By Muluken Yewondwossen
As pressure piles for the expansion and further investment push for one of the most profitable public enterprises, the Ethiopian Shipping and Logistics (ESL), the logistics powerhouse now aims to boost its capital by four folds, Capital has learnt.
While reviewing the company’s annual report a few weeks ago, Berisso Amallo, CEO of ESL, hinted that capital expansion was an area that the firm was looking into, but did however restrain from giving further information on the matter.
As he explained to Capital, the firm has been evolving by automating its financial reporting through the enterprise resource planning (ERP), which was a priority to table the capital increment proposal to the relevant body, Ethiopian Investment Holdings (EIH) which is a sovereign wealth fund that was formed late 2021, managing a selected 26 state owned enterprises.
Despite the enterprise having planned to expand its capital a few years back, the situation did not allow it to materialize.
Since the ESL’s paid up capital surpassed 20 billion birr about two years ago with its assets accumulating significantly, the ESL management demanded for the capital increment. Nonetheless, some pre conditions still had to be met.
For instance sources close to the issue said that matters regarding reporting issues were raised for further action.
As Berisso informed Capital on the matter, his enterprise has now closed its report under the ERP system for the years including from 2019/20 to 2021/22, “We have closed our accounting report including the backlogs with the ERP system and have sent the same to an external auditor.”
“For our capital increment, the automated financial report was crucial and we were keen on that and have delivered on it. We are waiting for the response from the upper body for the go ahead for our capital increment,” the CEO explained.
Sources said that the enterprise has proposed to uplift its capital to 90 billion birr from the current 20 billion birr.
However, the final decision is up to EIH.
“As per the usual trend, we expect the capital to increase at least by four folds, that is, if the upper body does not approve the proposed amount,” they said. So at the bare minimum, ESL’s capital may reach 80 billion birr.
At the end of the 2021/22 budget year, ESL had disclosed that its capital had reached 64.85 billion birr, while it was not officially registered on its status.
It has also engaged on 50 ongoing projects that were carried out in the past years and of that 40 have been accomplished.
In the 2022/23 budget year it has also increased its trucks by 185 to reach to over 600.
Similarly in the stated period it had possessed 30 reefer containers, which is a first for the logistics player to have reefers. It also swapped two tankers for an ultramax.
The only deep-sea vessel operator in the continent is currently almost free from any local or foreign liability burden which allows it to target aggressive expansion in the years to come.
In the coming years, ESL has designed to be involved in massive investments including expanding its vessels with different purpose containers, trucks, and ports and terminals positon.
Regarding revenue, the enterprise is also expanding aggressively besides generating significant foreign currency from its promising cross trade business. One of the major pillars that ESL targets to expand is the cross trade business by volume and number of destinations, which needs substantial investment particularly on its vessel position with diversity and container.
In the budget year that will end early next July, ESL has targeted to secure over 6.7 billion birr profit before tax which is a 10.5 percent increment compared with the 2022/23 budget year.