Interview with Gateway Distriparks Ltd

"Domestic demand for good quality warehousing has gone up"

In conversation with Samvid Gupta, Joint Managing Director, Gateway Rail Freight Ltd (Subsidiary of Gateway Distriparks Ltd. GRFL).

What is your outlook on the Indian logistics sector?

The logistics sector in India has bounced back throughout 2021 at a fast pace, as the demand has shot up tremendously with economic activity resuming after the second wave of COVID. Manufacturing activity has continued to increase, resulting in higher volumes for both import and export. Domestic demand for good quality warehousing has also gone up and is expected to rise exponentially. We are seeing a surge in demand for temperature-controlled warehousing of high-value products, for example from the pharmaceutical and industrial products segments. With the National Logistics Policy in its final drafting stages, the cost of logistics in India is expected to reduce substantially and further investments are expected to come in for infrastructure development in this industry.

In Q2FY22, Gateway Distriparks sales rose by 27.89% to Rs 335.74 crore as against Rs 262.52 crore in Q2FY21. Net profit zoomed to Rs 46.91 crore in Q2FY22 as against Rs 3.42 crore in Q2FY21. Which factors have contributed the most to help you outperform?

The main reason for the growth in profits was the increase in business volume and revenue and reduction of costs, especially in the rail segment. We were able to increase our market share due to our service levels and dedicated block train services, and as we have the fastest transit times from our terminals in NCR to maritime ports. The overall market size has grown as well. In addition, the cost of operations has also been lowered due to reduction of imbalance in import and export containers, and lower underframe and empty running costs. Further, the company has also been consistently reducing its debt and prepaying it ahead of time leading to a reduction in interest outflow.

What are your growth levers?

The main growth lever for us will be the Western Dedicated Freight Corridor (DFC), which will allow us to operate faster, heavier and longer trains. This will allow us to have better utilization of our assets and higher double stacking of our rail business which will improve productivity and margins. The DFC will also lead to a shift from road to rail which will help improve our volumes. This along with macroeconomic factors of the overall trade of India and the growth in containerization of cargo will be important for our growth. Going forward, when the Quadrilateral Dedicated Freight Corridors will be operational across India, it will be viable to handle domestic containers as well, and we will then be a full-service rail logistics provider in India.

In addition, under Snowman Logistics we are seeing a very large increase in demand for temperature-controlled warehousing and we plan to double our capacity in the next three to four years.

What are your top three strategic objectives?

1. To establish a large network of container handling facilities across India, to maximize our efficiency using double stack and hub and spoke. This will provide an end to end integrated logistics solution to our customers, from ship to factory and vice versa within India.

2. To continuously innovate in terms of technology to increase operational efficiencies. For example, we were the first container train operator in India to facilitate shipping lines through blockchain technology by TradeLens enabling Electronic Data Exchange and availability of information for importers/exporters. Through initiatives like these, we can reduce costs of operation for our customers.

3. To reduce our impact on the environment and surroundings, by using carbon-friendly alternatives in our areas of operation.