The Hindu Business Line : German major Rethmann, Seaways team up for projects in India

GERMAN logistics major, the $2.6-billion Rethmann Group, which also has interests in bio-technology and waste management, has tied up with Hyderabad-based Seaways Group for taking up projects in these sectors in India.

The two companies are likely to form a special purpose vehicle (SPV) by July end, which will focus on providing logistics solutions to companies in India having export or import links with Germany initially, and later expand to other parts of the world. "One potential area is the automotive sector, especially as the German auto majors are looking for setting up bases in India. The SPV will be providing logistics services on a turnkey basis, handling the entire gamut of logistics requirements of these companies. The SPV will be offering its customers tailor-made logistics solutions to the most remote parts of Europe through a combination of rail, road and inland waterways transportation," Capt. P.V.K. Mohan, Chairman of the Seaways Group, told Business Line.

The SPV's focus on the automotive industry has been the front-runner in the usage of third party logistics (3PL) services. The drivers of growth in this segment include the emergence of India as the new hub for auto component outsourcing and the trend among the manufacturers to follow JIT (Just In Time) practices. This, in other words, means that any disruption of supply chain would translate into loss of sale, which is prompting the automotive industry to increasingly outsource their logistics requirements to third party service providers.

At present, the automotive industry is estimated to account for a little over 5 per cent of the revenue of the Indian logistics industry, which was estimated at $13.46 billion in 2003. Although chemicals, metals/metal products, FMCG, cement and textiles were the top five revenue contributors to the logistics market, the automotive industry is expected to go up in the chart, as market projections are bullish in this sector. The domestic logistics market itself is projected to touch the $20- billion mark by 2009 on the strength of a growing economy and higher international trade, industry analysts say.

The SPV between the German company and Seaways intends to capitalise on this projected upsurge in the logistics market. Rethmann operates a string of container terminals, hinterland transport systems and a chain of warehouses, its package of services including supply chain logistics. Apart from this sector, the company is involved in waste management projects in over 40 cities in Europe and also owns about 36 bio-tech parks.

The Chairman of Rethmann Group, Dr. Franz Hermann Niehues, also met with the Andhra Pradesh Chief Minister, Mr N. Chandrababu Naidu, recently and had shown interest in taking up bio-tech projects in the proposed Bio-tech Park in Andhra Pradesh. "The SPV will initially focus on animal bio-tech. We will be first setting up a R&D facility, which will be followed by an export unit," Capt. Mohan said.

Not willing to divulge any details about the equity stake of the two companies in the SPV, Capt. Mohan said by July end, its equity structure and broad agenda would be finalised by the two partners.

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