Allcargo Global Logistics, an integrated logistics solutions provider with consolidated revenues at Rs 2,089 crore for FY09, came into the limelight in 2006 when it acquired ECU Line and went public. Allcargo moved into the third party logistics (3PL) space last year. It’s major business segment is LCL, which is a shipment not large enough to fill a standard cargo container. Shashi Kiran Shetty, chairman and MD of Allcargo Global Logistics, spoke to FE’s Nikita Upadhyay about the company?s expansion plans in 2011.
Excerpts:
LCL is the major business segment for you and you acquired two companies in this space. How would it help in future?
LCL contributes about 70% to our revenues. We acquired two Hong Kong-based companies in this space for approximately $22 million (about Rs 100 crore). This acquisition is expected to contribute an Ebitda of $3.6 million in the current year. This has brought significant value addition to our network as China is expected to remain a volume driver in the future.
What kind of growth do you see in LCL business for the year?
Our LCL business, although just 10% of the container trade in India, is growing. This year, we have done 4.1 million cubic metre of LCL and expect to do about 6 million cubic metre in 2011. We already have offices in 150 locations worldwide and will be opening another office at Saudi Arabia in 2011. The US is again a very big market for us and we may look at having an office there too.
You have already expanded capacity at Chennai and Mundra container freight station (CFS). Are you looking at expansion in CFS or inland container depots (ICD) business next year?
We have CFS at Mumbai, Chennai, Mundra and an ICD at Indore. We will be expanding our CFS facility at JNPT. At present, we are operational on a 22-acre facility and have a land bank to double this capacity.
We have land bank to build warehouses in Nagpur, Bangalore and Hyderabad that will be ready by the end of 2011.
Our Delhi ICD will be operational in March 2011. We will also convert a part of our Goa warehouse into a CFS.
Was it a wrong move to foray into shipping at this time?
Not at all. Asset prices have bottomed out and we have already acquired two vessels with a dead weight of approximately 6,500 tonnes and can look at a total of four to five vessels after seeing how this business proceeds. We will be handling bulk and project cargo on the coastal front.
What are your investment plans for all these expansion activities?
We have envisaged an investment of about Rs 300 crore for FY11. Of this, Rs 200 crore will be funded through internal accruals and Rs 100 crore will be in debt.