GST to push demand for logistics solution: Allcargo

The Goods & Services Tax (GST) will help increase demand for logistics solution, says Prakash Tulsiani, ED & COO, Allcargo Logistics. Speaking to CNBC-TV18, Tulsiani says that logistics demand will aid growth in manufacturing segment. The company’s project and equipment asset utilisations have been 90 percent plus, he says. On the business front, Tulsiani says that the company has been awarded land for Kolkata CFS and the facility will be completed in a year. The total capex for the project is Rs 35 crore, he adds. Below is the transcript of Prakash Tulsiani’s interview with Ekta Batra and Anuj Singhal. Ekta: While we understand that the goods and services tax (GST) will obviously facilitate the movement of goods, how much of these benefits will flow down to Allcargo Logistics?

A: Allcargo Logistics is the only Indian company which has an integrated service provider that is in the logistics. We are a one-stop solution. What will happen is as and when the GST is rolled out, there will companies which will require more logistics. They will have more logistics requirement; there will be need for logistics to be done in a different way compared to what it is done today. Today, if we look at most of the companies, the manufacturing side, when they do the distribution, they go on the basis of taxation rather than on logistics needs. Now, it will be based on the logistics requirement of each of the company. So, they can set up the manufacturing plant, the distribution as they would like and that is where, as a logistics company, we will participate and help them achieve their goals of a distribution which is very effective and efficient.Anuj: You have three segments; Multi-Modal Transport Operations (MTO), Container Freight Station (CFS) and Project Business. Which of these segments will see the maximum benefit because of GST?

A: Our MTO business is a global business, so there is a portion of that which comes from India. There, there is no GST effect on that, but definitely on our CFS, our warehousing business, our contract logistics which is a part of the pickup & delivery (P&D) which will see a lot of activity in it. So, definitely, these are the segments which are all India based segments. We will see GST improving our business proposition.

Ekta: The margins in the CFS business did see a sharp uptick in Q2, but do you think they are sustainable at these levels? What is the outlook in the second half?

A: If you see our business, it is about efficiency. Bringing in efficiency and increasing the market share. So, as and when we grow our market share, we will certainly see the benefits of that straight-away hitting to our margins. And as you see that given the market which is where we are, the Exim trade is not growing the way that we had all anticipated. Despite the numbers what we have, we have performed very well in the second quarter. And, our focus is continuously, to deliver a product which is beneficial to the client and ensures that we bring in a lot of efficiency for them and thereby improve our margins.