FM Logistic plans mega warehouses as part of its growth plans
Mumbai, Nov 1:
FM Logistic of France has drawn up aggressive warehousing plans for India as part of its Ambition 2022 global vision statement. The company acquired a majority stake in Pune-based Spear Logistics earlier this year and will leverage the partnership to take the growth story forward.
“It is an important time to enter India. We had decided to come here nearly three years ago after a careful study,” said Stephane Descarpentries, Director, Strategic Projects and Director, Operations Asia, FM Logistic, in a recent telephone interview.
Sectors like fast moving consumer goods and retail will become key ingredients of the script where the company has earmarked €50 million to be spent over the next four years in India.
“Within the next three to five years, we want to be among the top three logistics players for warehousing. Along with Spear, we want to continue developing the core business of automotive, engineering and telecom while building FMCG and retail,” said Descarpentries.
Some of the French company’s prized global clientele like Nestle and L’Oreal could become part of the India story. The idea is to offer top-class services in warehousing and distribution while keeping in mind the growing importance of e-commerce.
Beyond FMCG, there could be other interesting global dynamics at play in India. FM Logistic is talking to Renault-Nissan for operations in Brazil and, like L’Oreal, could be a “natural customer for India”. As Descarpentries reiterated, it will be FM Logistic’s endeavour to bring its corporate customers to India from operations in Europe, China and Brazil.
Bigger warehousing facilities in Mumbai and Delhi will be ready in early 2017 as the first part of a longer journey with Spear Logistics. These will be leased multi-client facilities that are scalable from 200,000 square feet to 400,000 square feet.
Depending on how quickly optimisation is achieved in these two mega units, FM Logistic will then open similar facilities in Bengaluru and Chennai, again on a leased basis. The next plan, three years down the line, will be to build owned facilities (termed ‘platforms’) keeping in line with its business model across the world.
Each of these will be close to a million square feet though not as large as the company’s biggest global platform in Russia which is nearly 1.3 million square feet. “We will set the platform up in national markets and close to main consumption centres like Delhi, Mumbai, Bengaluru and Chennai,” said Descarpentries.
According to Gautam Dembla, Managing Director, Spear Logistics, there will be fewer warehouses once the Goods and Services Tax is in place as it will lead to physical boundaries breaking down between states. However, they will still end up being larger and more complex. Warehouses will also need to be technologically advanced with software systems support and hi tech handling equipment to manage very large volumes.
The leased warehouse model, that has stood Spear Logistics in good stead, will continue for user industries like automotive and engineering. “They do not need a proliferation of warehouses unlike FMCG and retail which will do better with platforms,” said Dembla.
In his view, the opportunities are endless going forward. “When we started Spear Logistics 14 years ago, we were doing 10,000 square feet of warehousing which has since grown to three million square feet in India alone. Globally, FM manages three million square metres which gives you an idea of scale,” said Dembla.
FM Logistic is equally upbeat on growth prospects in China, Russia and Brazil. At present, the priority is to build the India business over the next three years. Russia and Brazil are going through tremendous economic volatility right now but the company is hopeful that better times are ahead.