Private equity firm Global Infrastructure Partners-backed Pristine Logistics & Infraprojects Pvt Ltd has scripted a strategy to “regain the old glory” of Sical Logistics Ltd, the Chennai-based logistics company which it acquired under India’s bankruptcy law for some Rs400 crores.
Rajnish Kumar, who along with Amit Kumar, his batchmate from the Indian Railways Traffic Service (IRTS), co-founded the firm in 2008, spoke at length to ET Infra on what the acquisition means to Pristine Logistics, to the export-import and domestic trade centred in and around Chennai and the rest of the country.
They said, Sical Logistics underwent some tough times, and now we want to regain its old glory. The Sical Logistics brand name will continue. We intend to provide a differentiated value proposition through Sical Logistics; we don’t want to do business in a very traditional fashion. There has to be some quality, there has to be a differentiation and it must meet the requirements of the customer and of the cargo. We are open, we have a good team in Sical Logistics, and we will be further strengthening the team.
Chennai (where the company is headquartered) is a very competitive place, but we think a bit differently. Logistics is not all about infrastructure, logistics is about services and the focus of this business is the customer
We have grand visions for Sical’s revival; investment is not a problem. Whenever, whatever investment has to be done, we will do it and we want to do it very fast. Certain things we have thought of. First, we are going to create a private rail facility, whatever rail terminals are there in Chennai, they are Indian Railways owned railway goods sheds. Sical Logistics has land, and we want to convert that land into a rail terminal with all types of value-added services.
A lot of import and export business comes to the ports in and around Chennai from the hinterland. Doing that movement by road is a difficult and demanding proposition. So, we want to create a railway siding, we will run Indian Railways owned container trains to this location, convert that cargo into export cargo and then we can hand over that cargo to Chennai or Ennore ports. We want to start this service very soon.
Besides, as you know, there is perennial road congestion in Chennai. We want to, if there is a possibility and there should be one, start running shuttle services between our rail terminal and the ports. That will decongest the roads, the detentions could be avoided, and the trade will have regular train services.
Sical Logistics has huge parcels of land in and around Chennai. We have almost more than 250 acres at three locations. If there is a requirement, if a customer has a specific requirement, they need customised warehouses, if they need part of the warehouse on a dedicated basis, there are consolidators, LCL consolidators and others, if they need space, we can create and offer that service. We don’t take more than 4-6 months to do that.
In addition to that, we will provide empty storage, empty repairs, maintenance, and specific requirements of shipping lines in Chennai. Further, we are going to create one more rail linked terminal in Bengaluru.
We want to operationalise the rail terminal in Chennai by October-November this year and in Bengaluru by next year where we will have an inland container depot (ICD) cum rail terminal. We would also like to leverage on and use the network strength of Pristine Logistics.
We would be running regular train services for domestic customers and otherwise from Chennai and Bengaluru connecting the whole country.
Right now, there is poor connectivity from Southern India to the rest of the country for containerised domestic services.
Currently, only Concor is running services. It was a very vibrant business once upon a time. Ten years back there was huge demand and regular train services were run but because value additions couldn’t be done, volume has come down. But there is a latent demand, and the demand is linked to the service levels and value additions. We want to fill that gap.
Frequency of rail services
Many years ago, the frequency used to be one train every day. It has come down to one train every third day: so, ten trains a month from 30 trains a month.
In logistics, if you are running one train every day, the dwell time comes down. Nobody likes delays. It’s difficult to get back to that level, that’s what people are looking up to us. We want to fill in that gap by consolidation, running regular train services to Northern India and to Kolkata.
Linking Chennai with Nepal and Bangladesh
There is a lot of cargo which is going to Nepal from Chennai and people are really struggling, using part rail, part road and they are paying a huge cost for that. A regular train service to Nepal can be done because the missing link so far was the terminal at both the ends. Now, we have a terminal at Birgunj in Nepal, and we are creating a terminal in Chennai that will facilitate running trains.
Besides, there are locations which are 150-200 kms short of Nepal. Those locations also have a demand, say for instance Patna, which is 200 kms from Birgunj. We can run a cargo train from Chennai to Patna, half train to Patna, half train to Nepal. An exporter or a dispatcher or a consignor sitting in Chennai wants his cargo to reach Nepal within a given timeframe. We want to give that commitment.
In due course, we are also planning to have a presence in Bangladesh. If we have to run a train from Southern India to Bangladesh, we can do that. We intend to start rail services from Southern India to the rest of the country and outside. We will be announcing the dates for the regular rail services soon.
Listing Pristine Logistics & Infraprojects
Pristine Logistics listing is a work in progress. The regulatory approval for the initial public offering (IPO) is valid till September. A whole lot of other things have happened, so we are brainstorming and trying to figure out everything. Our valuations have also gone up significantly.
Sical Logistics certainly is going to continue as a listed company. We want to revive Sical’s business legacy, they are a very dominant player in all aspects of logistics whether it is containers, stevedoring, port handling, bulk logistics, container freight station (CFS) activities and so on.
The value addition we are going to give is linkage to the rest of the country through containerised rail movement because we are very active as far as container trains and rakes are concerned and then we merge the two.
In logistics, integration is the key. We want to integrate the services.
How does Patchem fit into the scheme of things?
Patchem, which is a unit of Sical Logistics, is a very interesting value addition.
The pharma companies and other related entities want complete end to end distribution solutions, right from their production centres to warehousing to distribution which Patchem is providing right now. It provides a just in time delivery model. Patchem has developed expertise in that.
Patchem is based out of Bhiwandi near Mumbai with a huge warehousing capacity of almost 600,000 sq ft. It handles Johnson & Johnson, Baxter, Panasonic, and others. These are very customer specific businesses which are totally dependent on value additions that you create and customise for the customers.
Expanding Patchem to other places
Up to now, the biggest challenge was that there were not many service providers who could tell Johnson & Johnson or Baxter that this type of Bhiwandi infrastructure and services can be offered at other places as well. We want to do that; we want to offer that at other places as well.
One missing link is that we are only present at the distribution side – warehousing, further distribution, and delivery. At the procurement end, we still have not done much, we want to explore and understand that as well.
