Capt. Uday Palsule, Director, Spear Logistics Pvt. Ltd.

India Infoline News Service | Mumbai |

Hemant P. Maradia of IIFL brings to you the following key takeaways from an interaction of select media persons with Capt. Uday Palsule in Pune. "Spear Logistics could surpass 100 warehouses in the next two to three years," he says.

Capt. Uday Palsule, Director, Spear Logistics Pvt. Ltd. Uday started his career in the Merchant Navy on Training Ship Dufferin. He completed his Master Mariners license from the U.K. and commanded ships in the Norwegian company Wilhelmsen. He was a Captain of ships on some of the largest car carriers and self-unloading bulk carriers. Post Merchant navy, Uday entered into logistics. He worked with some of the best names in logistics industry. He set up a Container Freight Station for Dynamic Logistics. He went on to set up domestic logistics business for GeoLogistics in India. Later, he partnered in starting up Spear Logistics. He has specialized in analytics and solutions besides creating several optimised models in warehouse and network designs. He has been a faculty at SIIB PG programme for Supply Chain Management (SCM). He has been a contributory participant to several seminars, including CII.

Pune based, Spear Logistics Pvt. Ltd. is a contract logistics company. Founded in 2001, it has already carved a niche for itself and is proving to be a very strong and rapidly emerging player in the industry. With its relentless commitment to quality, unparalleled service with inventory accuracy of 99.95%, focused approach, constant innovation leading to value added benefits and a loyal clientele, Spear Logistics today is amongst top players when it comes to complete warehousing and distribution management (in-bound, outbound and in-plant) in a short span of 10 years of its inception. Spear Logistics has a vision of becoming the most dependable and responsive logistics service provider. It has more than 15 branch offices all across India, and controls over 60 warehouses with 16,00,000 square feet of space and managing inventory worth Rs 7bn.

Hemant P. Maradia of IIFL brings to you the following key takeaways from an interaction of select media persons with Capt. Uday Palsule in Pune. "Spear Logistics could surpass 100 warehouses in the next two to three years," he says.

How did Spear Logistics come into being?
The company was started in 2001 by Captain Uday Palsule and Gautam Dembla with just 10,000 square feet of facility for Atlas Copco.

Dembla has been in the logistics industry for the past 18 years. He was previous the CEO of Dynamic Logistics up to 1999.

Palsule is an ex-merchant navy captain. He was also with Dynamic for some time; then both these persons joined Geo Logistics before branching out on their own in 2001.

We manage in-plant warehouses as well as external warehouses. We also carry out certain value-added services for our clients as well.

The contribution of in-plant will be 20-25% while the balance is accounted by external warehouse services.

How many warehouses do you operate right now?
Today, Spear Logistics manages warehouses totaling in excess of 1.6mn square feet across 55-60 locations in India.

We keep increasing the number of warehouses as and when we get new clients. We could surpass 100 warehouses in the next two to three years.

We work with large companies such as Atlas Copco, Siemens, Shell, Hyundai Mobis, India Pistons Ltd., Reliance Retail, etc.

Briefly tells us about your operations?
Spear is a contracts logistics company, which has its own challenges. One needs to understand the customers’ requirements for its supply chain. A lot of transport operators call themselves logistics companies. But they do not have warehouses; they have more of godowns.

India is a growing economy and the markets are fairly competitive. We believe in the adage "the right cargo, at the right place, at the right time and at the right cost". If that doesn’t happen we lose market share.

We have industrial solutions engineers with us who engage with the customers. We study their entire process. Then we come up with our own concept paper.

We help customers reduce costs in all aspects. This helps customers get its receivables faster. Once the concept paper is accepted by the customer we go into costs, KPIs, KRAs, SLAs, Processes, etc.

We see this as a long-term association. Globally, this is how logistics is done.

We look to balance manpower as well as technology. All the advanced nations and regions of the world have reached the pinnacle in terms of logistics and supply chain management.

We have a division that does daily cycle counts to help reduce discrepancies in a particular warehouse. Some companies do this exercise only once a year. At that time it becomes difficult to iron out the discrepancies.

