Logistics player offering strong growth prospects ahead - Business Guardian
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Logistics player offering strong growth prospects ahead



Logistics refers to the overall process of acquiring goods, their storage and their transportation to the final destination. The logistics sector is now considered as one of the most important sectors contributing to the Indian economy.

The Indian logistics sector has been growing at a rapid pace and is expected to reach $380 billion-mark by 2025. Constant growth in online buying and thus e-commerce business, the government’s focus on localised manufacturing through “Make in India” drive, and the onset of many D2C businesses, all these augurs well for the country’s logistics industry in 2022 and beyond.

The logistic industry is mainly dependent on two of the most unorganised sectors of India, transportation and warehousing. Digitalisation has been implemented in logistics services, and it is the reason for a drastic improvement in port management and transportation efficiency, that is directly boosting the economy by speeding up the delivery of goods and improving international relations.

The growth of the Indian economy is significantly associated with the expansion of the logistics sector and the transportation marketplace. Logistics joins all the elements of production with the manufacturers and the consumers that create the economies of both scale and scope.

Growing demand, foreign infrastructure investments, e-commerce growth and digitalisation are just a few of the forces that have fuelled the development of transportation and logistics services. Increasing foreign trade and the growth of private online transportation service providers are also factors. As a result, by serving as many people as possible, it is fuelling our Indian economy.

In such a scenario, which are the companies which are likely to derive maximum benefit and grow significantly within the logistics sector both domestically as well as globally? One such company, which is a dominant leader in the entire logistics value chain, is Allcargo Logistics Ltd (ALL), a multinational company engaged in providing integrated logistics solutions.

ALL offers specialised logistics services across multimodal transport operations, inland container depot, container freight station operations, contract logistics operations & project and engineering solutions. It provides logistics services such as non-vessel owning common carrier (NVOCC), container freight station (CFS), inland container depot (ICD), warehousing, coastal shipping, express logistics, project logistics and equipment leasing.

The company has a strong presence at major container ports that handle >70% of India’s container traffic. It is the global leader in ‘less than container load’ (LCL) consolidation and is India’s largest integrated logistics services provider.

ALL is a leading player in the CFS segment, which is its most profitable business, with stations at four major ports of India, and an ICD at Dadri in Uttar Pradesh. Its operations are well spread out with 20% coming from Europe, 20% coming from Americas, 25% coming from the Indian subcontinent, Middle East & Africa and 35% coming from the APAC region.

Besides LCL consolidation, Allcargo has also forayed into FCL freight-forwarding through acquisition of FCL Marine, a Netherlands based FCL freight-forwarding company. ECU Worldwide – Allcargo’s 100% owned subsidiary – is the Largest Player Globally in the LCL Market. ECU’s Global network in 160+ countries with 300+ offices covering over 4,000 port pairs, provides the company the ability to offer pan-global services to multinational clients.

Container volume in India is expected to be 2x by 2020, driven by EXIM trade and an increase in containerisation from the current 55% to >65% (versus developed countries’ average of 70%). Revival in EXIM trade expected to translate into higher demand for containerisation due to their efficiency.

The CFS/ICD segment operations cater to the handling of import and export cargo, customs clearance, warehousing and other related ancillary logistics services. Allcargo has a presence across the major ports, viz. JNPT, Mundra, Chennai and Kolkata, which collectively drive 80% of India’s container traffic.

Allcargo completed the acquisition of a 46.86% stake in Gati in April 2020. The board of Gati has approved allotment of shares and warrants to ALL on 17 June 2021 to raise Rs 80 crore, so that post the conversion of warrants, the stake of ALL would rise to 50.2%.

Gati Ltd offers a wide range of services, viz. express distribution, supply chain management solution, e-commerce logistics, managed value-added transportation services (MVATS) and fuel stations. The company has an extensive pan-India presence that covers almost all the districts (735 out of the total 739) in the country, operating on more than 1,900+ scheduled routes with 1,500 fleet, 5,000+ trucks and 600+ operating centres and 7,000 business partners.

