Sical Logistics: Moving with the times

23 May 2007

Sical is shedding all its baggage as it prepares for a new innings as a focused logistics company, says Venkatachari Jagannathan.

Once upon a time there was a company that called itself South India Corporation (Agencies) Ltd, which did this, that and the other. It was into logistics, auto dealerships, agro products (sugar, coffee, palm oil, distillery) specialty chemicals, manufacturing (auto components, flexible shafts, refractories), engineering (construction, property development, boat building, harbour vessel maintenance) and building materials (trading in steel, cement, PVC pipes and cables)

Now, it's rejig time at the new-look integrated logistics company Sical Logistics Ltd. The Rs969 crore company is getting out of its non-core activities one by one, either by selling them outright or by 'parceling' them off to a separate company — Sicagen India Ltd. The idea is to be a focused logistics business, for it's logistics that has been bringing in nearly 65 per cent of Sical's consolidated revenues and a lion's share of its profits.

The company exited its sugar and distillery businesses a couple of years ago, but 2007 has been the year of the big sell. After selling the palm oil business to Soyumm Marketing (part of the Ruchi group) for Rs29.37 crore and the land where the refractories plant was to an unnamed real estate entrepreneur for Rs40.79 crore, Sical has now identified a buyer for its auto components business, Indrad Auto. Says its young director Karthik Menon, "The due diligence process is over, but I am not in a position to reveal the buyer's name." The company expects to realise anything between Rs12 to Rs15 crore from the sale.

Sical will demerge coffee plantation, vehicle and other dealerships, building material trading and parcel them to Sicagen, whose shareholding mirrors that of Sical. What's the logic behind a special purpose vehicle (SPV) to house its ownership in infrastructure oriented and asset intensive businesses?