Interview| Logistics poised for growth, says Gateway Distriparks CMD Prem Kishan Gupta

#CONCOR, #Covid-19, #Gateway Distriparks, #logistics, #pandemic, #Private train operations, #Third Wave

Prem Kishan Gupta, Gateway Distriparks’ Chairman And Managing Director

The logistics sector is poised for growth in 2021-22 after recovering from the impact of COVID-19, and ready to handle the potential third wave of the pandemic, Gateway Distriparks’ Chairman And Managing DirectorPrem Kishan Gupta told Moneycontrol in an Interview.

Gupta said the second wave of COVID-19 did not have a big impact on the logistics industry, and volumes are expected to rise in the coming months.

As our volumes have increased in the last few months and we expect them to continue improving our margins will definitely improve, he said.

He said his company was interested in bidding for the government’s stake in Container Corporation of India but is sceptical about bidding to operate private passenger trains.

Edited Excerpts:

How were operations hit by the two waves of COVID-19 and What will happen if there is a third wave?

During the first wave of COVID-19, everything was shut down, though our services were declared essential services, because there was a national lockdown, we could only move containers from ports to the Container Freight Stations or Inland Container Depots. We were not able to deliver products because customers were not accepting delivery and our volumes were very low.

During the second wave, there was no national lockdown and lockdowns were at different times in different states. However, factories were not completely shut down across India. In many states, the industry was allowed to function.

So, the flow of cargo both in import and export was not completely brought to a standstill like the first wave, and we were functioning like pre-COVID times.

A lot of people have been vaccinated and if a third wave hits later this month or in October during the festival time, we are ready to handle the situation. But it all depends on the severity and when it hits.

What percentage of your workforce has been vaccinated till now?

Most of our staff have taken the first dose of the vaccine. I would say more than 70 percent of our staff has been vaccinated with both doses and we expect that within the next few weeks, we will be able to vaccinate all of our staff.

Despite COVID-19, In the last year, the company’s stock has risen 93 percent. What is the biggest reason for the rise in your profits and return to shareholders?

Firstly, our volumes have reported an on-year rise since October-December and January-March of last year and even though there was an outbreak of the second wave in April and May, our volumes, remained strong, both in the export and imports.

Apart from improved volumes, our operational efficiencies have risen due to the section of the Dedicated Freight Corridor that was commissioned this year.

At the same time, because our cash flows improved, we reduced our company’s debt.

What are the targets that you have set for your topline and bottomline in FY22 and beyond, guidance on margins?

I cannot make a forward-looking statement. But I can tell you that in April-June our volumes have done well despite the second wave of COVID-19 and now things look good. There’s no doubt that both in terms of topline and bottom line we will do better in FY22 when compared to FY21.

As our volumes have increased in the last few months and we expect them to continue improving our margins will definitely improve.

Is the company interested in the Indian Railways’ plans to let private operators run passenger trains? What were the major drawbacks in that railways’ tender this time?

We had expressed interest when the government had first come out with a tender to bid for operating private trains but we did not bid to operate trains in the final bidding process.

The request for quote that the government had come out within April had a number of shortcomings and I believe for private participation, the government’s policy needs to change.

If private players are dependent on the Indian Railways for running the train, they will not be able to compete with the national carrier. They will not want to invest money into buying engines and rolling stock if we are still competing with the Indian Railways for time slots and availability of train tracks.

The lack of independent regulators is also a major issue in letting private operators run trains. Indian Railways cannot be an operator and a regulator simultaneously.

Are you interested in the government’s plan to privatize CONCOR?

Depending on what will be the final land licensing fee set by the government and once the government comes out with an expression of interest we will have a look and then decide to participate.

Shipping container rates have been at an all-time high since the start of the year. How has this affected exim volumes. When do you expect rates to fall?

Shipping container rates have risen on the spot market, there are regular customers, who have contracts with the shipping lines, and for them shipping rates have not risen by much.

So our volumes have not been impacted, if you look at our volumes since the start of the year our volumes have not suffered rather our exports have risen.

How has the government’s new freight express scheme performed? How do expect it to grow in the coming 2-3 years, and how has the western dedicated freight corridor helped in reduce transit time?

The new freight express scheme has helped improve our operational efficiency, as we are now able to turn around the containers much faster.

Our transit time for exports has reduced significantly because of the part of the western freight corridor that has been commissioned.

Our time taken to transport goods between Mundra and Gadi has been reduced to around 22 hours 30 minutes from around 40 plus hours earlier.

How much investment can we see from the company for its rail operations in the coming few years?

We have the capacity to handle around five times the current volumes that we currently cater, so not a lot of investment is needed at the moment. But we will be investing capex in the existing locations to prepare the yard and add equipment.

In the coming years, we are expanding our footprint in North India. We are looking to set up ICD’s in Uttar Pradesh, Rajasthan, and Jammu.

So overall in the next two to three years our capex will be in the range of Rs 250 to 300 crores.

By when can we expect the amalgamation of Gateway Distriparks and its subsidiaries Gateway Rail Freight and Gateway East India to be completed?

We are looking to get shareholder approval on September 28, and once we receive that, there are a few other formalities. So we expect this to be completed by December.

Snowman Logistics was in talks with Dr. Reddy’s for the transport of Sputnik vaccines. How have those conversations gone forward? By when can we expect Sputnik to be available across India?

We have an exclusive agreement with Dr. Reddy for the transportation of the Sputnik vaccine and we have already started distributing it across India. We are distributing the vaccine from five hubs across India where we are storing the vaccine in bulk right now.

How many vaccines are you transporting on a daily basis, at the moment?

So that is confidential, as per the agreement with Dr. Reddys.

At the moment Dr Reddy’s is importing the vaccine and we then handle the logistics and transportation of the vaccine across India.

Dr. Reddy’s is also looking to start manufacturing the vaccine in India and over time the pace of vaccines being delivered everyday will only increase.

Is Snowman currently transporting any of the Covidsheild or Covaxin vaccines available in India?

Yes, we are transporting Covidsheild or Covaxin vaccines as well, we have tied up with SpiceJet for the same.

What were the major reasons for the deal with Adani Logistics and Snowman Logistics to fall through? Have any other companies expressed interest in a stake in Snowman?

I won’t know the exact reasons, but what happened was, our deal was to be finalized and to be completed by March 31, 2021.

Adani Logistics was going to buy the 40 percent stake of Gateway Distriparks in Snowman Logistics and had even made an open offer to buy a 26 percent stake in Snowman from the open market, as per SEBI regulations.

But before Gateway Distriparks could transfer our stake to Adani Logistics, the first wave of COVID-19 hit and they called it off.

If there is any other reason, only they would know. But now Gateway Distriparks is not looking to sell its stake in Snowman and has started on our expansion plan.

Snowman has opened a temperature-controlled warehouse at Siliguri, West Bengal this month. Snowman will have a total of 120,000 pallet positions of shared warehouses and 110,000 sq. feet of e-commerce fulfillment centres by October 21. With these expansions, Snowman would have operations in 17 cities and 38 warehouses

In the next three years, we are aiming to go up to 200,000 pallets and also set up a dedicated e-commerce facility and a dedicated pharma facility in India.

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