Mumbai: When Shashi Kiran Shetty moved to the country’s commercial capital from Mangalore in 1978, he was clear about one thing.
“I came to Mumbai to do something big in life,” he says, not unlike many other migrants to the metropolis before him. Today, Shetty is on his way to achieving his ambition.
Growth appetite: Shashi Kiran Shetty of Allcargo Global says Indian logistics sector will experience significant growth in the coming years.
In 1995, Belgium-based ECU Line NV, the world’s second largest LCL firm, appointed Shetty’s Allcargo Global Logistics Ltd, which he set up in 1993, as its agent for Mumbai and New Delhi. LCL (less than a container load) firms collect small cargo and aggregate them into a full container load.
Ten years later, Allcargo took a 33.8% stake in ECU and the following year, acquired the remaining shares. The takeover of ECU, which had five times the acquirer’s revenue in 2006, for €23 million (Rs160 crore today), made Allcargo the world’s No. 2 LCL firm, after OTS Logistics Group of the US. “I want to grow my company as the top in the world in LCL consolidation and India’s leading company in other areas that we are into,” says Shetty.
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While absorbing ECU, Allcargo made sure that it would have a direct presence in containerized cargo versus being a mere freight-forwarding firm. It has started container freight stations, inland container depots and enhanced its presence in equipment leasing.
“Be it oil exploration rigs or windmills or (freight) trains, Allcargo is capable of offering end-to-end logistics for companies from any part of the world,” says a senior Allcargo executive who doesn’t want to be named. Thanks to ECU, Allcargo is in 63 countries with 140 offices, with LCL contributing at least 82% of its overall revenue.
This global footprint persuaded private equity firm Blackstone Group to invest an additional $23 million in Allcargo, taking its total commitment to $75 million over two phases in the last two years.
“This is a successful culmination of our partnership. We are confident that the Indian logistics sector will experience significant growth in the coming years,” said Akhil Gupta, chairman and managing director of Blackstone Advisors India Pvt. Ltd. “Shetty has created a strong logistics company with an enviable market position and we have also been impressed by both the breadth and depth of Allcargo’s management team and look forward to partnering with the company through its critical growth phase.”
“The interesting fact is there is no major competitor in India. Shetty competes with international freight forwarders,” said an executive with a rival shipping firm. He didn’t want to be named.