Business Logistics & SCM

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Logistics firms eager for share of Indian pie March 26, 2007

Filed under: Business Logistics — TSBL @ 11:47 am

Author: P R Sanjai in Mumbai

Article Dated: March 20, 2007

Thanks to the entry of global giants into the retail space and a resurgence in manufacturing, the international logistics majors are now busy in acquiring middle level Indian logistics companies to have their presence in the country.

Global logistics giants such as US-based Phoenix International Freight Services, Hong Kong-based Kerry Logistics, the Netherlands’ Broekman Group and CH Robinson of the US have already enhanced their presence in the country by acquiring Indian logistics companies.

Besides, farms such as Swift Freight of Dubai, Rhenus of Germany and Bax Logistics of California are looking for major acquisitions in the country to have a pie of the retail-led logistics revolution.

Big boys of logistics such as DHL, Fedex and TNT had already completed major acquisitions in India.

According to a Goldman Sachs study, over the next two decades, India’s GDP could touch $1.4 trillion, with a 4.4 per cent compound annual growth rate and India would then be spending around 10 per cent of GDP, a whopping $140 billion on logistics and related services.

“The Indian logistics sector is at the beginning of a strong growth path. Not only retail, there are other growth drivers like the manufacturing, FMCG and auto components sectors,” says an Edelweiss research.

Industry analysts say domestic players are likely to invest over $250 million by the end of the next financial year. “The valuation of Indian logistics companies are hitting the roof following the mega acquisition of Speedage by TNT. Currently, domestic players are in an expansion mode to increase their valuation,” a Mumbai-based logistics company representative said.

However, he declined to divulge the acquisition amount of Speedage by TNT adding, “thanks to that high price our and other players’ valuation will also go up.”

Meanwhile, the Broekman Group, which has a strong presence in shipping and automative segment, has acquired Mumbai-based Courcan Cargo (India) to extend logistics and freight forwarding.

Courcan Cargo has nearly 11 offices spread across Mumbai. Phoenix International has acquired Mumbai-based logistics company Eastern Logistics Private, which has nationwide presence.

While Hong Kong’s Kerry Logistics made a foray into India by acquiring 51 per cent shares of Reliable Freight Forwarders of Chennai, CH Robinson acquired assets of Chennai-based Triune Freight Private and Trinue Logistics that have 19 offices throughout India and an annual gross revenues of approximately $11 million.

“Acquisition is the easiest mode for an international major to make its presence in India. Almost all companies are looking to acquire small domestic companies though integration would be a problem for them. The details of acquisition are kept under wrap,” industry analysts add.

Recently, Fedex has acquired its Indian service provider Pafex for an undisclosed amount while another multinational logistics major DHL had acquired Indian express delivery company Blue Dart.

Source: http://ia.rediff.com/money/2007/mar/20logis.htm

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