As per the company, the combined total available market (surface + air + e-commerce + contract logistics) is Rs 52,500 crore. Express contributes approximately 2.5% to the Indian logistics sector, which is poised to grow 10-12% CAGR by 2025. A mere 100-bps market share could double market opportunity for express industry.

GATI has made huge investments in digital and technology for its improving its sales reach, providing convenient payment solutions for its customers, digital analytics and to scale its operations ahead. The company has also announced a major group restructuring programme which is expected to get operationalised from April 2023 onwards.

Allcargo will demerge its CFS/ICD division and its asset heavy equipment, logistics parks business into separately listed entities. The demerger would create three focused entities targeting distinct set of growth opportunities. ALL would now focus on its international supply chain (MTO) business and organic and inorganic opportunities thereon.

The company would continue maintaining its controlling stake in Gati and ACCI. Allcargo Terminals (ATL) would include operations related to CFS and ICD businesses across locations at JNPT, Mundra, Chennai and Kolkata. A joint venture with CONCOR and planned ICD at Jhajjar under Allcargo Inland Terminal would also be a part ATL.

The land bank pertaining to usage for this business would be transferred to TransIndia Realty & Logistics Parks (TRL) and this entity would continue to be managed as asset-light entity. TRL would build a portfolio of high-yielding rental assets. Also certain asset classes, which could be leased/constructed with other JV partners (Logistics Parks etc), would also be a part of TRL.

The proposed demerger of Allcargo Terminals will be in the ratio of 1 equity share of Rs 2 each fully paid up of ATL for every 1 equity share of Rs 2 each fully paid up held in Allcargo Logistics. The proposed demerger of TRL will be in the ratio of 1 equity share of Rs 2 each fully paid up of TRL for every 1 equity share of Rs 2 each fully paid up held in Allcargo.

Hence, there will be 3 companies after this demerger which will make the business asset light and wherein ALL will include the multimodal transport operations and other holdings in Gati and ACCI, ATL will include CFS and ICD segment while TRL will include equipment hiring/leasing and logistics parks (EHL&LP) business. Every share-holder of ALL will get 1 share each for every 1 share held in the ATL and TRLPL companies apart from the existing company AGLL.

The logistics industry in India is highly fragmented with a large number of unorganised players. Only 10-15% of the $215-billion Indian logistics market is owned by organised players. Several factors are playing the role of a catalyst in fuelling the growth of the logistics industry in India.

The factors are improving infrastructure nationwide, opportunities in emerging markets and channel alliances, urbanisation, faster adoption of newer technologies and digitalisation, increased consumer preference for the reduced delivery time and deployment of innovative techniques for a fast delivery of products.

The logistics industry in India, considered to be the lifeline of the country, holds unprecedented importance as it connects various markets, suppliers and customers dotted across the country, and has now been firmly embedded as an integral part of the national GDP value chain.

Hence, Allcargo is the best proxy to play the logistics theme which is likely to show strong growth over the next 3 to 5 years ahead as the company enjoys the scale and a well-established infrastructure to benefit from this change.

All this has got reflected in FY22 numbers with revenues at Rs 20,072 crore and a PAT of Rs 926 crore as against Rs 173 crore last year with a net EPS of Rs 38 as compared to Rs 7 in FY21. From a valuation perspective, the Allcargo stock has also corrected by almost 30% from its peak in January 2022 and currently trades at Rs 280 levels at a PE multiple of 7xFY23E & 6xFY24E.

These valuations look attractive considering the fact Allcargo enjoys healthy demand prospects across all its product segments, plus its focus towards capital efficiency and the huge runway for growth here in next 2 years are other key drivers which will help it perform strongly over the next 2 to 3 years which essentially puts Allcargo in a sweet spot.

(The author is the Head-Research at Profitmart Securities and a seasoned financial planner and equity researcher)

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Kejriwal unveils ‘Guarantee’ for LS Polls: AAP’s pledge for change



On “Kejriwal ki Guarantee”, he said 24X7 power supply, good education and health facilities, and arranging two crore jobs for youths every year are part of it.

