BL Interview. Post GST, logistics business will improve: Abhik Mitra of Spoton

“Logistics business will change quite dramatically following GST,” Abhik Mitra, Managing Director, Spoton, told BusinessLine . The road express parcel service provider and other logistics company are talking to clients on the impact the shift to GST will have on their sector.

Movement of goods by road could increase as the new tax regime eases prevailing complexities. The company was formed in 2012 when TNT’s road express business was bought over by India Equity Partners at its realms of around ₹180 crore. “We will double that figure this year. We are profitable, and growing at 20 per year-on-year. We have stayed focus on being a road express player,” he said. Excerpts:

Will the road movement of goods change post Goods Services Tax?

I envisage a situation post GST when all check posts are gone. Once check post goes away, a truck that departs from Chennai to Delhi, unless there is an accident or flood, it will reach on time. Goods will be delivered on time. Predictability levels post GST will significantly improve, let alone improvement in transit time. Let’s say if you are moving goods by air from Chennai to Jalandhar but price differential between air and road is nearly one-eighth. Once logistics manager sees that he can manage his inventory in a manner where it gets more predictable by road, people will switch more volume by road.

For your business, what could be the impact?

In addition to GST driving GDP growth, it will drive more growth on road express. There will be more speed demanded and more volume moving on road. It is possible that companies may say we will design supply chain for effectiveness of the chain rather than for tax expedience. Most supply chain in India is designed for tax first and supply chain efficiency later. Post GST, they may say, we will manage local Regional Distribution Centres all by ourselves rather than using a Custom and Forwarding agent.

Have you started preparing for post GST?

We have started talking to customers across different verticals to understand the kind of impact their supply chain will have post GST so that we can plug in accordingly. For example We do not expect any significant change in movement of auto components to OEMs which follow just-in-time model. But components movement to distributors will be tweaked. What may be true to pharma may be similar to FMCG.

What verticals do you focus on?

Healthcare and pharma, auto and auto components, lifestyle and ready made garments, high tech, engineering and mobile telephone including base towers and mobile telephones. Our revenue across this six vertical is equal. We cover about 18,000 pin codes. We are amongst top three players in the market. Based on current market, we are among the fastest road express company. We have nearly 400 long haul vehicles and 800 pick up and delivery vehicles doing around 7,500 consignments a day.

Any new sector planned?

Our core is parcel delivery in express mode. The logistical extension is to look at B2B air express cargo and B2C space in ecommerce, possibly in 2017-18. Existing team and infrastructure has capability to do it. The B2B day definite road express delivery is nearly ₹2,000-crore business.

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