The Hindu Business Line : Patel Roadways to foray into third-party logistics services

PATEL Roadways Ltd, primarily engaged in road transportation, is gearing up to expand its business canvas by foraying into full-fledged logistics services that would involve supply chain management solutions or third party logistics (3 PL) services.

As the first step, Patel Roadways has decided to amalgamate one of its group companies, Patel On Board Couriers Ltd, with it.

The board of directors, at its meeting on August 29, approved the amalgamation proposal.

As per the proposal, shareholders of Patel On Board Couriers will be allotted 23 equity shares of Rs 10 each of Patel Roadways for every 20 equity shares held.

Patel Roadways had clocked a net freight earnings of Rs 120.89 crore in the last fiscal, while Patel On Board had notched up an income of Rs 134.39 crore during the year.

The combined entity is looking at a turnover of Rs 300 crore in the next five years.

Mr O.P. Harshwal, CEO of Patel Roadways, told Business Line that the company did not have immediate plans to get into marine transportation.

"We will continue to focus on road and air transportation for the moment. We will also be looking for forging strategic alliances or joint ventures with overseas logistics companies for providing third-party logistics services," he said.

The company sees significant potential in the 3 PL space, as corporates are increasingly outsourcing their logistics requirements to specialised logistics service providers.

Several corporate houses have registered savings ranging from 9 per cent to 15 per cent by using 3 PL services, with the benefits including improvement in delivery time, reduced cycle time, reduction in operational costs and enhanced geographical reach.

In fact, a study by Transport Corporation of India and Management Development Institute, Gurgaon, some time ago had shown the lexicon of logistics has been changing to include new value-added services such as import/export management, outbound warehousing, labelling and packaging, order picking and inventory management.

Mr Harshwal said the company, in recent times, has been focussing on routes that are less than 1,000 km and between 100-500 km, which are lucrative.

Of late, even the express service business has seen growth, with operators such as Gati, Safe Express, Speedage and XPS joining the bandwagon.

The company covers an average of 1 lakh km every year, having a fleet of 100 company-owned trucks and 450 stations spread out across the country.

Patel Roadways is also expanding its franchisee system, having 330 business associates today.

"Today, 67 per cent of our turnover is coming from these associates and the remaining 45 company-owned branches contributing 33 per cent," Mr Harshwal said.

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Patel Roadways to foray into third-party logistics services