Pune-based third-party logistics company FM Logistic plans to double its warehousing space to 1.2 crore square feet in three to four years from 60 lakh square feet at present as it expects demand for such facilities to increase in the aftermath of the pandemic, said Alexandra Soufiani, MD and CEO, FM Logistic India.
The company expects business to return to pre-Covid levels by March 2021 as it has recorded 90 percent recovery in December. Last week, FM Logistic India had announced setting up of intra-city warehousing units in Mumbai, Delhi and Bangalore. With its plans to set up A-grade facilities in all metro cities and ‘dynamic economic areas’, especially multi-customer units, and focus on urban logistics it looks to attain leadership position in the sector.
Grade A warehouses are categorised on the basis of construction quality, available space, location, amenities and clients, among others. In March 2019, FM Logistic had outlined its plans to invest $150 million (Rs 1,110 crore) over the next five years to set up new warehouses in India, with focus on multi-client warehouses.
"When we acquired Spear Logistics in 2016, there was only 20 lakh square feet space and four warehousing units. Today we have 60 lakh square feet in four years and we want to double this to take it to 1.20 crore square feet under our operations in the next 3-4 years," added Soufiani.
The company has already announced its plans to add 40 lakh square feet warehousing space in the next three years that will take its total space to 1 crore square feet, adding that it could add another 20 lakh square feet. He said the company has added a total of 10 lakh square feet space in the last six months, all for multi-customers facilities, including omni-channel, pharma, e-groceries, FMCG, food, industrial, among others.
The company also plans to have multi-customer facilities in Bangalore, Delhi, Kolkata, Hyderabad and Chennai in the next 2-3 years. It is expected to soon commence operations at its Bhiwandi facility in Maharashtra, which is spread in 4 lakh square feet space with a part of it dedicated for pharma clients. The upcoming state-of-the art warehousing facility at Jhajjar in Haryana will also be operational in the second quarter of 2021.
Earlier this month, FM Logistic had signed a strategic partnership with Welspun Logistic Park to develop 9 lakh square feet space in Bhiwandi in the next 3 years.
"We could realise a quarter of our 40 (lakh sqft). There is another 10 lakh sqft of space that we have also signed for which 4 lakh (sqft) we are going to get this month, another 4 lakh sqft we will be getting in April/May next year," he said.
The omni-channel strategy has now become a central strategy for most of the companies which are into retail, FMCG, groceries and pharma, among others, and has given a big opportunity to third party logistics providers. However, in the wake of pandemic, safety, compliance and quality have become a must and players in segments such as FMCG, pharma and e-commerce are pushing more and more for A grade warehousing facilities, added Soufiani.
The company has signed five new contracts during the pandemic period. While omni-channel and auto segment account for 25 percent of the company's overall business, pharma accounts for 10 percent of business and the rest comes from other segments.
"We expect revenue from omni-channel to grow to 40 percent in the next 3-4 years as this is going to be the future. Auto revenue we expect to stay at the same level. However, we are also looking to double revenue from pharma to 200 per cent in the 3-4 years period as against 10 percent at present. Overall, we are looking at 35-40 per cent year-on-year growth in our revenue, going forward. The company wants to continue building new multi-customer facilities and signing big contracts. In addition to the overall portfolio of services that we offer, omni-channel and urban or intra-city logistics are also extremely important for us," said Soufiani.
The company has added 1,000 people in the last six months, taking its total head count to 6,000 from 2,500 in 2016. He said many of the projects are part of the Rs 1,200 crore investment plan announced by the company in March last year.
"We have already consumed Rs 200 crore of this. The pending Rs 1,000 crore is still available for creating state-of the art A grade facilities in all the metro cities and the dynamic economic areas of the country," pointed out Soufiani.
Besides, it will also be used for intra-city logistics facilities, IT systems as well as automation. Though full-automation in warehouses is not feasible in the country due to certain barriers, the company is going to have provision for automation in areas such as loading/uploading and inventory stock taking, among others.