An interview with Praveen Somani, Director (Strategy & New Business Development), Inland World Logistics, about the company’s focus on the MSME sector and its growth plans.

Inland World Logistics, formerly, Inland Road Transport, is the flagship company and core strength of the Inland Group. Founded in 1989 and headquartered in Kolkata, the company started operations with transportation of consignments in eastern and north-eastern region in India. Offering point-to-point services with carrying out the promise of 50% reduction in stock delivery time, the company grew manifold. Today, Inland World Logistics has over 350 locations, fleet of vehicles and a nationwide network and, in particular, has focused on the MSME sector to grow its business. The company reported a turnover of Rs 783 crore in 2014-15 and has been growing at 22-25% year on year. Excerpts from the interview:

What prompted your foray into the logistics sector?

Right from my college days, I felt an attraction for the transportation and logistics industry. That led to a study of how the industry operates, in the course of which I realised that it lacked a proper and organised approach to doing this business. After graduation I felt that the industry required a clear-headed approach that should not limit itself merely to logistics but take into account how it can help reduce costs for the Indian industry and thereby contribute to the GDP. Inland World Logistics (IWL) was therefore set up as a part of the Rs 2,200 crore (in turnover) Inland Group that comprises Inland Automate, Inland Power, Inland Courier, Bhartiyam Food & Beverages, etc.

What kind of services does the company provide to the MSME sector in India?

Since its inception, IWL has been focused on serving the MSME sector and started with parcel deliveries to the East India zone which, at that time, was in dire need of such a service. IWL has made it easier for small and medium-sized companies to be able to send their products in a stress-free environment to the end users. Apart from various models of services like PTL and Express Solution, the company started offering them industry connects and working credit as well. Most importantly, it has been the trust factor that has led to IWL’s niche position and growth.

Out of the total business revenue, what is the percentage of the MSME sector?

Around 40-45% of the company’s business is currently supporting the MSME sector.

Does the company provide any special facilities to the MSMEs?

IWL has been offering multiple service offerings to its customers, especially the MSME sector, like short and long-term warehousing, revolving credits, customer connects, documentation support, last mile deliveries, etc. Recently, we have started offering GST-compliant solutions.

What do you think will be the future requirements of MSMEs in terms of logistics?

As mentioned above, GST compliance is going to be a big constraint for MSME customers and at IWL we have been working on solutions which will make it easier for businesses to be GST-compliant.

Could you provide an overview of the logistics industry in India and its potential for growth? What are the factors that will propel this growth?

The logistics industry in India is looking at a complete turnaround with the GST becoming a reality. MSME customers will be looking at compliance solutions and the third party logistics’ (3PL) value chain is going to increase. 3PL in logistics and supply chain management is a company’s use of third party businesses to outsource elements of the company’s distribution and fulfillment services. Third party logistics providers typically specialise in integrated operation, warehousing and transportation services which can be scaled and customised to customers’ needs based on market conditions, such as the demand and delivery service requirements for their products and materials. Often, these services go beyond logistics and include value-added services related to the production or procurement of goods, i.e., services that integrate parts of the supply chain. When this integration occurs, the provider is then called a third party supply chain management provider (3PSCM) or supply chain management service provider (SCMSP).

3PL targets particular functions within supply management, such as warehousing, transportation, or raw material provision. The global 3PL market reached USD 750 billion in 2014, and grew to USD 157 billion in the US; demand growth for 3PL services in the US (7.4% YoY) outpaced the growth of the US economy in 2014. As of 2014, 80% of all Fortune 500 companies and 96 of the Fortune 100 used some form of 3PL services. TechNavio’s analysts forecast the 3PL market in India to grow at a CAGR of 21.16% over the period 2013-2018. Further, many smaller businesses were not able to expand due to different permits but now those bottlenecks will be removed. Larger customers are also working on resizing their supply chain.

Is it true that the company is investing in developing logistics parks?

To scale up our logistics infrastructure in western and southern India, IWL has planned to invest Rs 400 crore to set up logistics parks and container freight stations (CFS) near Mumbai, in Chennai, and Gujarat. We have already started work on a logistics park at Ahmedabad and another logistics park is under approval at Bhiwandi near Mumbai. The logistics park at Ahmedabad is coming up on 100 acres and involves an investment of Rs 125 crore. The one at Bhiwandi will be housed on 106 acres. The logistics park at Bhiwandi will come up in two phases. The first phase will come up on 56 acres and involve an investment of Rs 53 crore.

What are the company’s plans to strengthen its presence in the MSME logistics segment?

IWL has continuously been supporting the MSME industry by connecting all larger trade centres with the hinterland of India. The last mile connect is the focus at IWL and the company has invested in acquiring another 150 vehicles in the last one year and is looking to add 300 more vehicles within the next 18-month period. The company has also been ramping up its warehouse infrastructure to be able to cater to varied customer needs. Today, the company offers the customer surface and air logistics solutions in the domestic market as well as the SAARC countries. The company has also been adaptive to the dynamic needs of the customer by continuously investing in suitable technology to make the entire experience seamless.

-HUNED CONTRACTOR