (August 1), to be followed by Baghdad, Medina and Dakar (Senegal).

Emirates currently operate 184 flights to 10 destinations in India. From Ahmedabad, Emirates has 10
weekly flights with 2,780 seats and carries 170 tonnes of cargo a week. In Gujarat, it operates with a
175 per ent load factor with 75-80 per cent occupancy, he said.

90-seater plane project all set for take-off

The high-power committee on the national civil aircraft project met and zeroed in on a 90-seater
model that will be light, eco-friendly, high-tech and rugged enough for short, remote small-town
runways.

Nine sub-committees have been formed to figure out the technical, financial and production roadmaps
of India's own passenger plane.

The main committee will shortly set the ball rolling for industry partners and call for expressions of
interest from small, medium industry vendors and major industries. The project cost – roughly put at
Rs 5,000 crore – would be worked out with help from a consultant.

The choice of the engine – that has to be fuel-efficient and suit short take-offs – would be decided in
three-four months. Whether it would be a propeller or turbofan version was being analysed.

SpiceJet in talks with US Ex-Im Bank for credit to buy aircraft

Low-cost carrier SpiceJet is looking to buy two aircraft (737-800) from Boeing with export credit
support from the Export-Import Bank of the United States, according to a top official of the US export
credit agency.

The private airline, which is currently running its operations with 20 leased aircraft, will get delivery
of its own aircraft in 2011-2012.

As of December-end 2009, the BSE-listed SpiceJet accounted for 13 per cent market share in the
domestic airline industry.

Pointing out that of the total outstanding export credit exposure of $5 billion to India, $4 billion was
on account of supply of aircraft to NACIL and Jet Airways, Mr Hochberg said Ex-Im would diversify
its export credit exposure to include non-aircraft sectors such as infrastructure — roads, airports,
ports, power, including solar and wind — and non-banking finance companies operating in the
infrastructure space.

Referring to the Planning Commission's estimate that investments of $585 billion would be required
for infrastructure development — power, roads and bridges, telecommunications, railways, irrigation,
water supply and sanitation, ports, airports, storage, and gas — in the 11th Plan (2007-12), Mr
Hochberg said, US exporters that supply goods and services related to these sectors would find many
opportunities in the Indian market.

APPOINTMENT
Essar Shipping Ports appoints Rajiv Agarwal as CEO

Essar Shipping Ports and Logistics Limited

CEO and Whole time Director of Essar Shipping Ports and Logistics Limited. He is also nominated as
Managing Director subject to the approval of members of the company in the ensuing AGM.

Prior to this appointment, Mr Rajiv Agarwal was the CEO of The MobileStore Limited. He
successfully started and managed this company to make it the largest retail chain in the telecom
sector. He was also the Executive Director and CFO of Essar Shipping during 1998-2002.

Perschke is Audi India head

Audi has appointed Michael Perschke as its head of India operations from July 1, replacing Benoit
Tiers who is moving to head Audi’s operations in France.

Perschke served a three-year term with Mercedes-Benz in India during 1997-2000. Prior to his new
appointment, he was in charge of the European Service Network Project of Audi AG.

INTERNATIONAL NEWS

Transnet strike continues to trouble S. Africa

Transnet, a state-owned transport operator in South Africa, suffered 17 days of strikes in the run-up
to the June 11 start of the football World Cup. For 17 days, the country's rail and port shipments
remained choked. About 40,000 of the utility's 54,000 workers were on strike. Transnet operates the
nation's main metal and grain lines as well as a pipeline that is Johannesburg's main source of fuel.
Bloomberg reported that Xstrata Plc, ArcelorMittal South Africa Ltd and Kumba Iron Ore Ltd's
operations, among others, were hit.

ArcelorMittal South Africa, the country's largest steel producer, said deliveries of iron ore and coking
coal to its mills were badly hit by the strike. A large number of ships were trapped by the strike-
related congestion at the ports of Durban, Richards Bay, Saldanha and Cape Town. The strike also
increased the demand from customers for larger private sector participation in Transnet's operations.
Interestingly, when asked, a leading Indian trader of bulk materials having business with South Africa
said he was not aware of the strike, while inquiries with the country's largest private sector steel
company having interests in South Africa evoked no response.

