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ASL Logistics – Looking at unswerving growth
What first began as a group with an industrial construction project in Mumbai in 1981, expanded into the distribution of cement in 1991 and subsequently transportation of cement in 1998. 25 years after its inception, the Nawany group’s cement bulker transportation vertical was born. Today, the group has diversified interests in the construction of industrial and logistics parks, cement and fly ash supply as well as end to end logistics services to leading cement companies. Sarada Vishnubhatla puts across questions to Mohit Nawany, Director – ASL Logistics, to find out the Group’s insights during Covid-19, strategy and, future roadmap.
Nawany Group that was co-founded in 1981 by brothers, Ashok and Vinod, today is a name to reckon with in the cement and fly ash bulker road transportation. With the able next generation now taking up responsible roles alongside the senior management, Nawany Group is today aiming at growing steadfastly, notwithstanding any dampeners – even if it is in the form of the current pandemic, Covid-19.
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The Covid-19 pandemic has, at its worst, wreaked havoc on the country’s economy – akin to its detrimental impact on the global economy. The road transportation segment is no different. The damage has been extensive and the challenges are still being faced despite the signs of
Mohit Nawany, Director, ASL Logistics
slow yet definite revival of the market.
Mohit Nawany, Director – ASL Logistics shares the general fears plaguing the transportation and logistics sector. Yet he is confident that the revival of the market sentiment is soon to happen: “Typically, the robustness of the road transportation sector and the country’s economy work in tandem. Much will depend on the way the road transportation industry recovers and I feel it will mostly be uneven across the sectors. From the cement transportation perspective, we are currently seeing some pre-monsoon pent up demand coming our way. Driver shortage is severe and hence the operating vehicles are doing record-breaking trips. We anticipate that this will taper out in the coming few weeks. In my opinion, the market will return to a certain sense of normalcy by around October 2020. We hope that the virus becomes less destructive by then, but till then I am sure every stakeholder is looking at - first survive and then revive. That is definitely the mantra that we have adopted.”
Driver Attrition – Major Challenge
The attrition rate of truck drivers has always been a challenge across the world but more so in India because of lack of skilled drivers, de-humanized treatment that they are meted out with in general and children of truckers not open to taking up the profession . Covid-19 situation has further worsened the community’s prospects - financially, morally and physically, although ASL Logistics continues to fight hard to keep their drivers happy, healthy and well-provided for in these tough times.
Nawany recounts the challenge: “Apart from the obvious loss of business implications during the lockdown period, about
20% of our vehicles have stood loaded for 8 weeks at a stretch, which has led to damages of a different kind, including loss to the vehicle tyres and such. Then, as the operations slowly resumed in the last few weeks, restricted movement of workforce is creating problems. Attending to highway breakdowns has become a major challenge. Our drivers, like most of their brethren, have been bogged down by the fear of the virus contamination when on the move, coupled with their family concerns and their safety, non-availability of food due to wayside amenities being shut and their migration back to hometowns.”
He explains further: “All our drivers are hired on contractual basis. For the entire lockdown duration, ASL has paid them their regular wages. We have been fortunate to not have even a single case of drivers being stranded en route due to the lockdown. All our drivers have managed to reach either their local homes, our workshops or the cement plants within few hours of the lockdown announcement. And those drivers who were staying at our workshops were provided with food and basic amenities.”
Challenges Galore
Additional challenges include inflated labour charges (which ASL is either compelled to absorb or pass on to their customers) and the sector being non-conducive to the adoption of digital and social media in operations. While the former challenge may see some mitigation what with reverse migration being hinted at, the latter poses a problem of a different nature.
Nawany explains: “Since this is a B2B nature of operation, we have not seen much adoption of digital and social media in our
operati ons. However, we are trying to work closely with all of our clients to incorporate the benefi ts of technology in changing ti mes. We are constantly pushing them towards e-PODs, freight billing through the system and the like, in an att empt to minimize human interacti on and promote paperless transacti ons.”
Despite challenges, Nawany is ‘bullish’ that in a year’s ti me, India’s economy will be back on track and well on the road to becoming robust once again.
Counti ng Blessings
The Nawany Group feels grateful that their loyal team has stood by them in these tough ti mes. He shares: “The situati on is unprecedented and so are the challenges that we are facing. We are thankful that it has awakened a hero in each one of us and hence there can be not just one parti cular story to recount. Our workforce – be it younger ones or those in mid-50s – have risen to the occasion. Almost all our supervisors made it a point to report back as the transportati on was resumed. Most of us have gracefully accepted salary cuts and our drivers are doing an amazing job despite fears.”
He conti nues: “As management we have been personally counselling our employees through the lockdown and are providing medical insurance against the pandemic for drivers and fi eld staff . Currently, we are operati ng at 50% capacity and we are sure it will only improve from here.”
India – An Att racti ve Desti nati on
With many major and mid-level global companies planning to shift their manufacturing bases from China to India – a senti - ment which seems to have further solidifi ed during Covid-19 pandemic – India surely will see bett er business days to come. Yet, Nawany feels we will have to strategize in a way to compete bett er with smaller yet aggressive markets like Taiwan, Vietnam and Indonesia, among others.
