Co feels op­por­tu­ni­ties are likely to grow at a faster clip un­der GST

The Economic Times - - Companies: Pursuit Of Profit - Anirban.Chowdhury @times­group.com

Mum­bai: All­cargo Lo­gis­tics is look­ing for ac­qui­si­tions in the tech­nol­ogy and con­tract lo­gis­tics space, seek­ing to grow its busi­ness in In­dia where op­por­tu­ni­ties will likely grow at a faster clip un­der GST.

“We have started fo­cus­ing a lot more on In­dia,” chair­man Shashi Ki­ran Shetty told ET in an in­ter­view. “In the last five years, there was noth­ing much hap­pen­ing here. Although the econ­omy was grow­ing at 6-7%, on (the) ground, there weren’t any big changes. There was ex­cess ca­pac­ity in trans­porta­tion, man­u­fac­tur­ing, ho­tels,” he said. “It ap­pears now that the cy­cle is chang­ing. GST will also help com­pa­nies re­or­gan­ise their sup­ply chain man­age­ment.” The com­pany has kept aside ₹ 200 crore for ac­qui­si­tions. It has made 12 ac­qui­si­tions till date.

Cur­rently, the In­dia busi­ness ac­counts for just 20% of All­cargo’s con­sol­i­dated rev­enue; its global busi­ness — con­sol­i­dated last year un­der an en­tity called ECU World­wide — con­trib­utes the rest. The im­ple­men­ta­tion of GST on June 30, among other things, would lead com­pa­nies to shift to big­ger, more ef­fi­cient ware­houses and im­bibe higher lev­els of tech­nol­ogy in all as­pects of func­tio- ning for higher ef­fi­cien­cies.

“One way con­sol­i­da­tion will hap­pen in this in­dus­try is through tech­nol­ogy. I think tech­nol­ogy will force the mid­dle­man out,” Shetty said. “The tech com­pa­nies will take that role. Once tech­nol­ogy comes into play, it starts build­ing the or­gan­i­sa­tion to cer­tain stan­dard­i­s­a­tions,” he said. Ac­cord­ing to him, the fo­cus will be on tech­nol­ogy-en­ablers in the trans­po­ra­tion space.

Newer tech­nol­ogy will be es­pe­cially rel­e­vant in last-mile de­liv­ery, a seg­ment where All­cargo re­cently for­ayed into. The com­pany is in the B2B (busi­nessto-busi­ness) space but may look at ven­tur­ing into the B2C (busi­ness-to-cus­tomer) space in the next few years, said Shetty. “What at­tracted us to the last-mile space was ex­press trans­port. It’s very sim­i­lar to what we do in­ter­na­tion­ally,” he said.

All­cargo is in­vest­ing ₹ 800-1,000 crore in set­ting up lo­gis­tics park in Ben­galuru, Hy­der­abad, Nag­pur and Jha­j­jar in Haryana. Shetty said work on at least two of them will start later this year.

He said at some point, it would be fea­si­ble to list ECU World­wide “to cre­ate fur­ther value for share­hold­ers and use the money to fund the growth of the com­pany.” Last year, ECU World­wide made three ac­qui­si­tions, one of them be­ing GenEx, an Ital­ian com­pany with an­nual rev­enues of 10 mil­lion.

The com­pany is look­ing for ac­qui­si­tions in tech­nol­ogy and con­tract lo­gis­tics space

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