Logistically Sound Move for Coffee Chain Owner
V.G. Siddhartha, owner of the Indian-based retail chain Cafe Coffee Day, has announced plans to acquire Sical Logistics Ltd for a reported sum of around Rupees 200 crore, bringing the latter’s relationship with one of Chennai’s longest-standing businesses, the M. A. Chidambaram Group, to a close.
Through the acquisition, the real estate enterprise of Siddhartha, Tanglin Retail Realty Developments Pvt. Ltd, will gain the majority hold of Sical through a variety of mediums, the direct purchase of shares, the issue of shares on a preferential level and via open offer.
As a result, Siddhartha will have access to numerous logistical services, such as port terminals, stevedoring, customs house and shipping agencies, as well as rail, truck and warehousing services that Sical has been building over the past ten years as trade has blossomed.
At present, Sical is said to handle approximately 26 million tonnes of large volume cargo and 500,000 containers of standard cargo annually, with net profit of Rupees 26.36 crore and turnover of Rupees 537.23 crore in the twelve month period to March 2010.
In addition to representing an attractive opportunity in terms of investment, Sical will also meet the in-house requirements of the diversified enterprise in respect to supply chain issues, with areas of activity spanning the production and export of coffee, properties within the hotel industry and furniture.
Having demerged the non-logistics part of its business in 2007, in an effort to concentrate on integrated logistics solutions for bulk and cargo containers, plans are reported to not have unfurled quite as planned, with the latest development a win-win situation for both parties.