Even though India Inc., comprising both automotive and non-automotive segments, is adopting belt-tightening measures and divesting its non-core assets, there is one logistics firm which is actually benefiting by providing transportation and warehousing solutions to various firms and at the same time recording a sustained increase in revenues and maintaining double-digit operating margins. It is Om Logistics Ltd. (OLL) which started out merely as a transport venture in 1981 with the vision of providing integrated logistics solutions and services designed to redefine customer satisfaction.
The Delhi-based company, which clocked Rs. 625 crores in the last financial year, is looking at a CAGR of 15 to 20 per cent in the next few years and is confident of clocking Rs. 1,000 crores by 2015-16. The company’s exuberance is underpinned by the fact that India’s logistics industry is posied to grow at 15 to 20 per cent a year to reach around $350 billion by 2015 from its current size of around $100 billion.
In his maiden exclusive interaction with MOTORINDIA, Mr. S.K. Goel, Vice President, Om Logistics Ltd., said: “When Maruti Suzuki came to India in 1983, we identified this as the biggest opportunity for Indian businesses and promptly got into the car transportation business and made the ‘First Car Carrier Load Truck’ for them in 1984. Since then, there has been no looking back, and we have now become a one-stop shop for logistics, warehousing and supply chain solutions to all the leading OEMs in the country like Tata Motors (both PVs and CVs), Bajaj Auto (both two and three-wheelers), Tata Motors, Ashok Leyland and Honda (HMSI and HCIL), Mercedes Benz (buses and cars), Volvo Buses, Mahindra (two-wheeler, three-wheeler and four-wheeler segments), Eicher Motors, JCB, AMW, etc. Many new entrants like Bharat Benz, Scania and Beiqi Foton are also on our radar. We are also serving some of the Tier-1 component players like Delphi, Talbros, Sona Steering, Indication Instruments, Sun Visors, Ramsons, Hellla India, Shriram Pistons and Rings, Federal Mogul India, Padmini, Sterling Tools, Bosch, Continental, Minda Group (both AK Minda and NK Minda), Anand Group and Lumax, besides Tier-2 companies. To sum it up, we are both into inbound and outbound operations depending on our clients’ requirements.”
Asked how inventory pile-ups at both the vehicle manufacturers and its suppliers’ end can actually turn out to be a boon rather than a bane for the company, he said: “Obviously, the market is witnessing prolonged recessionary trends, but this has compelled most of these firms to go back to their drawing board and streamline their supply chain management operations. And what better way to be cost-efficient in their operational efficiencies than outsourcing their non-core activities to a reliable logistics partner like us. While they can focus on their core business, we can bring in our expertise which will ensure enhanced savings in their supply chain, in addition to reduced lead time and safer transportation of high-end goods. And, fortunately, we don’t have a competitor with diversified operations in all the elements of the supply chain business and is a one-stop solutions provider.”
He, however, maintained that OLL will never get into bus operations even in the distant future.
OLL, the flagship company of the OM Group, is the leading multi-modal logistics provider with single-window integrated logistics services for all the elements of the supply chain management in India. The ISO 9001: 2008, ISO 14001: 2004 and IATA-approved Om Group has many associate concerns such as Om Logistics Ltd., Om Telecom Logistics Pvt. Ltd. (the telecom logistics division), Om Infra (the construction division), and OM Trans and OMX Info Management (the record and data management division). Its Indo-Japanese joint ventures are Omtrax Packaging Solutions Pvt. Ltd. and Om Marubeni Logistics Pvt. Ltd.
Besides aiming to be a key stakeholder in the domestic automotive industry, the company is also meticulously de-risking its business by diversifying into multiple domains like electronics, pharma, IT, electronics, FMCG, etc. “Before the automotive industry was facing headwinds, it contributed nearly 40 pc to our own business. Now, after a couple of years, it accounts for only 20 to 23 per cent of the overall business. Having said that, when the market improves, the (automotive industry’s) contribution may go up to 30 per cent. So, keeping all these factors in mind, we are quite confident of achieving the four-digit mark”, added Mr. Goel.
When MOTORINDIA delved deeper into its fleet of vehicles and the issue whether it is interested in sourcing next-generation vehicles, he stated: “We have a fleet size of 3,000 vehicles, with more than 60 per cent of them being specialised ones for companies like Maruti, JCB and Tata Motors. Usually, chassis for these car carriers are sourced from CV players like Tata Motors and Ashok Leyland with body fabrication undertaken by local body builders at Gurgaon. As the market evolves, we are going a step further by purchasing high-end trucks like Tata Prima and Eicher Pro and even from Scania. But these are still in the exploration stage, and we are yet to ink a deal.”
Furthermore, OLL is also ramping up its distribution network in the country. “We are running 450+ branches, a 200+ franchisee network in 1,500 cities which are tailor-made for both inbound and outbound customers, in all industries. The company target is to set up some greenfield warehouses in more Tier-II and Tier-III cities depending on our clients’ foothold”, Mr. Goel disclosed.
So what are the current impediments that hinder the company’s growth multifold? He explained: “Although there are multiple challenges, the primary among them is the burgeoning unorganised players running their outfits at various corners of the cities in the country. But we are trying to work it out by coming up with an attached vehicle policy also. That ensures small players get a regular and stable business. Besides, if the Government’s plan to allow foreign direct investment (FDI) in multi-brand retail and/or introduce the goods and services tax (GST) is implemented, corporates are likely to tie up with logistics experts like us to improve efficiency, leading to a further rise in outsourced logistics. So we are keeping our fingers crossed.”
Mr. Goel also stated that the road infrastructure, though getting a fillip, has further scope for improvement.
Even though the company has no plans to grow inorganically, it is open to any tie-ups or collaborations with overseas players who can widen the business. And to become a global player, the company has also executed some world-class practices as a check against any global logistics players eyeing the Indian market. One of the best practices that we have followed is automation of the whole process. We have also rolled out some mobile application system. Further, a GPS system has been installed in each and every vehicle. Now there is seamless transmission of information to the customers. Mobile apps like Blackberry IOS and Cloud computing have also been introduced,” he added.