Delhi Chief Minister and AAP national convener Arvind Kejriwal declared “Kejriwal ki Guarantee” on Sunday, outlining 10 urgent initiatives to be pursued swiftly, including the liberation of Indian territory from Chinese control, should the INDIA bloc come to power at the Centre. This opposition alliance, comprising parties like AAP, Congress, Trinamool Congress, and Dravida Munnetra Kazhagam, was established to challenge the BJP-led National Democratic Alliance in the Lok Sabha elections.

A day after his release from jail on interim bail, Kejriwal on Saturday said the INDIA bloc will form the next government and his AAP will be part of it. Addressing a press conference on Sunday, the AAP leader said people will have to choose between “Modi ki Guarantee” and “Kejriwal ki guarantee”. The latter is a “brand”, Kejriwal said.

On the announcement of his guarantees, Kejriwal said, “I have not discussed with my INDIA bloc partners about this. I will press upon my INDIA bloc partners to fulfill these guarantees.”

Kejriwal said while the AAP has fulfilled its “guarantees” of free power, good schools, and Mohalla Clinics in Delhi, “(Prime Minister Narendra) Modi has not fulfilled his guarantees”.

On “Kejriwal ki Guarantee”, he said 24X7 power supply, good education and health facilities, and arranging two crore jobs for youths every year are part of it.

“We worked on management to ensure 24×7 power supply in Punjab and Delhi. We can do it in the entire country. The government schools in the country are in a bad shape. We will arrange good quality education across the country. We know how to do it,” he said.

Kejriwal also promised to end the Agniveer scheme and ensure that farmers get MSP for their crops as per the Swaminathan Commission’s report. “Rashtra Sarvopari is our guarantee. China has occupied our land and we will free it from their occupation,” he said. Kejriwal also promised to provide full statehood to Delhi.

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Macro & financial stability, boost to infra, extended PLI likely key areas in Modi 3.0



If one were to go by the Central Government’s poll manifesto which has stayed aligned to the pre-poll interim Budget, a strong adherence to the path of macro and financial stability as priorities, marked by low inflation, strong external balances, high growth, and fiscal prudence, appears to be the likely scenario if it comes back to power. A DBS Group research by Radhika Rao, senior economist, DBS Group Research and Taimur Baig, MD and Chief Economist, DBS Group Research indicates that the government will continue with the infrastructure push, policies to expand the manufacturing sector, and establish the country’s position as a voice of the Global South.

On the first, the focus will be on improving physical and digital infrastructure, marked by new metro networks, new railway tracks, new-age trains, improved connectivity, new bullet trains, roads, and energy infrastructure. Concurrently, besides expanding the 5G network, improving rural broadband connectivity, exploring 6G technology and the digitization of land records, amongst others, were highlighted in the to-do lists, as per Rao and Baig.

Secondly, Make-in-India and PLI schemes are likely to be expanded, with an emphasis on employment creation, simplification of regulatory processes, appropriate infra for manufacturing hubs, and R&D. A mix of traditional and new-age sectors will likely be prioritized, including a globally competitive food-processing industry, and core sectors (steel, cement, metals, engineering etc), besides a push towards indigenous defense manufacturing, pharma, new age & chip manufacturing, auto and electric vehicles, amongst others.

Existing social welfare programs are likely to be enhanced with better outreach, including, a middle-class focus through the provision of high-value jobs, quality healthcare and infra to improve ease of living, amongst others. Also on the radar is affordable housing program expansion with a focus on slum redevelopment, sustainable cities, etc. The PM Garib Kalyan Anna Yojana is to be a priority, which will continue to provide free foodgrain ration to about 800 mn residents. On healthcare, Rao and Baig see continuity to provide quality free health treatment to up to 500,000 poor families under Ayushman Bharat.

The economists are also of the view that the PM Ujjwala Yojana, which has already benefited 100 mn with cooking gas connections, will be expanded. Subsidies for solar panels on roofs of 10 mn households up to 300 units/month under the PM Surya Ghar Muft Bijli Yojana, unorganized workers, farmers and continuation of financial assistance to farmers under PM Kisan, farm self-sufficiency, etc.), start-ups and micro-credit enterprises, will be the other focus areas to boost the economy from a bottom-up approach.

