There is a huge gap between how the logistics industry operates globally and how it operates in India: Anil Arora, MD, MJ Logistics
Anil Arora, MD, MJ Logistics Services Ltd (MJLSL) has said that lack of industry status is hurting the development of the logistics market in India. "Moreover, tags like real estate and services are further detrimental to our cause. We would be better off if we are included under the infrastructure umbrella," he remarked. Arora shared his views in an exclusive interview with Construction Week (India) at his Okhla office recently.
MJLSL, a north India based third party logistics (3PL) player currently operates over one million sq ft of warehousing space for various industry segments. It is currently developing a hub & spoke logistics model in the Northern India with the hub located at Palwal in Haryana. Spread over 21 acres, this hub will be developed in three phases. Phase I is under construction at present and will have an area of 1,90,000 sq ft. "Of this, about 1,40,000 would be ambient while the remaining would be cold storage," informed Sugato Chandra, executive director, MJLSL.
The ambient storage would have 20,000 pallet positions and the cold storage would have automated temperature controlled chambers from -25°C to +15°C temperatures.
Liberalisation and robust economic growth have led to substantial increase in both domestic and international trade volumes during the last one decade in the country. As a result, the demand for integrated logistics solutions has been growing. According to CII estimates, the Indian logistics industry is currently estimated to be worth US$ 90 billion and is expected to grow at a Compound Annual Growth Rate (CAGR) of approximately 8% in the next few years.
“However, the logistics industry in India is far from what it should be,” remarked Arora. He pointed out that there is a huge gap between how the logistics industry operates globally and how it operates in India. “To give you a simple example, HCL has strong team of 250 consultants to implement warehouse management system (WMS) for logistics players. However, logistics players in India have been quite slow with regards to the implementation of WMS. Not surprisingly, we are HCL’s first client in India,” says Arora.
HCL has used the nWMS software (known as 'Yantra' in its earlier avataar) for this implementation which has been greatly modified to suit the Indian conditions. Incidentally, global WMS majors like Manhattan and RedPrairie are still to break ground in India.
MJLSL is also introducing the pay-per use pricing model at its Palwal facility. "Basically, there are two major costs in logistics - transportation and warehousing. The transportation cost is a variable while warehousing cost has been fixed so far. But with the pay-per use model, warehousing cost will also be variable,” he added
Arora also added that the industry can expect a healthy growth ahead with the introduction of the Goods and Services Tax (GST). “GST will be a major impetus for our industry. It will change the demands and dynamics of our industry,” he said. GST is expected to considerably reduce the number of warehouses that manufacturers are required to maintain in different states, leading to a substantial increase in demand for integrated logistics solutions. “Also, it will consolidate inventory at one point and reduces the overall inventory cost of a company," added Chandra.
The Palwal facility’s phase I is scheduled to be operational by mid August. With state-of-the-art technolgy in place, this facility will also incorporate various green elements like rain water harvesting and abundant use of natural lighting and air (for ambient storage). MJLSL has invested nearly Rs52 crore in this phase and expects the overall investment in all three phases to be around Rs100 crore. UK based investment company Eredene Capital has taken a majority stake in MJLSL.
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