Home-grown logistics firm DTDC Express is waiting for the Indian Railways to address logistic infrastructure gaps in its network so that the company can expand its cargo movement through rail to around 60 percent of its total handling from the current 20 percent, Subhasish Chakraborty, Founder and Chairman & Managing Director, DTDC Group companies, told Moneycontrol on December 26.
"At the moment, 18-20 percent of our volumes are transported through railways, but going forward, as the Indian Railways improves its infrastructure and network, we will look to transport 60 percent of our volumes through rail," Chakraborty said.
DTDC handles over 12 million shipments per month through its over 580 operating facilities, with 2.21 million sq ft of space under its management.
For transporting cargo across distances of over 1,000 km, the railways are more efficient and sustainable than roads, he said. However, roads will continue to be pivotal for cargo movement in India, especially in the medium to short-haul distances, he said.
While DTDC is very bullish on the use of railroads to transport cargo across India, upgradation of infrastructure by the Indian Railways is imperative for the country's logistics sector for the switch, Chakraborty said.
"There won't be an instant switch to railways from the road for cargo movement because road infrastructure is better in the country," he said.
The Indian Railways will have to ensure speed, cost, and security of cargo before logistics companies start adopting railways in a significant way. The breakdown time of rail coaches will also have to be reduced, Chakraborty added.
Total logistics cost
Chakraborty refrained from commenting on the accuracy of the central government's estimate of the overall logistics cost in the country.
According to the estimate, the total logistics cost of India stands between 7.8 percent (lower band) to 8.9 percent (upper band) of the total GDP worth for 2021-22.
"I am not saying it is inaccurate, but I cannot say exactly how much percentage it is to the GDP," Chakraborty said.
In the last five years, the logistics cost has reduced significantly, mainly due to the improvement in the country's road and rail infrastructure.
According to the government’s ‘ballpark’ assessment, the logistics cost stood between 8.7-9.9 percent of GDP in 2011-12. It rose to 8.8-10 percent in 2012-13 and then fell below the maximum upper band of 9.4 percent of the GDP between 2014-15 till 2021-22.
Growth plans
Chakraborty said that DTDC will look to grow 15-16 percent in 2023-24. The company's overall growth in 2022-23 stood at 23 percent over the previous fiscal, with both domestic and international business doing well.
International business, in the last two years, has grown at a faster pace than domestic business, he said.
In the first two quarters, the company logged 16 percent growth over the same period of FY23. Chakraborty said that the growth trajectory is moving up on a sequential basis.
The DTDC journey
DTDC was founded in 1990 by Subhasish Chakraborty in Bengaluru. The firm provides express courier services to local and overseas destinations for both retail and corporate clients.
DTDC, through its units, operates in New York, London, Dubai, Toronto, Singapore, Hong Kong, China, and Australia. It also has a presence in Nepal, Bhutan, Sri Lanka, Kenya, and Turkey through partners.
The company is planning an investment of Rs 100 crore each as capital investment in 2023-24 and 2024-25. This will be mainly used to upgrade warehousing facilities, equipment and backend technology.
DTDC currently has a fleet of 4,000 vehicles and it is looking to increase it by 500- -plus vehicles by this fiscal, Chakraborty said.
DTDC handles over 12 million shipments per month through its over 580 operating facilities, with 2.21 million sq ft of space under its management.
Initial public offering
Chakraborty said that DTDC has dropped plans to raise funds through an initial public offering (IPO) for now, as the company is in the middle of a massive transformation journey. This will help the organisation operate on a bigger scale.
"At the moment, with last year’s strong financial performance, we are not actively looking to raise any funds," Chakraborty said. DTDC, he said, will look to raise funds at a fair valuation, once its transformational journey is completed.
In 2022, DTDC Express Ltd, one of India’s largest courier service providers, started work on its IPO to raise as much as Rs 1,000 crore.
The courier firm had planned to use some of the proceeds from the IPO to strengthen its technology platform to compete with younger tech-enabled delivery companies that have helped fuel the rapid growth of e-commerce in India.
As of March 2021, France’s DPD Group held a 42.5 percent stake in DTDC, while the founder and other individual shareholders owned the rest.
Green initiatives
Chakraborty said that DTDC has made sustainability the cornerstone of its business philosophy. Going forward, it will look to adopt more sustainable practices while expanding its operations.
"So far, we have already introduced 350-plus Compressed Natural Gas (CNG) vehicles, and 60-plus e-vehicles in our fleet," he said. Going forward, the company is looking at more sustainable options for fleet expansion.
He added that DTDC is also encouraging its bikes across its 15,000 delivery points to switch to electric scooters.
DTDC has also already started minimising its carbon footprint by adopting an eco-friendly packaging system and incorporating renewable energy sources across its facilities.
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