Rao and Baig foresee limited fiscal implications from these announcements as part of these were included in the interim budget and the manifesto did not outline any new big-bang reforms or fresh social welfare spending programs. “We maintain our FY25 fiscal deficit assumption at -5.1% of GDP with the existing borrowing program,” says the economists.

A broad-based push towards more contentious structural reforms (land, labor, farming, etc.) did not receive a mention in the manifesto, which may still be prioritized if the party returns for a third term. In our view, the incoming government is neither limited by nor will be restricted by the poll promises. To that extent, the scope of reforms can be wider than what has been laid out in the respective manifestos.

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Govt extends date for submission of R&D proposals



The Government has extended the deadline for submission of proposals related to R&D scheme under the National Green Hydrogen Mission. The R&D scheme seeks to make the production, storage, transportation and utilisation of green hydrogen more affordable. It also aims to improve the efficiency, safety and reliability of the relevant processes and technologies involved in the green hydrogen value chain. Subsequent to the issue of the guidelines, the Ministry of New & Renewable Energy issued a call for proposals on 16 March, 2024.

While the Call for Proposals is receiving encouraging response, some stakeholders have requested more time for submission of R&D proposals. In view of such requests and to allow sufficient time to the institutions for submitting good-quality proposals, the Ministry has extended the deadline for submission of proposals to 27th April, 2024.

The scheme also aims to foster partnerships among industry, academia and government in order to establish an innovation ecosystem for green hydrogen technologies. The scheme will also help the scaling up and commercialisation of green hydrogen technologies by providing the necessary policy and regulatory support.

The R&D scheme will be implemented with a total budgetary outlay of Rs 400 crore till the financial year 2025-26. The support under the R&D programme includes all components of the green hydrogen value chain, namely, production, storage, compression, transportation, and utilisation.

The R&D projects supported under the mission will be goal-oriented, time bound, and suitable to be scaled up. In addition to industrial and institutional research, innovative MSMEs and start-ups working on indigenous technology development will also be encouraged under the Scheme.

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India, Brazil, South Africa to press for labour & social issues, sustainability



The Indian delegation also comprises Rupesh Kumar Thakur, Joint Secretary, and Rakesh Gaur, Deputy Director from the Ministry of Labour & Employment.

India, on Thursday, joined the G20’s two-day 2nd Employment Working Group (EWG) meeting under the Brazilian Presidency which is all set to address labour, employment and social issues for strong, sustainable, balanced and job-rich growth for all. India is co-chairing the 2nd EWG meeting, along with Brazil and South Africa, and is represented by Sumita Dawra, Secretary, Labour & Employment.

The Indian delegation also comprises Rupesh Kumar Thakur, Joint Secretary, and Rakesh Gaur, Deputy Director from the Ministry of Labour & Employment. India has pointed out that the priority areas of the 2nd EWG at Brasilia align with the priority areas and outcomes of previous G20 presidencies including Indian presidency, and commended the continuity in the multi-year agenda to create lasting positive change in the world of work. This not only sustains but also elevates the work initiated by the EWG during the Indian Presidency.

The focus areas for the 2nd EWG meeting are — creating quality employment and promoting decent labour, addressing a just transition amidst digital and energy transformations, leveraging technologies to enhance the quality of life for al and the emphasis on gender equity and promoting diversity in the world of employment for inclusivity, driving innovation and growth. On the first day of the meeting, deliberations were held on the over-arching theme of promotion of gender equality and promoting diversity in the workplace.

The Indian delegation emphasized the need for creating inclusive environments by ensuring equal representation and empowerment for all, irrespective of race, gender, ethnicity, or socio-economic background. To increase female labour force participation, India has enacted occupational safety health and working conditions code, 2020 which entitles women to be employed in all establishments for all types of work with their consent at night time. This provision has already been implemented in underground mines.

In 2017, the Government amended the Maternity Benefit Act of 1961, which increased the ‘maternity leave with pay protection’ from 12 weeks to 26 weeks for all women working in establishments employing 10 or more workers. This is expected to reduce the motherhood pay gap among the working mothers. To aid migrant workers, India’s innovative policy ‘One Nation, One Ration Card’ allows migrants to access their entitled food grains from anywhere in the Public Distribution System network in the country.

