Infrastructure Status To Boost Investments Into The Sector, Allcargo Logistics Says
Government’s move to include logistics as a part of infrastructure sector will be beneficial, said Allcargo’s CMD.
The government’s move to grant logistics sector infrastructure status will attract investment from international funds and domestic players, according to Shashi Kiran Shetty, chairman and managing director of Allcargo Logistics Ltd.
He said the combination of high costs and low margin have always burdened the logistics segment. Therefore, this move comes a breather, he said.
This move is beneficial for logistics as market players will now be able to avail loans at “easier terms with enhanced limits, access to larger amounts of funds as external commercial borrowings,” the Ministry of Finance said in a statement yesterday.
Easy availability of funds and lower cost of capital will definitely solve the issue of high costs but the extent of cost reduction cannot be estimated now, said Shetty.
It is a good time to be in the industry for sure, he said, as now logistics will attract a lot of interest from international players and international funds.
Allcargo plans to build logistics parks across the country, requiring investments to the tune of Rs 700-1,000 crore. Substantial amount of this will be raised from debt as the
“company is under-leveraged” and the rest will be sought from international partners and equities.
The logistics segment now can look forward to consolidation and it “won't be as fragmented as it used to be in the past.” Allcargo is looking forward for consolidation opportunities too, Shetty said.
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