Eyeing opportunity in the contract logistics space post-GST, Allcargo Logistics
today said it has demerged its supply chain management and freight forwarding businesses to form a joint venture with chemical warehousing company CCI.
The JV called Avashya CCI Logistics, is targeting a revenue of Rs 1,000 crore by 2020 from the present Rs 450 crore, Allcargo Chairman Shashikiran Shetty said.
In 2015-16, the contract logistics and freight forwarding verticals contributed around Rs 300 crore to the company’s total revenue of Rs 5,800 crore, Shetty said.
He said policy moves, especially the progress on the Goods and Services Tax, increase the opportunity for offering integrated end-to-end logistics solutions to companies across sectors for which the JV has been formed.
The publicly traded Allcargo will be owning 62 per cent in the joint venture, with the rest will be held by the privately-owned CCI’s promoters, he said.
The JV is targeting customers in the auto, engineering, retail, e-commerce, chemicals and pharma players, and will strive be the third biggest company in the contract logistics space by 2020, he said.
Stressing that it will be an asset-light business, wherein the JV will be renting out space, Shetty said the newly-formed company is targeting to have 5 million sqft of warehousing space to be made available to clients.
Shetty said business of the bigger partner Allcargo will not be affected due to this and added there is a complimentary role which it can play.
He said even before the progress on the GST, the contract logistics opportunity is estimated to be around USD 5 billion which is expected to grow at a faster clip once the GST is in place.