A landmark step in fostering inclusion in the workforce is the e-Shram portal, launched to create a national database of unorganized workers, especially migrant and construction workers. This initiative, providing the e-Shram card, enables access to benefits under various social security schemes.

The portal allows an unorganized worker to register himself or herself on the portal on self-declaration basis, under 400 occupations in 30 broad occupation sectors. More than 290 million unorganized workers have been registered on this portal so far.

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India to spend USD 3.7 billion to fence Myanmar border



India plans to spend nearly $3.7 billion to fence its 1,610-km (1,000-mile) porous border with Myanmar within about a decade, said a source with direct knowledge of the matter, to prevent smuggling and other illegal activities. New Delhi said earlier this year it would fence the border and end a decades-old visa-free movement policy with coup-hit Myanmar for border citizens for reasons of national security and to maintain the demographic structure of its northeastern region.

A government committee earlier this month approved the cost for the fencing, which needs to be approved by Prime Minister Narendra Modi’s cabinet, said the source who declined to be named as they were not authorised to talk to the media. The prime minister’s office and the ministries of home, finance, foreign affairs and information and broadcasting did not immediately respond to an email seeking comment.

Myanmar has so far not commented on India’s fencing plans. Since a military coup in Myanmar in 2021, thousands of civilians and hundreds of troops have fled from there to Indian states where people on both sides share ethnic and familial ties. This has worried New Delhi because of risk of communal tensions spreading to India. Some members of the Indian government have also blamed the porous border for abetting the tense situation in the restive north-eastern Indian state of Manipur, abutting Myanmar.

For nearly a year, Manipur has been engulfed by a civil war-like situation between two ethnic groups, one of which shares lineage with Myanmar’s Chin tribe. The committee of senior Indian officials also agreed to build parallel roads along the fence and 1,700 km (1,050 miles) of feeder roads connecting military bases to the border, the source said.

The fence and the adjoining road will cost nearly 125 million rupees per km, more than double that of the 55 million per km cost for the border fence with Bangladesh built in 2020, the source said, because of the difficult hilly terrain and the use of technology to prevent intrusion and corrosion.

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However, Stock highlighted the enormity of the challenge, noting that between 40% and 70% of criminal profits are reinvested, perpetuating the cycle of illicit financial activity.

In a press briefing held on Wednesday, Interpol Secretary General Jurgen Stock unveiled alarming statistics regarding the extent of undetected money laundering and illegal trade transactions plaguing the global banking network. Stock revealed that over 96% of the money transacted through this network remains undetected, with only 2-3% of the estimated USD 2-3 trillion from illegal trade being tracked and returned to victims.

Interpol, working in conjunction with law enforcement agencies and private financial sectors across its 196 member countries, is committed to combating the rising tide of fraud perpetrated by illicit traders. These criminal activities encompass a wide spectrum, including drug trafficking, human trafficking, arms dealing, and the illicit movement of financial assets.

Stock emphasized the urgent need to establish mechanisms for monitoring transactions within the global banking network. Currently, efforts are underway to engage banking associations worldwide in setting up such a framework. However, Stock highlighted the enormity of the challenge, noting that between 40% and 70% of criminal profits are reinvested, perpetuating the cycle of illicit financial activity. The lack of real-time information sharing poses a significant obstacle to law enforcement agencies in their efforts to combat money laundering and illegal trade.

Stock underscored the role of Artificial Intelligence (AI) in exacerbating this problem, citing its use in voice cloning and other fraudulent activities. Criminal organizations are leveraging AI technologies to expand their operations and evade detection on a global scale. Stock emphasized the importance of enhanced cooperation between law enforcement agencies and private sector banking groups. Realtime information sharing is crucial in the fight against illegal wealth accumulation.

Drawing inspiration from initiatives such as the “Singapore Anti-Scam Centre,” Stock called for the adoption of similar models in other countries to strengthen the collective response to financial crimes. In conclusion, Stock’s revelations underscore the pressing need for concerted action to combat global financial crimes. Enhanced cooperation between public and private sectors, coupled with innovative strategies for monitoring and combating illicit transactions, is essential to safeguarding the integrity of the global financial system.

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