Leveraging chemical logistics expertise and customer trust to emerge integrated solutions provider
‘Necessity is the mother of inventions’, so goes the wisdom statement and the same has been invariably the genesis for several of the innovations and growth stories in every sphere of life. In the business terrain, many of the successful expansion programs facilitated thro’ forward and backward integration routes too have followed the above maxim; and one such forward integration success story has been the Pon Pure Logistics Private Limited, Chennai, an offshoot from the Rs. 1,800-crore Pon Pure Group involved in chemicals trading and distribution business.
Pon Pure Logistics (PPL) was started in 2005 to provide logistics support for the parent company and ensure reliable, economical and timely service in the demanding chemicals supplies segment. Having done that successfully and gaining invaluable customer trust, PPL next set its sight on other segments with the goal of becoming a complete integrated logistics player. Backed with experience and adopting a professional approach, the company soon started getting impressive results down the timeline. It aims to close the current fiscal year with a turnover of Rs. 60 crores and has set itself an ambitious revenue target of Rs. 500 crores by the year 2022. To understand their operations and game plans in the competitive and high growth segment, we met Mr. M. Ponnuswami, Chairman & Managing Director, Pon Pure Group, and his senior management team for interactions at their Chennai main office – excerpts from the interesting meeting follow.
Initial journey
Mr. Ponnuswami recollecting the path traversed says, “After completing my graduation in Erode, I came to Chennai during early 70s and worked in the Lab Chemicals trading firm, got the feel for the trade and then started my own venture during 1981. With two employees, little money and some trade contacts we started the chemicals trading business in a small way. We procured chemicals in bulk quantities from established distributors and manufacturers mainly from Maharashtra, Gujarat and T.N. and supplied it to the customers who needed the same in varying quantities from 10 kg to 500 kg or more. Cost effective transportation and timely service were important factors to meet the customer expectations and retain them in one’s fold. To cite an example, when dealing with acetic acid, we used to buy second hand carboys from market, clean it and send the same thro’ trucks carrying steel – to collect acid from a supplier at Trichy and deliver it to an Erode customer. However delivering the acid in carboys thro’ the mixed cargo transportation posed problems and transporters were reluctant to carry the same due to possible leakages and damage to their goods; they wanted either full truck load or payment for the full truck load – both were not viable and this was when we decided to take the first step of opening branch office at Erode”.
Pon Group’s chemical trading business was intrinsically tied to cost-effective transportation and to excel in the little service space left open by competition, they decided to focus on chemical logistics in a big way and get that extra advantage. The same propelled their business to the fast lane leading them to open offices at various locations in India and overseas countries.
Logistics and operations management
In the initial stages, the commercial division of the Pon Pure Chemicals Company was utilising the services of various transporters both thro’ the dedicated and spot booking routes to deliver the cargo. The transport of packed chemicals in trucks and liquid cargo in ISO tanks and in tankers posed several challenges. In the tanker transport route, pilferage, adulteration, mishandling often led to the deterioration in quality of cargo and sometimes accidents; also the seasonal demands and acute shortage at times put the company at the mercy of the transporters and that is when they decided to delink the logistics activities from the trading line and consolidate the operations under a dedicated outfit. PPL was thus started to take charge of the logistics challenges faced by the parent company’s trading operations, points out Mr. Ponnuswami.
He adds: “We used to approach our chemicals customers and tell them that we can also provide the logistics services on an end-to-end holistic basis, viz., right from the suppliers’ place in India or overseas location to the customer’s doorstep and considering in our scope various activities like freight forwarding, customs clearance, handling at ports, unloading in storage tanks, warehousing, packaging, repackaging, drumming and inland deliveries. We impressed upon them that instead of speaking to multiple agencies the customer has to face only one agency for their procurement. This approach also removed several hassles for the customers and ensured that they get their timely supplies at economical rates; and the service model started getting increasing acceptance paving way for the accelerated growth of PPL”.
PPL’s focussed approach enabled them to gain valuable experience in the difficult business terrain. Rules and regulations were getting stricter and they started educating the drivers, fleet operators and customers in correct methods of handling the cargo. Safety teams were put in place to impart the correct methods of handling at warehouse, storage tanks and during transport. Standard Operating Procedures (SOPs) were established at every stage of transport chain to ensure safety norms and no accidents occurred at any stage. Safety norms education thus became one of the core activities while other allied operations included reverse consolidation, checking compatibility of chemicals for transport, inspection for the cleaning of tanks, pipe lines and sealing systems before loading the chemicals, correct and safe handling procedures at warehouses, quality checks thro’ SOPs at loading and delivery points, etc. More than 300 drivers and operators have been trained so far apart from various MSMEs, with the help of ICC (Indian Chemical Council) and other agencies, remarks Mr. Ponnuswami. He emphasises that all these activities are important to ensure that the quality of material remained the same right from the supply source till the destination at customer’s plant.
