+
Allcargo Logistics pursues $30 mn cost-cutting amid global slowdown
WAREHOUSING & LOGISTICS

Allcargo Logistics pursues $30 mn cost-cutting amid global slowdown

Allcargo Logistics is targeting a cost reduction of $30 million (approximately Rs 250 crore) by the end of the fiscal year 2023-24 amidst the ongoing global logistics sector slowdown, revealed Chairman Shashi Kiran Shetty in an interview. Despite this cost-cutting initiative, the Mumbai-based company is allocating $100 million (Rs 830 crore) for a comprehensive digital transformation, including the enhancement of its cybersecurity infrastructure.

Additionally, an anonymous source disclosed that the company plans to raise up to Rs 3 billion in equity funds for Gati, its express logistics business.

Shetty attributed the disruption in the supply chain to excessive ordering during the global logistics slowdown, leading to full warehouses. However, he highlighted a significant shift due to geopolitical events, such as the war in Russia and Ukraine, causing dramatic changes in the global landscape with rising commodity prices and interest costs.

Acknowledging the challenging market conditions, Shetty outlined the cost-cutting measures, including workforce rationalisation and a hiring freeze. Despite the current challenges, he expressed optimism about improving conditions from December onwards, citing decreasing inventory levels and a surge in real orders.

Allcargo Logistics is actively investing in digitalisation, data security, and centralisation of its processes, particularly in the aftermath of a cyber-attack in 2022 that disrupted the company's systems for a week. Shetty emphasised the company's commitment to becoming one of the most secure logistics companies globally, collaborating with firms like IN Groupe, Soc LLC, KPMG, and EY.

Highlighting the ongoing restructuring efforts, Shetty announced the demerger of ECU Worldwide, its lucrative international business, into a separate listed entity named Allcargo ECU. This move is the final step in a series of strategic initiatives that included selling non-core assets, providing exits to partners, and acquiring their stakes in business.

The Allcargo Group will now consist of four listed entities: Allcargo ECU, Allcargo Logistics (including the acquired Gati express business), Allcargo Terminals, and TransIndia Real Estate. Shetty indicated that Gati, still a loss-making and leveraged entity, will raise equity funds to create a five-year business plan, invest in systems, processes, people, and retire debt. TransIndia Real Estate may explore the alternative investment fund route for fundraising. Shetty concluded by envisioning a global system, operating system, and platform for Allcargo Logistics' businesses by the end of 2024.

Allcargo Logistics is targeting a cost reduction of $30 million (approximately Rs 250 crore) by the end of the fiscal year 2023-24 amidst the ongoing global logistics sector slowdown, revealed Chairman Shashi Kiran Shetty in an interview. Despite this cost-cutting initiative, the Mumbai-based company is allocating $100 million (Rs 830 crore) for a comprehensive digital transformation, including the enhancement of its cybersecurity infrastructure. Additionally, an anonymous source disclosed that the company plans to raise up to Rs 3 billion in equity funds for Gati, its express logistics business. Shetty attributed the disruption in the supply chain to excessive ordering during the global logistics slowdown, leading to full warehouses. However, he highlighted a significant shift due to geopolitical events, such as the war in Russia and Ukraine, causing dramatic changes in the global landscape with rising commodity prices and interest costs. Acknowledging the challenging market conditions, Shetty outlined the cost-cutting measures, including workforce rationalisation and a hiring freeze. Despite the current challenges, he expressed optimism about improving conditions from December onwards, citing decreasing inventory levels and a surge in real orders. Allcargo Logistics is actively investing in digitalisation, data security, and centralisation of its processes, particularly in the aftermath of a cyber-attack in 2022 that disrupted the company's systems for a week. Shetty emphasised the company's commitment to becoming one of the most secure logistics companies globally, collaborating with firms like IN Groupe, Soc LLC, KPMG, and EY. Highlighting the ongoing restructuring efforts, Shetty announced the demerger of ECU Worldwide, its lucrative international business, into a separate listed entity named Allcargo ECU. This move is the final step in a series of strategic initiatives that included selling non-core assets, providing exits to partners, and acquiring their stakes in business. The Allcargo Group will now consist of four listed entities: Allcargo ECU, Allcargo Logistics (including the acquired Gati express business), Allcargo Terminals, and TransIndia Real Estate. Shetty indicated that Gati, still a loss-making and leveraged entity, will raise equity funds to create a five-year business plan, invest in systems, processes, people, and retire debt. TransIndia Real Estate may explore the alternative investment fund route for fundraising. Shetty concluded by envisioning a global system, operating system, and platform for Allcargo Logistics' businesses by the end of 2024.

Related Stories

Gold Stories

Next Story
Infrastructure Transport

Mumbai-Ahmedabad Bullet Train’s Surat-Vapi Section Set for 2027

The first section of the Mumbai-Ahmedabad Bullet Train corridor, linking Surat and Vapi, is targeted to begin services in 2027. Construction is expected to be completed by December 2026, while Railway Minister Ashwini Vaishnaw has indicated that an inauguration could take place around the middle of 2027. The National High Speed Rail Corporation (NHSRCL) said the train being manufactured in India is expected to reach the tracks around April or May 2027. The train will undergo extensive testing before the section is opened for passenger services. The project began construction in 2021 and includ..

Next Story
Infrastructure Transport

Indian Railways Approves Four Projects Worth Rs. 7.36 bn Across Four States

Indian Railways has approved four projects with a combined value of Rs. 7.36 bn across Uttar Pradesh, Maharashtra, Andhra Pradesh and Gujarat. The programme covers train protection, signalling, electric traction supply and a road overbridge, with each project assigned to a different railway zone. In Uttar Pradesh, Rs. 2.52 bn has been approved to extend the Kavach 4.0 automatic train protection system across 607.7 km in the Lucknow Division of North Eastern Railway. The system monitors train movements and can apply the brakes if a driver fails to observe a signal or exceeds a safe speed. The w..

Next Story
Infrastructure Urban

Chandru Raheja Sells 1.49% Stake in Mindspace REIT for Rs. 5 bn

Billionaire Chandru Lachmandas Raheja has sold a 1.49 per cent holding in Mindspace Business Parks REIT for Rs. 5 bn through a bulk deal on the BSE. The transaction involved 9.9 mn units and was executed at an average price of Rs. 505 per unit, according to exchange data. Following the sale, units of Mindspace Business Parks REIT were trading 0.18 per cent lower at Rs. 504.05 on Tuesday. Exchange data did not identify the buyers involved in the transaction. Raheja is the chairman of real estate company K Raheja Corp. The sale involved 99,00,990 units, representing 1.49 per cent of the Mumbai-b..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

SPECIAL OFFER
QR Code