Allcargo dismisses rumours of ECU sale to 'global shipping and logistics group'
Allcargo Logistics has dismissed market rumours – aired for some time – that it has ...
Credit Allcargo Project Division.
India’s leading 3PL, Allcargo Group, has begun to sell its non-core businesses.
The operator is looking to drive growth around “asset-light or non-asset” logistics services, a portfolio prominently featuring non-vessel-operating common carrier (NVOCC) and consolidation operations.
Allcargo, parent of ECU Worldwide, yesterday announced the signing of a Rs986.4m ($13m) definitive agreement to sell its project forwarding and logistics arm to JM Baxi Group, a Mumbai-based maritime organisation.
“This [deal] will be good for the industry, customers and employees,” said Adarsh Hegde, joint MD of Allcargo. “This exit is aligned with our strategy to focus on the group’s core business.”
Dhruv Kotak, MD of JM Baxi, added: “The Indian economy has strong fundamentals for growth, and this acquisition comes at a time where there is an upsurge in capital expenditure in various sectors.”
Allcargo has, in little over a decade, transformed from a niche freight forwarding player into a multimodal transport operator in India by pursuing an aggressive, targeted-acquisition investment strategy.
Multimodal services have been the biggest money-spinner for thecompany, generating roughly 90% of its overall group revenue. Allcargo’s Q3 21 results mirror that picture as, out of quarterly consolidated income that soared 115%, to Rs58.69bn ($773.2m), multimodal’s contributions increased 143%, year on year.
In December, Allcargo announced the de-merger of its warehousing and real estate divisions, “to attain a better long-term return on the capital employed”.
As it sees potential in the NVO market, through ECU, it has made a flurry of acquisitions in the forwarding industry, the most recent being a majority stake in Scandinavian consolidator Nordicon.
In 2019, Allcargo took over domestic express logistics provider GATI, to tap into the country’s booming parcel and e-commerce volumes. But all its asset-based logistics services, including container storage depots, are ostensibly not delivering the kind of numbers or scale that encourage further investment, it said.
Additionally, a deal – inked a year ago – for Rs3.8bn ($50.45m) funding from Blackstone for logistics park developments on land parcels it owns in India hasn’t yet come to fruition, because of regulatory approval hiccups.
“Our capital allocation and business expansion initiatives will focus on creating an improved return on capital employed, going forward,” Mr Hegde told The Loadstar. “We’ll continue to grow our reach and scale for our global LCL consolidation business, ECU Worldwide.”
JM Baxi operates marine terminals in Visakhapatnam, Haldia and Kandla, and the closure of India’s fiscal year 2021-22 saw “another master stroke” in its heavy-lift or unconventional logistics push.
The company agreed to acquire Lift & Shift India’s Mumbai-based heavy and over-dimensional cargo logistics business, which specialises in engineered logistics services for the niche category of super-heavy lifting, shifting and multimodal transport.
“There is strong demand for end-to-end solutions and, with the largest specialised equipment fleet on the subcontinent coupled with JM Baxi’s terminal infrastructure, we are confident we will be able to add tremendous value to our clients,” said Lift & Shift director Romil Parikh.
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