How ColdEX, a cold chain logistics company, pulls in a top line of INR 200 crore annually

Gaurav Jain is a gritty entrepreneur. He entered the world of business in 1999 by joining Swastik Roadlines, a trucking company setup by his father along with two others. Started nearly three decades ago, Swastik was well established but its business majorly relied on one big client – JK Tyres. When that client went away, the company suddenly hit a wall and that is when young Gaurav took the matter in his hands. He found an opportunity with cold chain logistics and made a huge bet in that direction. Cadbury was their pilot client and that deal helped them turn the tide. Over the years, Gaurav transformed the company from a dry logistics to a cold chain business. Swastik Roadlines started operating under the brand name ColdEX Logistics from 2007.

Today, ColdEX is a leading integrated cold chain logistics company providing end-to-end customised supply chain solutions to client. ColdEX serves leading brands, catering to almost all industries from QSR chains, confectioneries, food processing units, pharmaceutical, meat, poultry, fruits and vegetables, etc. Presently, ColdEX has six warehouses (five leased, one owned) and is in the process of increasing its cold storage capacity from 6,000 pallets to 30,000 pallets over the next 18 months. “We have a large reefer fleet of over 825 trucks and 1,500 drivers. To ensure last mile delivery where products are transported from distributors to consumers via two wheelers, ColdEX is augmenting its fleet of scooters from 10 to 400,” says Gaurav.

Since 2007, ColdEX has bagged some of the biggest customers in the business, and provided logistical support and distribution services to well-known international brands operating in India, including Subway, Domino’s Pizza, Starbucks, and KFC. “Last year, we got the first big client for integrated services in the QSR sector: Yum! Brands, which operates KFC, Pizza Hut, and Taco Bell in India,” says Gaurav. For KFC, ColdEx manages daily pickups from 80 vendors and delivers frozen goods to six Yum! Brands distribution centres in a -18°C environment. Apart from QSRs, ColdEX also has presence in the field of pharmaceuticals, fruits, and the confectionery industry with clients like Nestlé India, Hershey India, Amul, Kwality Wall’s, and GlaxoSmithKline. “Today, we have a top-line of about Rs 200 crore, and sales are growing at 35 per cent annually in the last five years,” says Gaurav.

India’s temperature-controlled logistics industry is estimated at Rs 12,000–15,000 crore and is estimated to grow at a minimum 20 per cent year-on-year over the next three to five years. One of the drivers of this is the increase in the consumption of perishable goods that are sensitive to temperature. The Government of India has recognised the need to nurture the cold chain industry and has introduced several incentives to achieve its objectives. The Budget 2011–2012 provided infrastructure status to the cold chain sector. This opens up the sector for perks like viability gap funding. The Budget also exempted air-conditioning equipment’s and refrigeration panels used in cold chain infrastructure, including conveyor belts, from excise duty. It also extended excise duty exemption to conveyor belts and equipment used in cold storages, mandis, and warehouses. These government initiatives has further added impetus to the sector.

But like in all businesses, there are challenges as well. The cold chain logistics segment is a capital-intensive business requiring investments in equipment, vehicles, temperature controlled warehousing, etc. “Furthermore, the business requires strict temperature adherence and there is a huge energy dependence. The cold chain business in India also faces many of the same issues challenging the entire supply chain business globally: serving the market, driving out costs, becoming more strategic, and addressing capacity and resource constraints, all while managing the exacting needs of the sector’s precious cargo,” says Gaurav.

ColdEX is a pioneer in the space in India and brings in a lot of experience. “We have mapped out a growth plan for the next five years, one that could easily propel us into a Rs 700-crore business,” says Gaurav. ColdEX plans to create a plug and play model in the cold chain logistics business, which can then be sold to any QSR that wants to set up shop in the Indian market. ColdEX already provides services to five of the six major international QSR companies. And according to the company, there are at least 40 international players who are looking at the Indian consumption story seriously.

Currently, while its revenue is based on a business-to-business model, ColdEX wants to reach the end customer (the people who eat the burgers and fries) as part of its integrated services. ColdEX should be in a position to reach the city’s narrow lanes and inner roads where the end customer or retail shop is located. “If we can crack this last link in the supply chain, we will target e-commerce companies and offer a separate service to fast food chains,” says Gaurav. ColdEX is a great example of a traditional Indian business that can leverage technology and keep up with the times to give the newly venture funded startups a run for their money.

Shipdesk is using technology to make logistics simple, scalable and smart

E-commerce logistics has been growing in sync with the online retail industry in the country. It is estimated that online retail will be an USD 18-billion industry in India in 2018 and e-commerce logistics will be a USD two-billion industry in 2019.

In the logistics segment, companies have been experimenting and bringing new methods and technology to make the process smoother. Logistics is always a sub-segment in e-commerce and fraught with inefficiency, but Shipdesk claims it is all about efficiency of logistics through technology.

Launched in December 2014 by Lipjo Joseph and Sree Krishna BV, Shipdesk is a logistics marketplace providing online merchants with a cloud-based shipping solution. It’s using technology to aggregate demand and services on a real-time basis.

“When an online merchant makes Shipdesk its partner, all the information regarding the online orders placed with the online merchant is made available in their cloud and they immediately dispatch their team for shipping. It simplifies shipping and accelerates profits for merchants,” says Lipjo, adding that they offer the cheapest shipping rates..An easy plug-in integrates with marketplaces and e-commerce platforms to allow order, tracking and fulfillment data to populate in real time across all systems. This solution helps companies save time and money on shipping while reducing postal errors and keeping buyers informed, yielding loyalty and better seller feedback.

The platform claims to have more than 550 users and the number is increasing with around 150 merchants being added every month. Its clients include marketplaces like Zingohub, Frekart, Budli.in, among others and e-commerce sites such as Dailycatcher, Nivysfashion, Kamalsbotique, Zarasbotiques and online sellers who sell their products in various online channels. The company has been growing at the rate of 40 percent month-on-month.

An investment of around Rs one crore has been made into the venture. The capital was spent mostly on resources which includes sales, marketing and technology. Its focus is presently on online resellers and it would be addressing the SME segment soon.

The platform works on two revenue models, namely margin on shipments and subscription revenue. “So far, our annualised revenue has reached more than Rs one crore as we are yet to complete a year,” says Lipjo.

Challenges and growth prospect

Capacity, lack of uniform demand and inefficiency are some of the major challenges in the logistics industry.  However, optimisation and reducing manual intervention can solve many of the problems. “We are continuously investing in these areas and our growth adds credibility to the solution,” says Lipjo.

On growth prospect, he adds there are more than 10 lakh online sellers in India and each is a potential market for Shipdesk. This solution can be expanded beyond the country in other geographies. Besides, there is huge untapped SME segment where unorganised logistics players play a big role. All these markets can be tapped for the growth.

Market and competition

According to a recent logistics report by Singhi Advisors, a city-based boutique investment bank that focusses on deals on the space, the logistics industry has been growing at a CAGR of over 16 per cent over the last five years, despite it being highly fragmented with organised players comprising only six per cent. Globally, the report says the logistics industry was a whopping USD four-trillion giant in 2013, representing 10 per cent of the global GDP.

The players in the segment includes logistics companies like Fedex, Bluedart, Delhivery, Ecom Express etc., marketplace logistics companies like eKart, Gojavas, among others and many localised courier companies.

On competition, Lipjo says that since this market is evolving there is room for every competition. The growth of this industry ensures that each player needs to pick his/her core area and works towards improving the same. He has a roadmap to address these challenges and any new competition would make this industry more stable.

The platform has recently come out with mobile app, and analytics will be playing a big role in its product roadmap.