Interview with
our Chairman.
What is your assessment of Velogic’s performance in FY 2023?
The financial year 2023 was a year of major developments by many standards, whether from a geopolitical perspective for the markets in which Velogic operates, or in terms of the considerable progress made in executing our strategy. I am pleased to share that Velogic sustained the upswing experienced in FY 2022 and achieved commendable results across most markets, further anchoring its presence in Mauritius, and overseas.
Global supply chains have been tested by unique scenarios over the past few years. While port congestion, capacity issues and record-high freight rates were the major challenges plaguing the industry between 2020 and 2022, market conditions made a sharp reversal in early 2023, with global freight rates declining quickly. What began as a problem of scarcity has transformed into a problem of plenty. This comes largely as a result of demand-supply imbalances: a surge in energy prices has contributed to inflation across Europe and the USA, leading to shrinking demand for goods on the back of a high stock level. At the same time, vessel and container capacities are on the rise, creating an oversupply and overcapacity of equipment.
Yet, Velogic ended the financial year with a strong performance and much to be proud of. I see this as a confirmation of three things: first, of the agility of Velogic’s teams, who have proven their ability to go beyond formulaic approaches to design new supply chain strategies and solutions for customers; second, that strong relationships with our trusted network agents and service partners are paramount in maintaining organisational flexibility and responding quickly to new circumstances; and third, that the Company’s diversified portfolio across service lines, economic sectors and geographies has provided Velogic with diversified exposure and a solid foundation to capture growth opportunities in all its markets.
What value has been created for Velogic’s shareholders since the Company’s admission on the Development & Enterprise Market (DEM)?
Now in its second year of trading on the DEM, Velogic is well-capitalised and on strong financial footing. This confirms our conviction, and the confidence of our shareholders, in the unique value proposition and capabilities the Company has to offer. This milestone is strengthening our profile towards investors and accelerating the execution of our growth strategy, which as you know is driven by international expansion.
In this context, I am pleased to announce that the quality of our results has enabled us to deliver on our promise to shareholders. Once again, Velogic’s performance exceeded the forecasts announced in the Admission Document, enabling us to uphold our tradition of consistently distributing dividends.We declared total dividends of Rs 1.20 per share (up from Rs 0.72 per share in 2022), generating a commendable 5.2% yield on the closing share price.
Adhering to sound financial principles, prudent risk management and a targeted growth strategy has served Velogic well and should continue to generate interesting shareholder returns.
How is Velogic’s strategy unfolding? What key achievements were made in laying the groundwork for its ambition?
Velogic’s regional expansion plans are progressing well, with our overseas operations contributing over 50% to our bottom line. Two years ago, this contribution was only around 40%. We integrated the acquisition of Rongai Workshop and Transport Limited, a well-reputed road transport company with 75 years of presence in Kenya and expertise in tea transportation. In addition to generating significant economies of scale, this integration is set to deliver further synergies in FY 2024 as Velogic widens its client base and deepens its presence in the region.
Likewise, Madagascar delivered a very strong performance. Velogic Madagascar has set up its ninth office there to support its diversification into sectors beyond the textile industry.
Velogic India was impacted by reduced exports and the decline in freight rates, which opened the door to even more competition. However, our coverage and network are continuing to expand. We opened a new office in Gujarat in a strategic location near Mundra, home to India’s largest commercial port and a major economic getaway catering to major cities in the north of the country. With state-of-the-art and all-weather infrastructure, Mundra offers faster cargo evacuation and minimal turnaround times, with a capacity to move more than 8.5 million TEU and accommodate the largest container ships in the world. This milestone marks Velogic’s 13th office in India alone, extending our own network to 42 offices worldwide.
Closer to home, in Mauritius, we maintained our leadership position and improved profitability through a combination of growth in the economy and heightened operational efficiency. Our fleet optimisation measures delivered upsides for our Landside Logistics services – which account for around 20% of Velogic’s revenues, – offsetting the decline in sugar packaging activities. Velogic Mauritius stands out as a successful model of a streamlined and lean business, where continuous investments in our talents, process re-engineering and digital solutions have enabled it to branch out into every node of the supply chain and offer fully integrated logistics solutions. The objective is to roll out this model in Velogic’s foreign subsidiaries to achieve equally cost-efficient and high-performing operations.
What measures were taken to strengthen corporate governance practices?
Sound governance practices are the cornerstone of our business. Guided by its Board Charter and Constitution, Velogic is committed to leading with ethics, transparency, and integrity and promoting these values to all Velogic employees and collaborators along its value chain.
