Bangalore: Mumbai-listed Allcargo Global Logistics Ltd plans to develop a special economic zone (SEZ) and a free trade warehousing zone (FTWZ) in Gujarat’s Kutch district as it looks to grow its logistics business, two of its executives said.
The SEZ project will be executed through Sealand Ports Pvt. Ltd, while the FTWZ will be developed through Avash Logistic Park Pvt. Ltd, which are listed in the 2010 annual report of Allcargo Global Logistics among those enterprises owned or significantly influenced by its key management personnel or their relatives.
If the plan succeeds, Allcargo, in which private equity firm Blackstone Group Lp holds a 15% stake, will join a select list of logistics companies diversifying into setting up these zones to boost cargo volumes.
The SEZ will be developed in partnership with Infrastructure Leasing and Financial Services Ltd (IL&FS). “We will be a co-promoter of the SEZ... with a 50% stake and also be the operator of the SEZ,” said one of the executives mentioned above.
The executive said the firm would benefit from the cargo generated at the SEZ, planned over 1,112 hectares (ha), and the FTWZ spread over 496ha.
The format and structure of the planned multi-product zones, both of which which have in-principle approval from the commerce ministry’s board of approval for SEZs, is under discussion, said the second executive. Both exectives requested anonymity as the plan is yet to be made public.
“Allcargo Global Logistics does not have anything to say at this point in time,” a spokesperson for the company said.
IL&FS Infrastructure Development Corp. Ltd, a unit of IL&FS that builds SEZ projects, was not immediately available for comment.
Allcargo is the world’s second biggest LCL (less than a container load) cargo consolidator, a term used to describe logistics firms that collect small quantities of cargo from customers and aggregate them into a full container load for shipments.
Blackstone invested $75 million (Rs 337 crore today) in the firm in two phases in February 2008 and September 2009.
Adani Group-promoted Mundra Port and Special Economic Zone Ltd, the operator of India’s biggest private port at Mundra in Gujarat, runs a port-based SEZ. Arshiya International Ltd started running an FTWZ from August 2010 at Panvel near Mumbai. Union government-controlled ports such as Cochin and Kandla are also planning to set up SEZs.
“Apart from receiving lease rentals from firms operating in the SEZ and FTWZ, logistics firms will gain by locking-in customers for the long-term who bring cargo volumes to support their core business,” said Gagan Seksaria, associate director, transportation and logistics, at audit and consulting firm KPMG India Pvt. Ltd.
Allcargo Global operates container freight stations (CFS) at Mumbai, Chennai and Mundra and an inland container depot (ICD) in Indore. A new ICD is expected to start operations at Dadri near Delhi. CFS and ICD are common-user customs bonded facilities, offering services for handling and temporary storage of cargo containers.