We also do daily cycle count where certain items are counted on a daily basis based on some analysis. Each product is counted at least once in four months. This also helps us increase our accuracy level.

We have project implementation team that gets involved to start operations for a particular customer. We also hold monthly and quarterly meetings with the clients to review if their requirements are being met based on what is documented.

Where does the Indian logistics industry stand?
India is at a nascent stage as far as logistics and SCM is concerned. It has its own challenges. Sometimes customers do not know themselves what they want.

Globally, most companies outsource logistics operations because that is not their core activities. It is a dead investment for them. In India, companies have only just started realising the potential of outsourced logistics.

Companies don’t want to invest in warehouses, equipment, IT, manpower etc. MNC across the world outsource their logistics operations. They let companies like Spear to do logistics for them.

In India, this will take few more years.

Are your customers your exclusive clients?
We work as partners. Our customers are our exclusive partners.

We started with one unit for Atlas Copco. We have grown together. Next year will be 10 years for us. Customers have multiple choices but they stick with us because of the confidence and trust they have in our ability to deliver.

For Siemens also, we started with only one division; today we are working with 12 of their divisions.

We have more than 30 clients.

We work on various pricing models. Once we design a concept and process model, the throughput can increase over a period of time with the same number of people.

Do you own any assets?
We don’t own property. We take warehouses on long-term lease. We invest in material handling equipment as per client requirements. We also invest within the warehouses to improve processes. We have a very strong IT system developed in-house.

Which are the sectors you are targeting?
We focus on certain verticals. Our core strength and learnings have come from the Auto industry, Engineering, High-Tech, Apparels, Chemicals, etc.

Much of our business today comes from the Auto and Engineering sectors.

We have clients like Ashok Leyland, Cummins India and Hyundai India.

Hyundai India’s main focus is to manage supply of parts. We manage a huge facility for them at Taloja.

Do you also have Container Freight Stations?
No, we do not have Container Freight Stations or Cargo Freight Stations. We are more focused on the Third Party Logistics (3PL). We also do truck loads.

But, what we do have for our customers is something called Carrier Management Services. A lot of companies operating for a number of years deal with fixed number of transporters. It is fragmented and there are a lot of regional players.

What we do is we take over the entire transport management for the companies. We have our own in-house software that you can log into from any part of the country.

For the Telecom industry we do a lot of installation support logistics. We install their communications towers on high rises and even on mountains.

What would logistics industry gain from GST?
We have to wait and watch as far GST is concerned. Let the Government first rollout the GST. At present there is no clarity on the status of GST implementation. It will take a while before GST sees the light of day. Even after it is implemented, it needs to stabilise.

There will be consolidation once GST is rolled out. You may not have one warehouse in each state but two in one state. Also, the size of the warehouses will increase.

And once the Golden Quadrilateral and the Railway Freight Corridors are up and running, the scenario will only improve for the logistics industry.

But, right now nobody is sure how things will play out as far as GST is concerned or even for that matter SEZs and Freight Corridors are concerned.

Are you looking at inorganic growth?
We are open to inorganic growth for our company. From last year to this year, we have taken quite a leap. We have set our targets for next year as well. We are looking at expansion and we could look at acquisitions.

Local warehouse operators or Cargo & Freight operators would be the ideal targets for us; because companies would like to deal with as few of these operators as possible.

We are evaluating a few options. But this does not happen overnight. It like takes its own time to happen. We want to be sure of what we acquire. So, we are not in a hurry.

How do you see the prospects for the logistics industry?
The industry will become more and more organised over a period of time. A lot of small-time players will get bought out and a few others will shut their shops.

Going forward, particularly post GST, there would be larger warehouse facilities that would operate as common user facility. Instead of running a 50,000 sq. ft. facility for once client we could be running a facility of up to 400,000-500,000 sq. ft. for multiple customers.

Will you be considering an IPO in future?
Right now we are funded. We are moving on our on steam. We will see how things go in future. We might look at an IPO but nothing there are no plans as of now.

Private equity firm Ambit Pragma is an equity partner in our company.

What is your topline?
Our turnover last year was Rs 350mn and it is growing 25-30% annually.

 

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