Logistics companies look to India for investment

While Goods and Services Tax (GST) continues to remain in a state where several loose ends still need to be tied up, logistics companies — both domestic and global — are not just bullish about the sector but are actively making investment plans for the coming fiscal as well.

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Justphulkari“For us, I do not see investments getting hampered if GST gets delayed. GST can only add to our current investment plans. As of now, in a growing logistics market like India, higher investments are much a need of the business to improve earnings and streamline operations,” said Abhishek Chakraborty, executive director at DTDC Express.

The Bengaluru-based company has 60-65 per cent of its total revenue coming from the express business where it competes with giants like Blue Dart and Fedex. Apart from that, DTDC is into supply chain and e-commerce as well. “We plan to invest about Rs 20-25 crore through internal accruals of which a part will go into technology, hardware and increasing head count. Also, over the next one-two years, we expect to make more serious efforts to raise capital through either our subsidiaries or internally, and may even go to third parties for funds,” said Chakraborty without divulging the amount it plans to raise. The company is expected to close the current financial year with a topline of Rs 1,050 crore.

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According to Agility’s Emerging Markets Logistics index published last month, India, for the second consecutive year was picked as the country with the most potential to grow as a logistics market. The report, which surveyed more than 800 supply chain and logistics professionals, said GST would be the potential game-changer and companies will have to re-gear themselves to adjust to GST. Surveyed entities also indicated that India was the leading emerging market destination for investment by their companies over the next five years.

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Last year, France’s FM Logistics acquired Pune-based Spear Logistics, making an entry into the promising India logistics market.

“We see a good growth potential for warehousing segment in the domestic market and would have invested even if GST was not round the corner,” Stephane Descarpentries, director-strategic projects and director operations Asia, FM Logistics had said.

FM Logistics aims to invest about Rs 300 crore over next three years in order to strengthen its warehousing base across the country. “With e-commerce segment growing in India, we see the need for better warehousing across country and hence this investment (of acquistion),” explained Descarpentries. In the short-term, the company plans to invest about Rs 30 crore over next 6-8 months on ramping up custom-built warehouses of Spear Logistics.
With its strong presence in eastern part of the country, Inland World Logistics, flagship company of Inland Group is also all set to strengthen its investments in value-added services within the country while foraying to neighbouring regions.

“India is the largest of entire SAARC (South Asian Association for Regional Cooperation) countries but a lot of Indian companies have trade with SAARC countries and hence we have plans to invest Rs 20-25 crore in Sri Lanka and Bangladesh next fiscal to increase our volumes,” said Praveen Somani, director at Inland World Logistics.

Inland World Logistics already has a subsidiary in Nepal and Bhutan where it sees growing traction for distribution business from India to the latter. Meanwhile, domestically, Inland World Logistics has increased its third party logistics segment, inventory management and warehouse management as services under value-added platform.

The company is expected to close the current financial year with a topline of Rs 920 crore and has aimed to take its consolidated revenues to Rs 3,000 crore. For 2017-18 (Apr-Mar), the Inland World Logistics has set a target of Rs 1,500 crore topline as it expects foraying into new regions would translate into some contribution to the revenue volumes.

Buseness Standard: March 01, 2017

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