Mahindra Logistics is preparing to enter the sea transport segment through partnerships and is in talks with two European liners for a tie-up, a top company official has said.
The move is aimed at preparing for a liberalised coastal shipping regime, where foreign-flagged vessels will be allowed to operate in the domestic waters.
"As soon as the waterways become lucrative enough or kind of cost benefit, we will go to the asset owners and make our business partners. That's our model...this would be a tie-up with a shipping line," chief executive Pirojshaw Sarkari told PTI.
He said the company, which is already into the roads and rail sector, has spoken to two European companies which are not averse to allocate vessels if the business model gets developed. He did not name the companies though.
That the shipping ministry is favourably looking at reviewing the Cabotage law is a good beginning, Sarkari said and his company is working overtime to be ready for the big policy change.
Under the present Cabotage laws, foreign flagged vessels are not allowed to operate in the domestic sector. But having understood the importance of sea transport in bringing down cost of logistics, government is serious on liberalizing these norms, according to reports.
When asked about possible time-lines for entering the new segment, Sarkari said there will be "regular movement" of cargo through the sea from next year.
The necessary infrastructure is being developed by government and global shipping majors, which have been reeling under a difficult period since the 2008 global financial crisis, are happy allocating assets to India, he said.
Sarkari said Mahindra Logistics will be entering container movement through the sea either through the West or East Coast after circumventing the peninsula, or also the North-South connectivity on the same coast.
He, however, sounded apprehensive about adopting the water transport using the inland waterways network, saying that segment focuses on bulk cargo which the company does not operate in.
The company, which owes its origins to handling logistics for the parent Mahindra Group and still depends on the auto industry for a bulk of its revenue, feels the 'Ro-Ro' (roll-on-roll-off) shipping will also be used extensively in the next two years, he said.
With the stabilisation of the GST regime, the company is preparing to hire multi-user, large format warehouses at locations in close proximity to the consumption areas and has already booked over 0.5 million sqft space in Gurgaon and the auto hub of Chakan in Pune, he said, adding this business is margin accretive.
It is targeting to increase this to up to 3 million sqft of space in the next three years, he said, adding the locations will be decided later.
Any such warehouse has to have an 80 per cent utilisation by clients for financial viability, he said, adding it is targeted at the auto, FMCG and consumer durables segments.
On the e-commerce segment, which accounts for over 10 per cent of its revenue of nearly Rs 2,400 crore in the first nine months of the current fiscal, he said revenue is still rising due to greater demand. However, e-commerce companies demand price revisions every six months leading to process innovations, he said.
The e-commerce sector has helped the domestic logistics sector turn more agile and professional, he said, adding it's also cemented the importance of the industry in the minds of people which aids companies looking to scout talent from top business and tech schools.
Mahindra Logistics is also looking at acquiring majority stake in logistics technology-focused startups, he said without offering more details like the budget and timeline.
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