Allcargo arm Avvashya Logistics to invest ₹400 cr to expand warehouse capacity to 10 million sq ft by 2022

Avvashya CCI Logistics Pvt Ltd, a unit of Mumbai-listed Allcargo Logistics Ltd, will invest ₹400 crore by 2022 to expand its warehousing capacity to 10 million sq ft as the Goods and Services Tax regime drives consolidation in the logistics industry, a top company official said.

“We have 3.5 million sq ft of operating facility across the country. By 2022, we are looking to grow it to 10 million sq ft which will require an investment of about ₹400 crore,” V Balaji, CEO — Contract Logistics, Avvashya, told BusinessLine .

The expansion will focus on three key areas: Speciality chemicals, retail associated with e-commerce and auto engineering.

“With the introduction of GST, major consumption centres will continue to remain locations where warehouses will get consolidated,” Balaji said.

Guwahati, according to Balaji, is being looked at keenly by the company for expanding facilities. “North-East is an area that requires high quality infrastructure and service operators with global best practices,” he said.

Specialty chemicals currently contributes to half of the revenue of the company while auto and retail account for 35 per cent and 15 per cent, respectively.

“Over a period of time, we will probably see chemicals contributing 40 per cent of our revenues while the remaining 60 per cent will be split equally between auto and retail,” Balaji said.

While auto will continue to remain a key focus area for the company with plans to enhance penetration by increasing services, the growth will be more in retail where the industry has been growing at a compounded annual growth rate (CAGR) of 30-34 per cent.

“With the recent acquisitions and consolidations in the retail space, the industry will grow manifold in the coming years,” he pointed out. Retail and e-commerce industry needs facilities that are able to scale-up and scale down to meet the seasonal requirements in terms of space and resources and quality infrastructure at strategic locations.

“Our investment in technology for automation of processes and storage operations enables us to multiply manifold without compromising on quality while allowing us to scale down quickly. This flexibility alongside scalability and economies of scale has been the key recipe we have presented to the retail industry,” Balaji said.

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