In interaction with PremKishan Gupta, Chairman & Managing Director, Gateway Distriparks Limited
Speaking with DSIJ, PremKishan Gupta, Chairman & Managing Director, Gateway Distriparks Limited says that the pandemic has opened a lot of investment opportunities for the logistics sector in India, with focus being on cold storage operations because of the demand and supply of vaccinations.
Q1. How has the pandemic impacted your business? What is your post-pandemic growth strategy?
The immediate impact during this unprecedented time was the mandatory restrictions like no movement of goods and delays due to a disrupted supply chain. This affected last-mile efficiency, with the entire logistics industry racing to get back on track. The pandemic also resulted in positive technological disruption in the logistics sector. We have been at the forefront when it came to adapting to these technological evolutions from bringing full visibility for the customer using technologies like global positioning system (GPS) and radio-frequency identification (RFID) much before they were commonly used in the logistics industry. We were the first to provide them a facility for doing everything online, including container tracking and making payments. Our company ERP creates customised reports & dashboards and also, has the ability built in to share data on electronic data interchange (EDI) over secured MPLS & VPN connections. Our tracking services have been available as a mobile app for our customers. Not only for customers, these solutions using both cloud applications and mobile apps also helped augment our own operations and allowed us to grow at a faster pace.
Our strategy in post-pandemic growth is to adapt to the ‘new normal’ along with our business growth. Also, recognising shifts in customers, business operations & technologies, ecosystems, and workforce will be our main focus. The commissioning of the dedicated freight corridor (DFC) project will enable our rail business and improve capacity utilisation.
Q2. What is your outlook on the logistics industry in India? Where are the new growth opportunities in the sector?
For the logistics industry in India, the pandemic has proved to be both boon and bane. Transporters are facing a lot of financial pressure because of the COVID-19 situation. There has been an increase in focus on warehousing, better infrastructure, and inventory management. Logistics and supply chain players are still in the process to figure out how to operate the inventory in a much efficient way and drive optimisation through omni-channel models for distribution so that the same inventory and support can be used online as well as for physical delivery.
As far as new growth opportunities are concerned, the pandemic has opened a lot of investment opportunities for the sector. Moreover, the focus is now on cold storage operations because of the demand and supply of vaccinations. There are reports that suggest logistics companies and start-ups will drive job opportunities in 2021. Additionally, in India, the Union Budget 2021-22 increased the infrastructure spending significantly with a focus on new economic corridors, improved road, railway infrastructure and push towards digitalisation, which bolstered the Indian logistics sector.
Q3. What are your top three strategic priorities?
Firstly, our focus is on our rail vertical, which is aligned with the Indian Railways’ project –Western Dedicated Freight Corridor. It is a broad-gauge freight corridor under construction in India by the Indian Railways. It will connect India's capital, Delhi, and its economic hub, Navi Mumbai. This corridor will cover a distance of 1,483 km and would be electrified with double line operation. Indian Railways is making dedicated freight corridors to provide exclusive movement on fast speeds for goods trains. In alignment with the government’s initiative, Gateway Rail Freight Ltd. (GatewayRail), a subsidiary of Gateway Distriparks Limited, has undertaken operations of two double-stacked trains in a python configuration on the Indian Railways Western DFC.
Our second priority would be the expansion plans for more rail terminals in the North West Corridor and thirdly, we are focussing on the internal amalgamation that is currently in process. We have filed an application for amalgamation along with two of our subsidiaries - Rail Freight Ltd and Gateway East India Pvt Ltd. The combined cash flows will enable the merged entity to accelerate debt reduction while at the same time, allow us to continue with expansion plans to build a wider network of rail terminals to further expand along the Western Dedicated Freight Corridor.
Q4. Please share with us your new Capex plans and how do you intend to fund it?
Gateway Distriparks plans to invest in rail-linked satellite terminals in the north. The satellite terminals will enable aggregation of cargo through our flagship terminal, Garhi Harsaru. We aim to set up two terminals in the next few years. This will entail a Capex of Rs 120 crore over the next couple of years. The expansion plans will be funded through internal accruals and project loans.
Q5. What are the key growth drivers for your company?
The commissioning of the DFC Project will be one of the major growth drivers for our company. The inauguration of Rewari-Madar section of WDFC of 309 km will benefit us resulting in lower transit time, higher double stacking, and improved connectivity of its ICDs located in north India. Our cold chain business will also add to the growth with improved volumes, technology developments, and revenue boost due to vaccine-related cold chain business. In addition, the key growth drivers also include the increase in containerisation of breakbulk cargo, a shift from road to rail with the dedicated freight corridor coming up as well as using the network effect of our 11 container logistics facilities under one entity.