Source: The Economic Times, Oct.04, 2016
MUMBAI: France’s FM Logistic plans to invest EUR 50 million in India over the next four years, becoming the latest global company to invest in the country’s logistics space, encouraged by the implementation of GST.
“We aim to contribute to a better efficiency of the logistics in India, especially in a post-GST scenario,” Stephane Descarpentries, Director-Strategic Projects and Director, operations Asia, FM Logistic.
“India is the biggest democracy worldwide, sporting an impressive growth rate – the GST adoption will be a turning point in the logistics market,” he added.
“If today most of major logistics players are Indian companies, DHL being the main exception, tomorrow this landscape will change. That’s the reason why it was key for us to adopt and deploy a long term strategy : arriving in the market beforehand, taking the time to deeply understand the requirements and being backed by the know-how of our local teams to deploy a new logistics blueprint in the country.
This is only possible because we are a family-owned company and an expert in developing collaborative logistics concepts, in particular thanks to our concept of large multi-client logistics platforms. India is definitely a promising market for logistics players however very few of them will be able to readily bring efficiency and flexibility in a post-GST scenario. This is what we’ve been working on since March this year,” he said.
FM Logistic, a billion Euro company invests EUR150 million as capex every year globally.
India in August announced the biggest tax overhaul since independence–the Goods and Services Tax–which will bring the entire market and most industries under a unified tax structure. This is slated to have a major impact on the logistics sector paving the way for big, centralised logistics parks instead of smaller warehouses scattered across the country. Transportation networks are set to undergo a major overhaul with bigger stress on technology.
In India, FM’s funds will be spent in creation of of multi-client sites close to the main cities, starting with Mumbai and Delhi, said Descarpentries.
There will also be investments on equipments of densification of storage viz. racking systems, reach-trucks etc. Part of the investment will also go into revving up technical solutions. FM bought a majority stake in Pune’s Spear Logistics recently.
Other global companies have started investing in India too. An affiliate of global private equity firm Warburg Pincus has agreed to invest $125 million (Rs 850 crore) in an local logistics company Stellar Value Chaim Solutions.
Japan’s Nippon Express Co. is also looking at major investments in India, sources in the know said. Emails sent to the company yielded on response.