Focus will be on express, last-mile biz, not cold chain: AllCargo's Shetty

The chairman of AllCargo Logistics says his aim is is to double the margin in the express segment to 10%

With expansion of e-commerce businesses, the express industy holds strong growth potential. AllCargo Logistics is set to capture the opportunity through its deal with Gati, pioneer in the industry. In a telephonic interview with Aditi Divekar, Allcargo’s Chairman Sashi Kiran Shetty talks about the company’s growth plans. Edited excerpts:

With a stake in Gati, you now have a presence in heavy investment cold chain business. How do you plan to grow this business?

In cold chain, we do not intend to put huge capital, atleast initially, as we need to understand this business. We could look to getting into collaboration in the space or build a franchise model. We still have to figure out on that front. We will focus closely on last mile and express segments of Gati’s business.  

What is your plan for growth of the express and last-mile delivery business verticals?

In express and last mile segments, we will focus on improving efficiency, as growth potential is strong there. Of the 747 districts in the country, Gati is present in 727 of them. The target is to grow volumes and double margin in this business to 10 percent. We will increase business with e-commerce, which in turn will give us more business in the express segment. In e-commerce, we will look to outsource it and not get into management.

What will your debt position be after this deal? How do you plan to lower your debt?

With ongoing organic expansions and Gati stake buy, we will have debt of Rs 1,200 crore. We plan to dilute our stake and become a minority shareholder in the five-logistics park section, which will reduce our debt by about 90 percent. We should be making an announcement on logistics park stake sale in the next two-three weeks.

What is the acquisition status of VG Siddhartha-owned Sical Logistics? 

Currently, due diligence for Sical Logistics is on, and hence, we cannot give a timeline. Sical is present in inland container depots/container freight stations business as well. It is present in locations where AllCargo is not, that’s why we are interested in this acquisition.