Allcargo, CCI forge supply chain JV; aim Rs 1,000 cr revenue by 2020

The Dollar Business Bureau

 New Delhi-based Allcargo Logistics on Friday announced it has demerged its freight forwarding and supply chain management businesses to forge a joint venture with chemical warehousing firm CCI.

The joint venture – now called Avashya CCI Logistics – has set a revenue target of Rs.1,000 crore to be achieved by 2020 from its current Rs.450 crore, said Shashikiran Shetty, Chairman, Allcargo.

“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.

The two companies’ joint venture decision has been influenced by the passage of the Goods and Services Tax (GST), which is expected to considerably benefit the logistics sector.

The progress on the goods and services tax, increase the opportunity to offer integrated end-to-end logistics solutions to companies across the sectors for which the JV has been formed, Sharma said.

In the absence of the GST, the contract logistics opportunity was projected to be about $5 billion. Once implemented, the opportunity is expected to grow at a faster pace.

Allcargo will hold 62% stake in the joint venture, while the rest will be owned by the CCI promoters.

With the conclusion of this deal, the two companies are looking to tap the country’s auto, chemicals, e-commerce, engineering, pharma and retail players.

Referring to the company’s future plans, Shetty said the joint venture is looking to acquire 5 million sqft of warehousing space for its clients.

The business of Allcargo will not have any negative impact due to this collaboration instead the two companies will play complimentary roles towards their business goals.