Nawany feels: “We surely would att ract opportuniti es yet considering the scale of such projects reaping returns and benefi ts will take another 4-5 years organically. I am an ardent Future-ready
As a group Nawany is constantly working towards staying in tune with the direction in which the market is moving. The development of Grade A Logistics Park in the Bhiwandi region shall provide the platform for the group’s foray into 3PL services. Additionally, the group is evaluating innovative logistics solutions in fly ash handling to address key environmental issues. Last but not the least, with the intent to give back more than it gets, the organization is also working on a technology-based social enterprise aimed to uplift the invaluable truck driver community.
believer that the great Indian dream is built on SMEs and ‘jugaad’ entrepreneurship – be it from an economy or an employment standpoint. If the wave of ‘vocal for local’ can pick up momentum and stay, then the SMEs backed by the government will become the driving force. This, of course, is subject to our ability to deliver price and quality.”
The top economies today are advocati ng localizati on and India needs to understand this bett er and take more advantage out of it. And to think that, India logs 30-40% higher logisti cs cost than the global benchmarked cost.
Nawany thinks the key reasons for this are – a) ineffi ciency due to substandard road conditi ons and poor working culture, b) high tax structure and, c) inferior conditi on of truck drivers. He explains further: “The fi rst point needs to be urgently att ended to and work was going on at a war footi ng prior to Covid-19. The 28% GST on trucks with diesel sti ll not under the GST is a major factor hiking costs. Driver treatment is abysmal in India, and it needs to be reformed while inculcati ng formal skills in them.”
The Nawany Group salutes the hardworking truck driver community and is gunning for a robust and steady growth of Indian economy and to the road transportati on sector. w
Indian auto industry to decline by at least 25% in all segments in 2020
The Indian automotive industry is set to continue its struggle in the slow lane and decline by at least 25% across segments this year, states Vinay Piparsania, Global Consulting Director, Counterpoint Research
India’s automobile industry, the fourth-largest globally by volume, is headed for another year of significant declines as extended lockdowns impact production and consumer demand. Sales volumes of passenger and commercial vehicles are projected to drop to levels not seen in over a decade. At the beginning of the year, the automotive sector was already suffering in the midst of a challenging economy. Compounding this, more stringent environmental and safety regulations, growing popularity of shared mobility platforms and cautious lending by banks and non-banking financial companies (NBFCs) negatively impacted vehicle sales.
The virus pandemic is now making the situation far worse. Based on data reported by the Society of Indian Automobile Manufacturers (SIAM), March passenger vehicle sales declined 51% YoY to 143,014 units. Sales of twowheelers fell 40% to 866,849 units and commercial vehicles declined 88% to 13,027 units. With a nationwide lockdown in effect from the last week of March, the industry saw zero production and sales of new vehicles in April. While automakers began partial operations in May, it has been an uphill struggle.
Openings were allowed only after receiving due approvals from respective state authorities, and conditional to following safety protocols such as body temperature scanning, social distancing and ensuring high standards of sanitization. Shutting down operations was far easier than reopening factories as companies need to manage complex synchronisation issues. The resumption of operations requires OEMs to coordinate with hundreds of local and global suppliers, logistics partners and thousands of employees.
The biggest challenges come from not having enough workers willing to come
Vinay Piparsania
back and sufficient and continuous supply of parts. It is likely plants across the country will function with a skeleton staff at least until July. Slow dealership re-openings are another problem. With almost all vehicle sales delivered through them, online sales are a rarity and still under development. As of the last week of May, only 3,500 dealerships were operational around the country, representing 20% of the total network. And amongst these, half were operating only their service departments and not showrooms.
The sharp contraction in sales will also lead to a decline in average manufacturing capacity utilisation. For the PV segment, effective annual capacity utilisation is projected to drop down to as low as 45% from 60% a year ago. Two-wheelers and commercial vehicles will drop to below 50% and 35%, respectively, from 65% and 51% a year ago.
Demand Outlook for 2020
The lack of government policy intervention for the automotive sector in this year’s national budget and also recent fiscal stimulus packages combined with a lack of visibility around when social and economic demand conditions will get back to normal has resulted in Counterpoint Research revising the 2020 forecasts. Our base case outlook sees YoY passenger vehicles, two-wheelers and commercial vehicles declining by 25%, 21% and 28%, respectively. CV sales, in particular, have been languishing under the impact of new axle load norms. They are unlikely to show much recovery this year with freight demand projected to
remain low.
Recovery Timing
Demand recovery can only be expected around the festive season in the last quarter of the year. With growing consumer preference for cheaper, personal transport and two-wheelers, motorcycles, in particular, with their higher rural share, will likely be the first category to see a rebound. Should the government develop scrappage schemes and lower interest rates for vehicle loans, along with reduction in sales and road taxes, as seen across Southeast Asia, these interventions could accelerate recovery.
Despite the above challenges, we remain positive over the longer term in view of India’s comparatively low vehicle penetration – 110 two-wheelers and 32 cars per 1,000. Australia has 740, Japan has 591 and China has 164 vehicles per 1,000 individuals. We expect recovery post-2022, helped by improvement in nonbanking financial institutions and the overall economy. Combined with a young population, rapid improvements in road infrastructure, growth in rural demand and possible introduction of entry-level passenger cars, this could significantly boost consumer demand.
