India based logistics and courier company DTDC reports a growth in business for its warehousing vertical as an impact of GST.
Since the GST has replaced State taxes by a common tax, the demand for smaller warehouses has decreased, which in turn has increased the demand for mid-sized spaces from companies like DTDC. The logistics giant offers warehouses of sizes ranging from 50,000 sq ft to 130,000 sq ft.
The major driving force is the availability of centrally located warehouses with DTDC which has enabled smaller brands to find proper spaces to store their stocks. This has further boosted the omnichannel presence of such businesses.
In addition, GST has also boosted the trend of warehouse sharing. Instead of renting multiple small warehouses across the States, the companies are now preferring to share one big warehouse.
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DTDC is positive that the business will grow even more in the coming future. According to DTDC Executive Director Abhishek Chakraborty, the warehousing business may see a growth of near 50 percent. “There was some churn after the GST rollout. A set of older players moved out and a set of new ones moved in. Post-GST, we have seen a 25-30 percent growth in warehouse space demand and this is expected to move up to 50 percent soon. In terms of size, the 50,000 to 130,000 sq ft warehouses are ideal as they bring in more efficiencies,” he told BusinessLine.
The warehousing business of DTDC is currently run by a separate subsidiary, DTDC 3PL and Fulfilment Solutions Ltd, and contributes around 4.5 percent to the total revenue of the group. The sharing is expected to grow even more in the coming years.
The company is also looking to raise funds to further expand its warehousing business subsidiary. “A significant capital will go towards expansion of warehouses. So we are now finalising the fund-raising plans. Previous expansion in the warehousing network was mostly through our internal resources,” Chakraborty said.
At present, DTDC has 13 warehouses across the country, out of which four were made operational only this year. The company also has 15-odd logistics hub, a part of which it rents out. The current capital expense (CAPEX) of DTDC in new space addition is $7,50,000, and the company reportedly invested $2.25 million towards adding new spaces in the last two years.
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