Shri Kailash Logistics Limited (SKLL), the logistics vertical of the Kochi-based Sree Kailash group plans to set up a chain of logistics parks across the country by 2014. The first of these the Logicity is coming up at Oragadam on the outskirts of Chennai and will be functional by March 2011, according to S Rajkumar, vice chairman of the group. In an interview with George Joseph, he informed that SKLL had initiated plans to set up world-class, hi-tech, integrated logistics parks in Bangalore, Pune, Nagpur, Salem and Kochi with an investment to the tune of ' 400 crore. Excerpts from the interview:
Have you set a time frame for commencement of operations at Oragadam?
The first phase of the park at Oragadam will be completed by March 2011. This is being set up on 30 acres of land with an investment outlay of ' 120 crore. This will be the first-of-its-kind in the entire south India. Our aim is to become India's No 1 player in the logistics industry.
When did the group venture into this business and what prompted you to take the plunge?
SKLL was established in 1995 with activities in logistics and transport industry. The company envisaged the market demand for world class logistics parks in India and responded to it by launching the Logicity at Oragadam. Recent surveys reveal that countries with weak global logistics links would face growing cost of exclusion from international trade. Experts in this sector indicate a CAGR (compounded annual growth rate) of 7-8 per cent for the Indian logistics market, valued at US $ 141 billion, a few years back. We see tremendous growth prospects for India in this segment as India is having a decent economic growth rate and rated to be one of the most promising investment destinations across the globe. With the implementation of GST (Goods and Services Tax) the demand and consolidation of warehouses will have tremendous growth potential.
How do you plan to fund the network of logistics parks?
We are open to various options for funding the new venture. We plan to mobilise the required fund either through private placement of equities or opt for the IPO route. The group's flagship company, Sree Sakthi Paper Mills Limited, had gone for an IPO in 2009 and is a listed company on the major stock exchanges. So, we will take a decision regarding the funding of the project very soon.
Why did the company select Oragadam for the first park?
Located in close proximity to Chennai city which is now known as ‘The Detroit of India', the Oragadam park is poised to become a one-stop destination for all logistics needs. Chennai is a burgeoning metropolis with six auto plants, an electronics hub and a consumer population of over 7.5 million. It is the destination of choice for leading FMCG and durable manufacturers also. So the growth of the outskirts of Chennai has tempted us to launch the first park at Oragadam, which is well connected by all the three national highways passing through Chennai -- the NH-45 (GST Road), NH-4 (Bangalore Highway) and NH-5 (Kolkata Highway). The East Coast Road and the IT corridor in close proximity to Oragadam are mass consumption centres for FMCG goods both durable and non-durable. The value proposition of the land is its proximity to auto manufacturers and other industrial manufacturers, FMCG, retail, connectivity to port and airport.
What is the current status of other logistics parks which you are planning?
We are seriously looking for appropriate bulk area of land at the proposed locations, and once we purchase the land, we will commence the construction immediately.
What are the facilities you offer at the Oragadam unit?
The Oragadam park will have one million sft area of warehousing which includes temperature-controlled warehouse, 100,000 sft of cold strorage and 100,000 sft of custom bonded warehouse. The Logicity has been conceptualised as per international standards in China and Hong Kong. The logistics park has got key features which provides supply chain advantage, focusing on reducing cost and driving business efficiency. The key features and its benefits proposed include 50 per cent more warehouse stacking volume ie, 12 metres high ceiling warehouse compared to the traditional eight metres.