Allcargo buys the contract logistics business of its partner CCI

Allcargo Logistics plans on Monday to buy out the contract logistics business of its joint venture partner CCI Integrated Logistics and sell the customs clearance segment to consolidate its business.

This is a move to ultimately restructure the entire business into four separate entities, its chief strategy officer Ravi Jakhar said.

Allcargo acquired a majority stake in CCI in 2016 and subsequently established the Avvashya CCI joint venture.

It now owns just over 61% and will buy the remaining 38.87% stake from its partners for Rs 145 crore, Jakhar said.

“The purchase price is based on the agreement signed with ACCI JV partners in 2016 and with the tremendous growth in this business over the years, this is proving to be a highly value-added acquisition,” the company said in a public offering filing.

“This important acquisition will give us management control and facilitate strategic decision-making. This will help us improve service delivery capabilities to drive growth. The company has experienced robust growth over the years and has diversified into several new industry segments. We can also expect more synergies between contract logistics and express shipping to further strengthen the group’s position in the fast-growing area of ​​express and contract logistics,” said Shashi Kiran Shetty, Chairman of Allcargo.

Allcargo’s contract logistics business is engaged in managing inventory and providing third-party supply chain solutions for well-known Indian and international clients in chemical, auto, e-commerce and other industries.

The Company has a total area of ​​over 5 million square feet under its management and reported an EBITDA of Rs 31 crore for Q3 FY23.

“Furthermore, the forthcoming acquisition of KWE’s stake in Gati will allow for closer collaboration between the two companies, putting them in a better position to leverage each other’s strengths as Allcargo buys out the partners’ entire stake in both companies,” so the companies said in the statement

Allcargo Logistics will sell its 61.13% stake in the customs clearance business for Rs 25 crore, Jakhar said.

Ultimately, the publicly traded company Allcargo Logistics will house its foreign subsidiaries ECU Worldwide, Gati and Allcargo Supply Chain. The other two entities will be Allcargo Terminals – which will house its inland container depot and container freight station businesses – and TransIndia Reality.

Allcargo signed an agreement to sell its logistics park to private equity firm Blackstone in February. As part of the transaction, Blackstone will own 90% of these logistics parks, while the remaining 10% will remain with Allcargo Logistics and be spun off into TransIndia Realty.

Both TransIndia Realty and Allcargo Terminals will be listed in April, Jakhar said.

Allcargo currently operates more than 300 offices in 180 countries.

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