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