Sony Supply Chain Solutions Singapore (SSCSS) reduces over 50 pc energy use

Echelon Corporation
featuring Echelon's LonWorks(R) control networking technology to provide dimmable, two-way
communicating lights. The new solution installed at the Sony Supply Chain Solutions Singapore
(SSCSS) warehouse uses ROMlight energy efficient, individually dimmable lights to cut energy use by
over 50 percent while increasing light quality, providing real-time insight into the health of each
fixture, energy consumption, and reducing maintenance costs.

High bay lighting systems are used in buildings featuring high ceilings such as warehouses, large retail
stores, grocery stores, convention centers, factories, athletic facilities, auditoriums, and airport
hangars.

IBM to acquire Sterling Commerce for $1.4 billion

IBM announced it has plans to acquire AT&T subsidiary Sterling Commerce, a provider of business-
to-business integration and cross-channel solutions for $1.4 billion. The transaction is expected to close
later this year.

With more than 18,000 customers and established more than 30 years ago, Sterling is engaged in more
than 1 billion business interactions per year for clients in various industries, including retail,
manufacturing, and distribution, among others.

ARC Advisory Group analyst Adrian Gonzalez commented in his Logistics Viewpoint blog that IBM
views this deal as a way of growing its Websphere business, which focuses on on-demand business,
business integration, application, and transaction infrastructure.

IATA launches electronic data supply chain programme in China

International Air Transport Association

standard as a programme that improves service and cuts overheads for the air freight industry.
Facilitated by IATA, the project is an industry-wide initiative involving carriers, freight forwarders,
ground handlers, shippers and customs authorities. IATA e-freight effectively eliminates the need to
send 12 core paper documents with air cargo shipments, hence streamlining processes, improving
speed and reliability and cutting costs.

The e-freight implementation team at Tianjin Binhai International Airport, where the system went
live last week, is truly an industry effort, with members representing the whole supply chain.
International logistics companies and local freight forwarders involved are Sinotrans, Dimerco,
Logistics, DGF,
China,
freight on schedule, China is the 26th e-freight location worldwide to deliver ‘paper-free cargo’

With e-freight implemented in China, IATA claim there will be time savings for the transportation
and availability of goods by up to 24 hours due to the electronic clearance and paper free process.
IATA aims to build on the success at Tianjin Airport and implement e-freight in more airports across
China.

In addition to the international e-freight program, there are also plans to implement domestic e-
freight at six different locations in China in
carriers are participating in the domestic e-freight program and IATA’s target is to implement e-
freight in 44 countries by the end of 2010, representing more than 80% of global air-freight volumes.
These countries need to have the appropriate international treaties and customs framework in place to
implement e-freight.

OOCL Jakarta named at Geoje Shipyard, Korea

OOCL is proud to announce on June 1, 2010, the christening of our newest vessel, the
Jakarta(4,578 TEUs). This vessel is the last in our line of 32 vessels on order from Samsung Heavy
Industries. The order included sixteen 4,578 vessels and sixteen 8,063 vessels.

The
Director of the Port of Long Beach. Mr Philip Chow, CEO of OOCL, hosted the ceremony which was
held at Samsung Heavy Industries shipyard on Geoje Island, Korea. Mr SY Bae, President and
Shipyard General Manager, Samsung Heavy Industries also attended the ceremony.

The

The port rotation is:

Penang / Port Kelang / Singapore / Hong Kong and back to Shanghai in a-35 day round trip.

Disclaimer: All information contained in this report has been obtained from sources believed to be
accurate by DVV Media India Pvt Ltd. While reasonable care has been taken in its preparation DVV
Media and CIIL make no representation, warranty, express or implied as to the accuracy, timeliness or
completeness of any such information. All information should be considered solely as statements of
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© 2008 Confederation of Indian Industry. All rights reserved.