Several changes were made during the year to strengthen the Board’s stewardship role. Mr Damien Mamet (Chief Finance Executive of Rogers & Co. Ltd.) was appointed as a Non-Executive Director, adding to the overall balance of background and knowledge of our already diverse Board. We have also set up our own Risk Management and Audit Committee (RMAC) to ensure that Velogic’s governance structure supports its development and that risks are managed in an effective and agile way.
An evaluation was carried out by the Boston Consulting Group to assess the effectiveness of the Board, revealing areas of strength, as well as areas of improvement with respect to skills diversity and gender balance. In line with our commitment to continuously improve our practices, and to ensure the Board represents the long-term interests of the Company, the recommendations are being implemented.
In last year’s report, you expressed Velogic’s strong commitment to making logistics greener. What progress was made on this front?
The logistics industry is facing high expectations on the environmental front, for obvious reasons. As an intermediary and facilitator of the movement of goods, Velogic’s sphere of influence lies mainly within the haulage business, which is the largest contributor to its carbon footprint. Good progress is being made in this regard, through several projects focusing on fuel efficiency, smart metering and waste management. Additionally, a major PV project under the CEB’s Carbon Neutral Industrial Sector (CNIS) Scheme will be implemented in FY 2024.Having obtained the approval in July 2023, Velogic is set to participate in renewable energy power generation, and support the island in its quest to have 60% renewable energy in the national electricity grid by 2030.
Velogic continues to align its efforts with the five priority areas developed by Business Mauritius under the SigneNatir Pact, which combine both environmental and social dimensions as a vehicle to transition to a greener, more inclusive future. Besides the initiatives described in the Social & Relationship Capital section on page 46, we are proud that Velogic Ltd has received the internationally-recognised Integrated Management System certification, which combines several standards in the fields of quality, environment and safety (ISO 9001: Quality Management Systems, ISO 14001: Environmental Management Systems, and ISO 45001: Health and Safety Management Systems). Adding another feather to our cap, we are proud to announce that Velogic was awarded the PwC Sustainability Award 2023 in the Transportation and Logistics category — an accolade that recognises our efforts in sustainability and innovation, and that motivates us to go even further on this path.
Velogic has also made it its mission to use its core expertise to make Meaningful Change, which is central to the Rogers Group’s purpose. Its enterprise of repurposing containers into affordable and sustainable homes started in 2007, and has progressively been extended to new uses, such as offices and storage spaces. Sukpak has implemented a zero- waste to landfill approach, intended to address the sustainable management of solid waste. This one-of-a-kind project within the Group is now being replicated in other business units. The active involvement and participation of Velogic’s employees in our conservation efforts is equally praiseworthy and has been instrumental in making our Sustainable and Inclusive Development agenda palpable throughout the Company.
We recognise that our business and social licence to operate are deeply tied to the communities surrounding us. Velogic’s efforts have been focused on supporting the Fam- Unie Foundation,an independent organisation which aims to uplift the women of Cité La Cure, a region that is socially and economically disadvantaged. Our contributions went towards setting up a community centre that has already empowered 60 women and 25 children towards autonomy and economic independence. We also pursued our initiatives to raise awareness of the fragility of Mauritius’ biodiversity among the youth.
What will be the key factors driving Velogic’s growth in FY 2024 and in the years ahead?
The ongoing war in Ukraine continues to be a cause for concern. Freight rates are expected to remain subdued and an eventual economic slowdown in developed markets, including China, would inevitably impact developing economies.
Notwithstanding these factors, and any other emerging risks in our operating environment, we are confident in our development strategy and on track for another year of profitable growth. Most of this growth will come from a focused expansion in our emerging markets of East Africa, India and Madagascar. In our more mature markets, Mauritius and Reunion, sustained operational efficiencies and meaningful cost improvements in the transport business are likely to deliver improved margins. The sugar packaging segment is also expected to turn around, boosted by a gradual comeback in consumption.
As we look to the future, delivering on our ESG priorities is of critical importance and will be a major driving force in the years ahead. Velogic has always been thoughtful and deliberate in setting its strategies, and our ESG pathway will be no different.We understand that this pursuit will require ongoing adaptation and collaboration, and we remain steadfast in continuing to refine our strategy to make logistics more sustainable in all the geographies in which we are present.
Do you have a closing message for your stakeholders?
I am pleased to share that the Board of Velogic welcomes two incoming Directors, Hanjali Permalloo and Soorya Oogarah, whose extensive experience in operational excellence, strategic planning and people development will no doubt bring fresh perspectives to the Board. This also enables us to reach the threshold of having 25% female representation on our Board, a national decision we have wholeheartedly embraced.
We also bid farewell to our outgoing Non- Executive Director, Gilbert Espitalier-Noël, who resigned from his role on 11 September 2023. His invaluable insights during his 12-year tenure at Velogic have greatly shaped our strategic discussions.
