Allcargo going big on inland container depots

Allcargo Global Logistics Ltd has lined up big plans for its inland container depot (ICD) business, a senior executive of the company said on Friday.

 “We plan to invest Rs 50 crore on ICD expansion. Our initial funding of Rs 75 crore for the ICD business was last year used for construction of depots in Pithampur near Indore, which is under a joint venture with Hind Terminals,” the official said.

The new investment would be made for setting up ICDs in Dadri (NCR Region, in joint venture with Concor), Hyderabad, Bangalore and Nagpur apart from expansion of Pithampur operations.

The official said the company did not intend to raise funds from the market as of now for the expansion. “We will be utilising the funds from our investors,” said the official.

One of its two main private equity investors — Blackstone Group, which has 10.38% stake in Allcargo, had invested $23 million in the company in September.

New Vernon, which has been an investor in Allcargo since prior to its pre-IPO structure, holds 6.41% in it as of the last quarter.
An Allcargo spokesperson said the company expects growth to pick up, especially in the multi-model transport operations.

“Our project logistics division is seeing robust growth on account of rise in spending in the infrastructure sector and growth in the overall Exim trade. Rise in containerisation, container penetration rate and growth in domestic container movements would also spur growth,” the spokesperson said.

In a recent report, Jignesh Dhabalia of India Capital Markets wrote that the company is expecting volumes of container freight stations (CFS) and ICDs to increase marginally, as additional capacity is expected to be operational by Q4CY10.

“Volumes are expected to increase at 6% compound annual growth rate over CY08-10. Revenues should increase at 7% CAGR over CY08-10 led by slower volume growth over the same period,” the analyst wrote.