ACI applies for 100% arm, test case for FDI in courier

NEW DELHI: Even as the Department of Posts (DoP) has circulated a cabinet note to cap foreign direct investment (FDI) in the courier sector at 49%, another multinational courier company is looking to set up shop in India as a wholly-owned company. South Korean courier and cargo company ACI Worldwide Express has initiated steps to enter India with a 100% owned Indian subsidiary.

According to a source, the Seoul-based company has approached the foreign investment promotion board (FIPB) with a proposal for acquiring 100% equity stake in a new Indian company ACI Logistics which was incorporated in June’07.

According to the proposal, South Korean nationals Sungwook Chung and Sinil Chung would acquire the nominal shares held by resident Indians in ACI Logistics. This apart, they would also be issued additional shares worth Rs 27 lakh, which would come in as foreign equity in the company, making it an Indian company with 100% foreign holding.

Given the proposed FDI ceiling in this, sector, it would be interesting to see if FIPB gives a green signal to the proposal. The proposal is likely to pass through the scrutiny of DoP, as is the usual practice in FIPB deliberations, and its views would indicate how serious it is about the new FDI norm which has been opposed by the courier industry.

Other multinationals such as Fedex, DHL, UPS and TNT hold more than 49% in their Indian arms as current laws allow foreign companies to fully own the a courier company in India.ACI Logistics has roped in two executives who have experience in the cargo and courier industry as directors on its board, Mohan Kaikini who is currently a consultant after working in various courier and cargo companies and Collins Carvalho who has worked in Federal Express and Gati apart from Aramex and Elbee Express.

A privately held company based in Seoul, ACI Worldwide has operations in more than 16 countries. Sungwok Chung who will hold 50% equity stake in the Indian arm is part of the family which owns ACI Worldwide Express. The other investor Sinil Chung, is a founding member of the Korean courier and cargo company.