Allcargo buys partner's 39% stake in contract logistics arm for Rs 145 cr

Allcargo Logistics on Monday acquired the remaining 38.87 per cent stake of its partner ACCI in the contract logistics arm for Rs 145 crore, valuing the company at Rs 373 crore at an enterprise level.

Allcargo has also decided to sell its non-core customs clearance business by divesting its 61.13 per cent stake for an enterprise value of Rs 42 crore.

With the acquisition, Allcargo will take its stake to 100 per cent in the contract logistics business and create an effective synergy between contract logistics and express distribution.

The acquisition price is based on the agreement that was signed with ACCI in 2016 and with growth in this business over the years, the company said in a statement.

The acquisition offers management control and facilitates strategic decision-making for the business. This will also help us enhance service delivery capabilities to drive growth.

The business has witnessed robust growth over the years diversifying into several new industry segments. With full ownership we also expect more synergies between our contract logistics and express distribution, Shashi Kiran Shetty, the founder & chairman of the Allcargo group said.

Allcargo's contract logistics business is engaged in managing inventories and providing third-party supply chain solutions to domestic and international customers across chemicals, auto, e-commerce and other industries.

The business has a total space of over 5 million square feet under its management and reported a pre-tax profit of Rs 31 crore for the December quarter, he said.

He also said the impending acquisition of KWE's stake in Gati will enable closer collaboration between the two businesses thus enabling them to be in a better position to leverage each other's strength with Allcargo buying out entire stakes of partners in both businesses.

The company's board also approved the sale of the smaller non-core customs clearance business of the group. Accordingly, Allcargo will divest its 61.13 per cent stake for an enterprise value of Rs 42 crore.

On this sale, Shetty said this is part of exiting non-core businesses to consolidate core businesses.

Post-demerger of Allcargo Terminals and TransIndia, which has already received NCLT approval, the company shall now have two distinct business segments under international supply chain and express and contract logistics.

Allcargo Logistics is a global leader in multimodal logistics solutions and its wholly-owned subsidiary Allcargo Belgium, which operates ECU Worldwide network is a global leader in ocean freight consolidation.

Domestically, Allcargo is the market leader in the container freight station business and is among the leaders in express logistics through its subsidiary Gati. It currently operates over 300 offices serving 180 countries.

Allcargo Logistics shares closed higher by 1.15 per cent at Rs 374.45 on BSE on Monday.

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