Patel Logistics Wants to Triple e-Commerce Revenue
Most domestic logistics players have been struggling over the last four years because of tepid growth in the manufacturing sector. But the e-commerce boom in India has boosted local logistic companies too.
Patel Logistics, an integrated logistics player that focuses on express delivery, e-commerce and warehousing, told NDTV that it expects to triple its revenue from the e-commerce segment in the near future.
"The company is looking to increase its revenue from e-commerce to 15-20 per cent of total revenue from 4-7 per cent now," said Areef Patel, vice-chairman at Patel Integrated Logistics.
Patel Logistics, which had reported a net profit of Rs 2.34 crore for fiscal year 2013-14, is looking to increase its profit to over Rs 3 crore in 2014-15 fiscal year, said Mr Patel.The company had reported a net profit of Rs 1.03 crore in the quarter ending September 30, 2014, a year-on-year growth of nearly 300 per cent.
The boom in e-commerce and falling crude oil prices have led to an expansion in the EBITDA margin as well. "70 per cent of our costs are operating costs. Reduction in the diesel cost has impacted our margins positively in last 6-7 months," said Mr Patel.
In order to cater to the growing needs of the e-commerce segment, the company recently set up a new warehousing facility in Mumbai. The company is also looking to build a new warehouse in Banglore, said Mr Patel. The existing warehousing facility at Chennai has an utilisation rate of 100 per cent, he added.
According to experts, some of the major challenges faced by the logistics sector is lack of expertise. Mr Patel said "we are in the process of gaining expertise in the segment as it is a new segment for us."The company is evaluating various options to raise capital to expand its infrastructure to cater to the growing needs of the e-commerce sector.
Shares in Patel Integrated Logistics have outperformed the broader indices over last one year, gaining nearly 900 per cent as compared to 32 per cent gain in the broader Nifty.
The implementation of Goods and Service Tax (GST) will improve the prospects of the logistics sector, Mr Patel said.