Allcargo Logistics aims to be a $2-b global leader by 2020

| Updated on: Jan 08, 2018

Chairman Shashi Kiran Shetty plans to pump in ₹1,000 cr over the next 5 years

Shashi Kiran Shetty, Chairman of Allcargo Logistics, is plotting the next phase of growth for the company he set up about 25 years ago “after listening to his inner voice”. The integrated logistics firm has traversed organic and inorganic routes including 12 acquisitions, one of which was at least five times the size of the Indian firm.

Shetty’s focus is to turn Allcargo into a $2-billion global leader by 2020.

‘Strategic fits’

Bantwal-born (a taluk in Karnataka’s Dakshina Kannada district, 25 kms east of Mangaluru, known for its entrepreneurial spirit) and educated Shetty, referred to as a ‘czar’ in the logistics industry, has always been quick to spot opportunities that make a “strategic fit”.

“We are in a large industry; we are in India and we are global. There is always an opportunity to grow organically in the markets where we operate. That’s clearly one focus,” Shetty told BusinessLine .

“As we go along, there are opportunities which come to grow inorganically. It’s a very fragmented industry. Some companies sell for different reasons. We always look for such opportunities which strategically fit into our organisation. That’s one of the ways in which we have grown all along.”

Shetty is quick to add that there is “nothing specific” on the table. “But having said that, in India, post-GST, there is opportunity to grow a lot more in the warehousing and distribution business.”

The Goods and Services Tax is expected to spur consolidation and transform the warehousing industry.

“Warehousing and distribution require a large scale, and very few companies can do it because that needs lot of capital and management bandwidth. It is not simply loading and unloading trucks and storing goods in a godown. A lot more goes into it — there is inventory management and value addition; it’s a very scientific way of managing business that needs a lot of competencies and capabilities, which we have as an organisation,” he said.

Shetty is ready for a bigger play in the space, having purchased land parcels a few years ago, and plans to pump in as much as ₹1,000 crore over the next five years to increase the capacity to over 10 million sqft, from about 2 million sq ft, spread across 15-20 cities.

After working for four years, first at Intermodal (now defunct) and later at Forbes Gokak, Shetty felt that he was “not enjoying” himself at the workplace: the Bantwal spirit caught up with him. “Something in me was telling me I can do better. So I thought, let me try my hand in business. That was the trigger — listening to my inner voice”.

In 1985, with ₹25,000, Shetty set up TransIndia, his first company, which handled containers, and project and general cargo at Mumbai and JNPT. “It took me 10 years to stabilise the business. By then, the company was profitable, had acquired assets, there was steady cash flow and we had regular customers, some of whom were willing to give repeat business. Once that stabilised, I got an opportunity to start Allcargo — a multi-modal transport operator — in 1993.”

Shetty later merged TransIndia with Allcargo and took Allcargo public in June 2007.

Among his 12 acquisitions, the most daring was the 2006 purchase of Belgium-based ECU Line (now named ECU Worldwide and one of the top players in the global NVOCC (non-vessel operating common carrier) business), whose revenue was five times more than Allcargo. ECU catapulted Allcargo into the pole position globally in the less than container load (LCL) business, the firm claims.

Shetty’s growth strategy also revolves around inducting young blood to infuse “energy and enthusiasm” into the firm (the firm hired 28 management graduates in 2017) and promoting gender diversity — 40 per cent of the group’s global workforce are women.

Digitalisation is also high on Shetty’s agenda. “We are going to invest a lot of money in building a digital platform, including hiring top-notch IT professionals to develop a digital strategy”.

He is also envisioning the future, with his son Vaishnav, 23, joining the group nine months ago after graduating from an American university. The junior Shetty will be instrumental in spearheading the company into a tech-enabled logistics solutions provider, he said.

Published on November 01, 2017
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