Allcargo Logistics Ltd, part of the Mumbai-based Avvashya Group, has hived off its contract logistics business to create a joint venture with CCI Logistics Ltd.
Allcargo will hold a 62% stake in the joint venture, called Avvashya CCI Logistics Private Ltd, while the promoters of CCI Logistics will hold the remaining.
The JV will hold the warehousing division of CCI Logistics and the contract logistics business of another Avvashya Group company, Hindustan Cargo Ltd.
The new company will provide end-to-end, integrated and value-added logistics services to customers, the partners announced on Thursday. The combined entity will offer about 1.5 million sq. ft of operating warehousing space across 20 locations in India.
Shashi Kiran Shetty, founder and chairman of Avvashya Group, will be the chairman of the new company. Naresh Sharma, director at CCI Logistics, will be managing director at the JV. Shetty said the newly formed entity will aim to create synergy by combining related portfolios of the three companies.
The merged entity expects to benefit from rising domestic consumption and the implementation of the goods and services tax, a new taxation system the government is introducing that will subsume a host of central and state indirect taxes including customs duty and excise tax.
It also expects to benefit from government initiatives to set up a dedicated rail freight corridor (DRFC) and smart cities. It plans to set up a rail-connected logistics park at Jhajjar in Haryana for inland container depot and warehousing capacity. It plans to raise about Rs 300 crore by issuing securities for expansion or acquisitions to grow its business, the company said.
Allcargo is backed by private equity firm Blackstone, which holds about 14.4% of the firm. The PE firm invested Rs 240 for a 10.4% stake in 2008 and made an additional Rs 110 crore investment in 2009.
Founded in 1993, Allcargo operates container freight stations and inland container depots and provides multimodal transport solutions. Its services include ocean, air and land logistics, container freight logistics, warehousing, project cargo movement and cargo consolidation.
Allcargo’s contract logistics division caters to companies in sectors such as automobile, engineering, e-commerce, fashion and retail.
The Avvashya Group also includes engineering services provider Conserve Infratech Pvt. Ltd and real estate services firm SKS Netgate Pvt Ltd.
CCI is an integrated logistics provider, specialising in customised surface and air transport solutions.
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