Mr. M.P. Lakshmipathy, Executive Director and son of Mr. Ponnuswami indicates: “Our parent company’s long experience in the chemicals trading business has given PPL that significant advantage in the specialised chemical logistics operations. We understand the nuances of the handling operations better and hence can execute it in an efficient way. We can undertake end-to-end operations including chartering vessels, unloading cargo into storage tanks and taking responsibility for inland transport till last mile delivery. Executing it as a turnkey job has enabled us build the trust of customers. They also share lot of data about their operations which we keep it confidential; and the same helps us to meet their tight delivery schedules. Also speaking to one agency and adopting end-to-end route helps in identifying key performance indicators, work towards reducing activity time, costs and ensure just-in-time deliveries”.
Mr. S. Suresh Babu, General Manager – Logistics, states that if a customer has to import various chemicals from different countries and needs those as per the production schedule, PPL can offer solutions as one-stop shop.
“Customer need not stock up chemicals saving thus the inventory costs apart from not having to bother about following up multiple agencies to get their job done. We study and understand their production details, chemical demand patterns and offer tailor-made solutions; and work at the logistics details to meet their deadline. Such a performance has helped us to both retain the customers and also expand the list based on results and references from satisfied customers”, adds Mr. Suresh.
Elaborating on the PPL infrastructure and facilities Mr. Lakshmipathy says: “We have today our offices at Kandla, Mumbai, Vapi, Bangalore, Erode, Karur and Kolkata. We have our presence at all the major ports and storage capacities of more than 40,000 KL at Kandla, Mumbai, Ennore and Vizag. The above taken on lease are in various tank capacities, exclusively for our use and for storing assorted chemicals. We have our own materials handling equipment like forklifts, reach stackers, and also lease the needed equipment depending upon the utility factors. As regards the vehicles fleet, we have 7 trucks and 2 tankers of our own and utilise more than 100 tankers belonging to our contractors on a daily basis. Trucks for packed chemicals are essentially rigid type from GVW 16 to 37 Ton. We are members in various organisations including IATA, WCA, DGLA, MTO (Multimodal Transport Operator) and are an IBA-approved transporter. For any of the overseas assignments, we utilise the services of registered agents in the WCA network; PPL operates only in India but undertakes any of the logistics services as the case may be from also an overseas location”.
In recognition of its operational excellence and outstanding overall performance, Pon Pure Logistics was adjudged the winner of the Exemplary Award for Specialized Cargo handling at the Confederation of Indian Industry’s (CII) Supply Chain and Logistics Excellence Awards (SCALE) for the years 2013 and 2014. The firm was also chosen as the ‘Liquid and Bulk Chemical-handing Company of the Year’ at the EXIM Awards during 2013 and 2014.
Complete integrated logistics platform
Commenting on PPL’s entry to general goods logistics, Mr. Lakshmipathy elaborates: “The experience in addressing the end-to-end requirements in chemical logistics gave us the confidence to address the other segments in the domain. Our core strengths are in technology, IT empowerment and operations management. We have our own softwares for transport management system and end-to-end management system and provide visibility of status to customers. We took up non-chemical business in 2010 and have been involved in logistics of FMCG, paper and allied products. We have also undertaken secondary distribution for stationery paper products in some of the cities and examining other segments like express cargo and e-commerce space down the timeline. Chemical logistics is still our major revenue earner and contributes about 60% of the PPL’s turnover”.
As regards viewpoints vis-à-vis logistics segment growth hurdles, multimodal transport and future trends Mr. Ponnuswami who is also the Vice Chairman – Chennai Zone of CII, Southern Region, opines: “Complex tax systems, archaic carriage acts and numerous check posts hinder the growth in the sector. Ease of doing business is now being examined seriously and with automation at check posts, GST implementation and good infrastructure the logistics segment can take off to the next level. Multimodal transport and inland waterways concepts are picking up but for chemicals, it’s still economical to transport by road”.
As for the road map of business operations, in the chemical logistics division they would like to put up special warehouses for chemicals as the same are not readily available in many places, comments Mr. Lakshmipathy.
“These chemical warehouses have to comply with various rules and regulations of the petroleum and explosives safety organisation and we would like to focus on this niche segment. The second area of thrust is going to be on end-to-end logistics where we can add value; thirdly it will be Pon Pure Expres Cargo and herein we want to cover south India in the initial stages. Ours is an asset light business model and we would like to keep it that way but whenever we see opportunities to add storage facilities, warehouses and equipment that can expand our business horizon, we will not hesitate invest”, affirms Mr. Lakshmipathy.
The acknowledged pioneer in procuring, storing and distribution of hazardous, toxic bulk liquid chemicals and lubricants has stepped on the gas pedal to enter the general logistics segments with panache, clear vision, mission plans and take the company to the next level. Looking at the focussed tech-savvy approach, strong operational management skills and passion for the domain, they should be able to comfortably meet their steep revenue target and tryst with time milestone.