The Board joins me in extending our deepest gratitude for the extraordinary efforts and agility of our 1,479 colleagues in serving customers, whilst upholding the strong customer-centric philosophy that runs in our DNA.
I would also like to thank our customers for their continued trust and for making Velogic an integral part of their supply chains. This reaffirms our purpose and motivates us to enhance the value that we bring to their business.
Lastly, I would also like to express my heartfelt appreciation to Velogic’s Board of Directors for their valued guidance and unwavering support. And to our leadership team, under the stewardship of the CEO Vishal Nunkoo, thank you for your efforts towards realising Velogic’s vision and creating an environment of excellence.
The financial year 2023 was a year ofmajor developments by many standards, whether from a geopolitical perspectivefor the markets in which velogic operates, or in terms of the considerable progressmade in executing our strategy. I ampleased to share that velogic sustainedthe upswing experienced in fy 2022and achieved commendable resultsacross most markets, further anchoringits presence in mauritius, and overseas.
Global supply chains have been testedby unique scenarios over the past fewyears. While port congestion, capacityissues and record-high freight rateswere the major challenges plaguingthe industry between 2020 and 2022, market conditions made a sharp reversalin early 2023, with global freight ratesdeclining quickly. What began as aproblem of scarcity has transformed intoa problem of plenty. This comes largely asa result of demand-supply imbalances: a surge in energy prices has contributedto inflation across europe and the usa, leading to shrinking demand for goods onthe back of a high stock level.
At the sametime, vessel and container capacities areon the rise, creating an oversupply andovercapacity of equipment. Yet, velogic ended the financial yearwith a strong performance and much tobe proud of. I see this as a confirmationof three things: first, of the agility ofvelogics teams, who have proventheir ability to go beyond formulaicapproaches to design new supply chainstrategies and solutions for customers; second, that strong relationships withour trusted network agents and servicepartners are paramount in maintainingorganisational flexibility and responding.
Quickly to new circumstances; andthird, that the companys diversifiedportfolio across service lines, economicsectors and geographies has providedvelogic with diversified exposure anda solid foundation to capture growthopportunities in all its markets.
Now in its second year of trading on thedem, velogic is well-capitalised and onstrong financial footing. This confirmsour conviction, and the confidenceof our shareholders, in the uniquevalue proposition and capabilities thecompany has to offer. This milestoneis strengthening our profile towardsinvestors and accelerating the executionof our growth strategy, which as you knowis driven by international expansion. In this context, i am pleased to announcethat the quality of our results hasenabled us to deliver on our promiseto shareholders.
Once again, velogicsperformance exceeded the forecastsannounced in the admission document, enabling us to uphold our tradition ofconsistently distributing dividends. Wedeclared total dividends of rs 1.20 pershare (up from rs 0.72 per share in2022), generating a commendable 5.2%yield on the closing share price. Adhering to sound financial principles, prudent risk management and a targetedgrowth strategy has served velogicwell and should continue to generateinteresting shareholder returns.
Velogics regional expansion plans areprogressing well, with our overseas operationscontributing over 50% to our bottom line. Two years ago, this contribution was onlyaround 40%. We integrated the acquisitionof rongai workshop and transport limited, a well-reputed road transport company with75 years of presence in kenya and expertisein tea transportation. In addition to generatingsignificant economies of scale, this integrationis set to deliver further synergies in fy 2024 asvelogic widens its client base and deepens itspresence in the region.
Likewise, madagascar delivered a very strongperformance. Velogic madagascar has set upits ninth office there to support its diversificationinto sectors beyond the textile industry. Velogic india was impacted by reducedexports and the decline in freight rates, whichopened the door to even more competition. However, our coverage and network arecontinuing to expand. We opened a new officein gujarat in a strategic location near mundra, home to indias largest commercial port anda major economic getaway catering to majorcities in the north of the country.
With state-of-the-art and all-weather infrastructure, mundraoffers faster cargo evacuation and minimalturnaround times, with a capacity to movemore than 8.5 million teu and accommodatethe largest container ships in the world. Thismilestone marks velogics 13th office in indiaalone, extending our own network to 42 officesworldwide.
Sound governance practices are thecornerstone of our business. Guided by itsboard charter and constitution, velogic iscommitted to leading with ethics, transparency, and integrity and promoting these values to allvelogic employees and collaborators along itsvalue chain. Several changes were made during the yearto strengthen the boards stewardship role.
Mr damien mamet (chief finance executiveof rogers & co. Ltd. ) was appointed as anon-executive director, adding to the overallbalance of background and knowledge of ouralready diverse board. We have also set up ourown risk management and audit committee(rmac) to ensure that velogics governancestructure supports its development and thatrisks are managed in an effective and agile way.