Blackstone-Backed Allcargo Plans Acquisition in India to Increase Revenue

Allcargo Global Logistics Ltd., an Indian freight forwarder backed by Blackstone Group LP, will buy a container clearance facility seeking to benefit from rising overseas trade in Asia’s second-fastest growing major economy.

Allcargo, which provides shipping and container freight logistics services, wants to add areas to allow customs officials to check cargo at Mumbai, Chennai and Mundra ports to accelerate processing of shipments, Chief Financial Officer S. Suryanarayanan said in an interview in Mumbai.

The company is betting the government will spend $500 billion on building ports and airports between 2012 and 2017 to boost trade. India’s merchandise exports grew at the fastest pace in five months in November, driven by engineering goods, jewelry and textile sales, the government said Dec. 8.

“There are a few opportunities in the ports that we operate in and we are considering those,” Suryanarayanan said. “If those opportunities fructify then we will go ahead with our expansion plans in the coming year.”

India’s overseas shipments in November rose 26.5 percent to $18.9 billion from a year earlier, according to data released by the country’s commerce ministry today. Imports in the month gained 11.2 percent to $27.8 billion, the data showed.

Allcargo shares rose 1.8 percent to 149.25 rupees at the 3:30 p.m. close in Mumbai. The stock dropped 25 percent in 2010, compared with a 17 percent gain for the Bombay Stock Exchange’s benchmark Sensitive Index.

Sales Growth

The company, based in Mumbai, expects sales to grow at least 25 percent in 2010 and this year, Suryanarayanan said.

The shipping-logistics company’s revenue in the quarter ended Sept. 30 rose 48 percent to 1.97 billion rupees ($43.8 million) from a year ago. Net income rose 25 percent to 391.4 million rupees. Profit in 2009 was 979.8 million rupees on sales of 5.17 billion rupees.

Allcargo, which has offices in 14 countries, in October bought controlling stakes in two Hong Kong-based firms that operate in eastern China.

“Inbound and outbound trade in India is improving,” said Siddhartha Khemka, an analyst at Centrum Broking Pvt. Ltd., who has a 1-year price target of 220 rupees for Allcargo’s stock. “Allcargo has an advantage because it has a diversified presence in the region.”

Allcargo will raise as much as 1 billion rupees this year, taking its total debt to 3 billion rupees, Suryanarayanan said. The new debt will be part of the 2.5 billion rupees it will spend on increasing container clearance and warehousing capacity, he said.

Blackstone Group LP, the world’s largest private-equity firm, owns about 14 percent of Mumbai-based Allcargo, according to data compiled by Bloomberg.

To contact the reporter on this story: Anoop Agrawal in Mumbai at aagrawal8@bloomberg.net.

To contact the editor responsible for this story: Hari Govind at hgovind@bloomberg.net

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