Ahead of GST, Spear Logistics to Invest Rs 30 crore


MUMBAI: France’s FM Logisticsowned Spear Logistics plans to spend 30 crore in the next 6-8 months in ramping up specialised custom-built warehouses in anticipation of a surge in seamless inter-state movement of goods once the GST regime rolls out.

“Spear in India was just about dedicated warehousing. However, with the advent of GST, we plan to come up with more multi-client warehouses. But we will still have our dedicated warehouses. It will be a fair mix of dedicated and multi-client,” said Pankaj Salpekar, head, marketing, Spear Logistics.

While an outlay of 30 crore is planned for the short term, the company’s long term plan is to invest 30-40 million over the next three years as the French warehousing player expands Spear’s blueprint in India.

“As GST kicks in, our plan is to first rent a large warehouse, which we have rented in Mumbai and we’ll do the same thing in Delhi. Then, we have decided to purchase land and build large warehouses of 500,000 sq ft to 800,000 sq ft. This is our long term plan,” said Jean-Claude Michel, chairman, FM Logistics.

The company had bought a majority stake in Pune-based Spear Logistics last year. Logistics giant DHL Supply Chain, part of global player Deutsche Post DHL Group, has already created a firm base for the transition, with an investment plan of 100 million for infrastructure and has already developed multiclient sites facilities in nine locations in India.

“The current average size of a warehouse is around 20,000 sqft, with a height of 7-8 metres, which makes it less efficient and sustainable. Also, it is the cubic feet that matters, not so much the square feet. If the warehouse is high, it brings down the cost as well as other inefficiencies, which in turn greatly benefit the customer,” said Vikas Anand, MD, DHL Supply Chain, India.

GST is expected to reduce logistics costs by up to 20%, but to benefit from that discount; logistics infrastructure has to be suitably attuned to the new environment after it is implemented.