Spread over two million square feet and set up with an investment of Rs. 700 crore, the Park was inaugurated by Malur MLA KY Nanjegowda and Shashi Kiran Shetty, Chairman of Allcargo Logistics, along with Venkat Raja, the DC of Kolar district.
In an interview with ET, Shetty said it hopes to take full advantage of being close enough to ports in three states: Mangalore, Kochi and Chennai. On the National Logistics Policy’s plan to create a Unified Logistics Interface Platform (ULIP) to integrate seven ministries—Ministry of Ports, Shipping and Waterways; Ministry of Civil Aviation; Ministry of Road Transport and Highways; Ministry of Commerce and Industry; Ministry of Railways; Ministry of Finance; and Ministry of Electronics and Information Technology—on one platform, he said the timing could not have been better as the company’s experience in getting approvals for land conversion was quite complicated.
This logistics and warehousing park is now fully occupied. With this park, Allcargo will help Karnataka become a logistics hub that seamlessly connects to the southern states of Andhra Pradesh and Tamil Nadu, making the state a desired destination for big businesses. The park is creating employment opportunities directly on-site, by creating over 5,500 jobs.
While Decathlon has taken up 900,000 square feet of space, Flipkart has rented over 500,000 square feet while Amazon is a tenant for 300,000 square feet.
There is also further proposed expansion of the Malur Logistics Park by 200 acres.
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Shashi Kiran Shetty, Founder and Chairman of Allcargo Group, told ET, “We dream of future where coffee from Chikkamagaluru will seamlessly make its way via National Highway 73 to Mangalore port for possible consumption at a café in Paris.”
The company had originally decided to develop an inland container depot like the one run by Container Corporation of India in Whitefield. Bengaluru is land locked with multiple exit ports in Mangalore, Kochi and Chennai.
“With the IT capital being a manufacturing hub, it can distribute cargo to all these places,” Shetty said.
Transporting containers by rail is most economical, and the company wanted to build a railway-connected inland container depot but the approval for the railway line coming into the property kept getting delayed and it faced some technical challenges.
“Once GST got implemented the demand for A-grade warehouses was emerging in the country. We fortunately had consolidated 100 acres of land but had challenges with land conversions and approvals, which took two to three years. By the time we could decide on the business plan, we had a lot of demand for warehousing, so we decided to build a logistics park instead of an inland depot,” he said.
He pointed out that the cost of construction of this warehouse is much more than what is spent on a normal warehouse in terms of requirements for a sports retailer like Decathlon, safety, quality of construction, height, value-added services and support systems.
“This is for a long lease of 10-12 years. As we finalised with Decathlon, we got interests from Flipkart which was just acquired by Walmart. So, they had superior quality and safety requirements compared to usual conditions of a pure warehouse. So, it was built to suit them for half a million square feet,” he said.
Then came Amazon which wanted something similar, “but we had only three lakh square feet to offer,” he said.
While Amazon’s facility is managed by Allcargo’s internal supply chain management, Decathlon and Flipkart have merely leased the property and are managing it on their own.
Shetty’s son, Vaishnav Shetty, the company’s Chief Digital Officer told ET, the company has been able to maximise capacity planning.
“Internally we have placed several cameras to plan flow of cargo, conveyor systems, and put-to-light systems. The unit economics for pure robotics like robotic arms however doesn’t make sense in India but drones do by flying over the top to view efficiency,” he said.
“We have artificial intelligence, machine learning, automation, startup collaborations and customer platforms. We take a profit and loss centric view to digital. In the past one-and-a-half years, we have optimised, reduced leakage, and improved efficiency,” he added.