—
T.S. Narasimhan, Executive Director, DARCL Logistics Ltd
DARCL Logistics Ltd,
a leading transport
and logistics
company based in
Hisar, Haryana, is
venturing into project
logistics with a
planned investment
of Rs 30-40 crore in
the current fiscal.
T.S. Narasimhan
speaks to
Lalitha
Rao on the growth of
the Indian logistics
industry and
highlights some of
the challenges in
project logistics.
What is the project rationale
behind the logistics industry?
Project rationale is a preamble
necessary for every project in the
context of what it intends to servesocioeconomic
development and
beneficiaries, basically people,
society and nation at large, generally
with envisaged investment.
This varies from project to project
with common rationale as to how
the projects serve people society
and nation at large, be it dams,
power, roads and bridges, industrial
goods or offshore or onshore
oil drilling etc.
Rationality of projects in our
context is to help the project
(customer) achieve time bound
commissioning with no cost or
time overrun for movement of
people and materials; precisely
help projects commission on
time; and keep gestation period
under control in accordance
with the plan.
Logistics plays a very important
role from conceptualisation to
commissioning and this cannot
be ignored because of requirement
of movement of over dimensional
cargo, heavy lift, turbines,
generator sets, and major or critical
inputs that need to reach on
time, as otherwise it adds to cost
overruns and time delays.
What should be the main objectives
of a logistics company?
As far as a logistics company is
concerned, it should work hand
in hand with project authorities
with an overall objective in mind
and make move men and materials
(as the case may be); materials
to reach as per schedule, be
it by road, rail, sea, air or
pipelines. The 'Plan, Do Check
Act' principle holds well here in
realising the objective for a
logistics player to help in the
project's endeavour. 24x7 working
is inevitable and logistics
players generally bear this in
mind. Timely reports to customer
even before questions are
raised by customer, so that the
project (customer) concentrates
on their core business competencies
and reliability on logistics
player increases.
Once the project (customer)
outsources the logistics part to
the time-tested and trusted player,
3PL comes into play to aid the
process towards realising the
objective.
What is the size of the Indian
project logistics industry and
how do you see the growth
evolving?
With the Indian economy looking
up, positive signs are evident.
This has given impetus to
development in power and energy,
telecom, port and transportation
infrastructure, thus paving
the way for overall growth of
industries like cement, steel and
automobile. A lot of power, steel
and cement projects are being
executed and many existing
units are undertaking huge
expansion in capacity, thus, providing
mega opportunities for
project logistics business.
Infrastructure investments by
2012 will be $200 billion. Thus,
project logistics can be estimated
at 5 per cent which means,
say, $10 billion by then. Trends
indicate that the current size of
the project logistics market
should be Rs 20,000 crore and
should grow at a CAGR of 18-20
per cent.
What challenges do you anticipate
in project logistics?
To understand in-depth the
requirements of customers,
sometimes it so happens that the
logistics player deals with a part
and misses the vital part. Infrastructure
problems, basically
bulk movement or over dimensional
cargo, needs good roads
and access to remote places and
bridges etc. While conceiving
the project location, sometimes
the logistics part is given a backseat
and discovered only when
an award of contract takes place,
making it time consuming in
terms of cost and time.
Meticulous planning and
strengthening surveys beforehand
for execution help; optimisation
of capacity is required;
resources can be shared by
logistics companies for a winwin
situation, and this way cost
optimisation can also take place.
What is the impact of privatisation
in the sector?
With PPP mode, infrastructure
comprising power, oil and gas,
steel, telecom, ports, roads and
freight corridors is driving the
Indian economy and every
industry, namely cement, steel,
heavy capital goods manufacturing,
telecom, aviation and
hospitality, is growing, leading
to overall GDP growth. Steel
production is also poised to
touch 15 million tonnes by 2015
which is again a precursor to
project logistics growth.
How can efficient logistics
result in bringing down project
costs?
For efficient logistics we need to
have good roads, abolition of
interstate tax structures (though
GST will resolve many of these),
change in obsolete motor vehicles
acts and rules, freight corridors
for road and rail, development
of hub-and-spoke model,
giving transportation industry
status, and government support
in skills development for training
drivers, supervisors, middle
level managers etc., to name a
few. Besides, companies have to
resort to innovation, use of technology
and better route analysis.
What kind of investment is
DARCL going to pump into
project logistics?
The company intends to pump
Rs 30-40 crore in the current fiscal
and another tranche of Rs 50
crore in 2011-2012 on specialised
equipment and fleet,
manpower, tie-ups etc.
Tell us about us your association
with Indian Railways and
CONCOR.
DARCL is associated with Indian
Railways and CONCOR in
different capacities:
With Indian Railways, it is one
of the first 14 (now 16) private
container train operatorslicense
holders along with
freight forwarders under various
freight incentive schemes of IR.
For e.g. Parcel Vans.
With CONCOR, in addition to
the piece meal services from 8-
10 of its domestic terminals, we
are also the business associate
and joint marketing agents
whereby we promote carryingbulk volumes through containers
in the domestic segment. Our
container rakes also run on a terminal
access model with CONCOR
whereby we access their limited
number of domestic container
terminals.
How can infrastructure development
in railway sector help
improve rail freight services? - A step towards faster turnaround
times: Currently the
transit times (including examination
of rakes etc) is quite high
to lay a base for diversion of
cargo from road to rail.
- Multi-user terminals: Railways
have a huge land bank
which can be the key for
developing terminals at
strategic locations. It may be
undertaken on a PPP model.
- C&W examination facilities:
container rakes need to be
examined after certain distance
coverage. There are a limited
number of such examination
facilities thereby resulting in
rake movement delay.
What is the range of solutions
offered by DARCL?
DARCL's core competency is providing
full truck load/bulk transportation
through road. Roughly
1,200-1,400 vehicles (trucks, trailers/
multi-hydraulic loads etc)
loaded on daily basis on any given
day by DARCL across the country.
Thus, we move around 8 million
tpa of cargo across the length and
breadth of the country, the value of
which would be more than
Rs 40,000 crore per annum.
Our pan-India network and customer
centric management
makes it possible to lend a helping
hand to customers even during
extreme situations arising out of
their production or market
dynamics. Long-term relationships
are considered important
rather than short-term commercial
aspects. Solutions are worked
out and options are given for economic
mode of transport by rail or
road or multimodal too, taking
into consideration distance,
cargo, customer preferences etc.
The other niche areas where
DARCL is present are in-plant
logistics, over dimensional
cargo (ODC, hydraulic axles),
and project logistics.