Consolidation of contract business aimed
The Avvashya Group, which comprises logistics major Allcargo Logistics and ECU Worldwide, has inked a joint venture agreement with the CCI Logistics Group to consolidate its contract logistics business in India. “The new entity, Avvashya CCI Logistics Private Ltd., will integrate three business entities – the Warehousing Division of CCI Logistics Ltd., Hindustan Cargo Ltd. and the Contract Logistics Division of Allcargo Logistics. As per the agreement, Allcargo will hold 62 per cent share and CCI will have 38 per cent share in the joint venture,” informs Mr. Balaji. V, CEO, Contract Logistics, Avvashya CCI.
The new entity Avvashya CCI Logistics will provide its customers end-to-end solution in the contract logistics space. Any company importing into India needs freight forwarding and also requires the cargo to CFSed and then to be transferred to a warehouse or a plant. “We have a product call 3C which covers our CFS (Container Freight Stations) operation, Clearance operation and Carrier operation. Through these integrated value we are able to offer substantial services to customers from their country of origin till it reaches the end destination,” explains Mr. Balaji.
Clear focus
Avvashya CCI Logistics has identified three sectors as its predominant focus areas – Chemicals and Pharma, Auto and Engineering sector and Retail and Fashion. “We offer a unique service combination for the Auto & Engineering sector called ‘Auto Logistics’, for Chemical, Pharma – ‘Specialty Logistics’ and for Retail & Fashion – ‘Fashion Logistics’. We have sector specialist for each of these industry verticals who will own that sector completely. The structure of the team will largely revolve around solutions team, Operations team and OE (Operational Excellence) team. The OE team will drive operational efficiency to ensure said processes are followed. This team will get assistance of another team which is Project Execution Team (PET) which will be largely six sigma champions. They will ensure migration is done between customer process and ours and then transition it to our locations and then it will go to sector specialist operation that will take over the entire contract,” reveals the CEO.
The well-planned-out solution team, referred to by Mr. Balaji, is equipped with adequate technology tools to do space optimization, network optimization, cost optimization and service optimization. The company believes to partner with the customers, align with them through the ups and downs of the seasonality of their business to grow as a company instead of a conventional pay by use model. He says: “We have robust system and stabilized processes to scale up and down as per the requirement.”
Currently a Rs. 450-crore company, Avvashya CCI Logistics, provides custom clearance services, warehousing solutions, freight forwarding services, bonded warehousing services, temperature controlled warehousing services and yard management, through its 15 lakh sq.ft. of land space across India. “We aim to take the turnover to Rs. 1,000 crores by 2020 on the bank of scaled operations, which will come through utilizing the additional land bank and taking it to 45 lakhs square foot. We have close to 700 acres of land bank at various location including Chennai, Bangalore, Hyderabad, Mumbai, Gurgaon, Kolkata, Nagpur, etc.,” beams Mr. Balaji.
Steady progress
The decision to form a JV was a calculated step forward to offer better services in the field of contract logistics in India. The Avvashya Group did various studies and research to understand the state of contract logistics in India. Having successfully established their CFS and ICD (Inland Container Depot) business through All Cargo Logistics Ltd. and also consolidating their international operations under ECU Worldwide (erstwhile ECU-Line), The Avvshya Group had established system efficiency and superior expertise across various portfolios. Its subsidiary Hindustan Cargo Ltd. extended their experience in supply chain management, customs procedures to give them a niche position.
Continuing with the lateral growth activity (operations), the Avvashya Group forayed into the business of contact logistics with Volvo Eicher Commercial Vehicles in Pithampur through their (ICD). They helped the OEM to strengthen their aftermarket spareparts processes, including VOR (vehicle Off Road), kitting, re-packing, UC and other forward process. “We ran the pilot for two years and made substantial progress now engaged for over 5 years. Today we handle in access of 15 lack hash items per month, in fact we do about 5000 lines that was on an average hovering around 700-800 line previously”, asserts Mr. Balaji.
That’s the first journey that the group embarked with VECV in the space of contract logistics. “We are managing for quite a lot of OEMs/manufacturing units like Ashok Leyland, ABB and Alstom today. We also feed the production line with components like washer, bush, clutch assembly and sometimes even engines coming from various suppliers. Policy moves, especially the progress on the Goods and Services Tax, increase the opportunity for offering integrated end-to-end logistics solutions to companies across sectors”, discloses Mr. Balaji.
Forward integration
Avvashya CCI Logistics will not limit itself to providing solutions on the lines of contract logistics (integration, warehousing, line feeding, etc.). Going forward, they plan to foray into Express transport that will be a time definite transport solution. “We will not be following the conventional business model, but will be a combination of long haul the line haul as well as the last mile delivery. It will also be a combination of multi modal, with truck and train or air and surface combine. It will not be a run of the mill express transport,” he adds.
This initiative is keeping in mind the cargo transportation that will gradually become large, post the conversion of space that Balaji spoke. “If we become the space that we envisaged, we will have cargo transportation that will be significantly larger than today. Even today we have about 3000 tonnes of cargo which is going out of our warehouse through various transporters across India, for the warehouses which are managed by us. We are not positioning or selling element wise costing. Our model will largely revolve around one SLA one price across services. We are doing a POC this year (Proof of Concept) and hope to go live next year,” concludes Mr. Balaji.