Expect margins to improve in 2nd half of fiscal: Tiger Logistics

A: I will give you a brief about what we are doing. We are basically into international logistics and when we talk of international logistics, it is door-to-door from one supplier to the buyer. So, when you have an export order or an import order, when you have an export order, you want to execute that, so we pick up the goods from your factory, take it to the port, do the transportation and put it on the vessel. We do the sea freight as well and take it to that particular country where the buyer is located and from that port we take it to the buyer’s warehouse. So, we are basically serving door-to-door from one country to the other. In short it is called as international logistics.

We cover all product lines such as local transportation in India, the custom clearance, the freight forwarding and the custom clearance on the other side and transportation on the other side of the globe. So we are taking care of the whole aspect. This is what the company is doing.

Reema: Why are the margins of the company so low, just in a range of 4-5 percent?

A: If you see logistics industry as a whole, the margins per se in the pure logistics sector hover around 3.5 percent to 5.5-6 percent or so. These are the margins on which we operate on because we are dependent on a lot of other service providers, especially the rail operators in India, the shipping lines, which operate vessels or the airlines. So, these are the margins on which actually the logistics industry as such works. So, that is the reason.

We are trying to improve our margins; from 4 we have come to 4.5 and now we are hovering around 5 and next year or maybe this half yearly results, we should see some slightly better margins. So, this is what the margins are hovering around. However, we are trying to better them but yes, these are the industry trends.

Prashant: One basic question, are you talking about transporting certain kind of items. As you said international logistics or you do everything?

A: We have de-risked our business. Logistics industry has been a much unorganised sector. Mostly, you will find regional players or players who are purely dependent on one or two commodities. Therefore, we have tried to de-risk our business where we have a pan-India presence and we have 6-7 strong verticals which are the major contributors to the export-import international business also.

Prashant: Which are the top-three?

A: We talk of projects where we are doing a lot of power projects, sugar projects. We are taking care of commodities.

Prashant: In power projects, what essentially would you transport?

A: When we talk of power projects, there are a lot of companies who are installing power projects in Africa or in South America. So, we are transporting a lot of transformers, a lot of towers, a lot of power transmission equipments, a lot of high quality wires and all.

Prashant: How much of your business is inbound and how much is outbound?

A: We are mostly an outbound company. Around 80 percent of our business comes from outbound logistics. Another major vertical is auto, we are working with a lot of two-wheeler companies, starting from Yamaha, Honda, Suzuki, Bajaj, TVS, all eight big manufacturers who are into two-wheelers, we are working for them.

However, the new sector which we have got into is defence logistics, which is very interesting because of the transparent policies of the new government, so a lot of private players are being encouraged to get into the logistics.

Prashant: Which is your largest competitor?

A: If you compare peer-to-peer, we would be on the same lines as what Allcargo Logistics is doing and though we are not into infrastructure projects, we do not have container freight stations (CFS) or inland container depots (ICD) at the moment, but we are on the same line of business as what Allcargo is.