We can read news and studies as much as we want, but to get the real picture we have to go to the root level. We met Ashok Gupta of RCI Ltd, to get the inside story of the transport sector, We had an in-depth discussion about the Logistics sector which highlighted several underlying issues of the market. From highway robberies to toll tax woes, the discussion threw light on almost every aspect of the transport sector.
Q- Tell us something about Road Carriers of India.
A- Road Carriers of India, changed to RCI Logistics Pvt Ltd. in 2009, was established in 1994. It is our family business. My elder brother, Pawan Gupta started this company. Pawan was associated with transport industry before starting this business for 10 years, in Hyderabad. We have manpower of around 700-800 people, and over 1000 drivers. We have 75 branches, which are spread all over India. The company saw a turnover of Rs. 325 crore this year. We have warehouses in Chennai, and Nagpur with capacities of 10,000sqft and 5,000sqft respectively. We have a fleet capacity of 800 vehicles, fully owned. We specialize in containerization.
Q- What are the challenges in the Logistics sector?
A- Toll tax is a big issue nowadays and government is not doing anything. Toll tax rates are increasing every day. Toll tax has reached a surprising price of more than Rs. 5 per kilometer. This is an alarming issue which needs to be taken care of. Another issue is highway robberies; you can hear many cases on daily basis. Apart from these, another major challenge is shortage of drivers. TDS is also a major issue which has come up in front of transporters.
Q- …But TDS is refundable. Why is that a problem?
A- It’s not a child’s play to claim a refund from the government. And we have to block a significant amount of working capital in TDS. If I talk about my company, we have to pay nearly Rs. 6 lac every month, which sums up to be more than 7 crores annually and that is a huge amount for us. We can use this amount for several other things. If we make a claim for Rs. 7 crore we are not sure when we will get it. Meanwhile, we have to pay TDS regularly. This blocks many opportunities for transporters.Â
Q- You demanded a single toll tax around the nation, throw some light on this.
A- We have to give the total amount of toll tax to drivers in advance. And once the money is in driver’s hands he can run away with the money. And recovering money from drivers is nearly impossible. Toll tax also delays the journey. A lot of time is wasted standing in queues for toll tax. It also encourages fuel theft and other problems.
Â It also encourages fuel theft and other problems.
Q- You said driver shortage is a major issue, but as a businessman what initiatives have you taken to motivate the drivers.
A- Every dealer is taking steps on their levels. Owners have very thin margins nowadays; we cannot do much in this area. Government has to support the drivers. They have to take steps for the betterment of drivers.
Q- What kind of support should be provided by the government?
A- There are no programs for drivers on road. Drivers travel 2500-3000 km, but there are no shelter for drivers. Drivers are looted, murdered but nothing is done for them. Their ride should be comfortable. Because of obligations, drivers drive at night, which is not very safe.
Q- You were talking about highway robberies, and murders; there are provisions of zero FIR which can be lodged from anywhere.
A- Firstly governments inner dispute doesn’t resolve. For instance, If a vehicle leaves from Punjabi Bagh and gets looted in Gurgaon, the police department not register the case. Gurgaon police will say the truck belongs to some other area and we could not register the case, Punjabi Bagh police would say the FIR would be lodged in the area of the accident.
Q- How many such cases do you personally see, and how often?
A- Cases of drivers running with toll money are very common. It happens every other day. Other cases happen, but not very often.
Other cases happen, but not very often.
Q- Other major issue prevailing in the logistics sector is NGT’s proposed ban. What’s your take on that?
A- I am in favour of NGT’s ban. NGT should ban 10 year old vehicles. It will improve the standards of industry.
Q- But a large segment is troubled by this ban?
A- This is a one-time problem. Even I will lose nearly 60-70 vehicles. But it will average very soon. It is because of old vehicles that the freight rate has fallen so low. Those vehicles are already depreciated, bought at a cheap rate. Say, one old vehicle whose value stands at Rs. 5 lacs gets low freight rate, it can survive in the market as the capital is already low. On the other hand, if my vehicle is valued at Rs. 20 lac and I am getting the same freight rate, how can I survive? There is no competition. If I see my individual profit and loss, I will also lose nearly 70 vehicles because of this ban.
Q- Old vehicles consume more fuel than new vehicles. Is that also a problem?
A- It does not affect very much. On a route like Delhi to Mumbai, an old vehicle will use nearly 50-60 liters more than new one. This margin is negligible.
Q- There is no fixed criterion for freight fixation in the market. Do you think things will change if it gets fixed?
A- Yes there is no set criterion. Demand and Supply determines the freight rate. Many times we quote rates to parties and they revert saying that you don’t have any idea about the market. This happens because there are depreciated vehicles out there providing ridiculously low freight rates. And customers don’t care if the vehicle is new or worn out. But the owner of new vehicle is unable to pay EMIs of their vehicles on that rate.
But the owner of new vehicle is unable to pay EMIs of their vehicles on that rate.
Q- GST is also in news for a long time, what is your take on it?
A- There is nothing certain about the GST. Commenting on this would be inappropriate. There are just discussions and speculations. Nobody has a clear picture of this tax.
Q- What do you think about the proposed entry tax by Delhi government?
A- The entry tax by Delhi government is completely wrong. If the government Â wants transporters to avoid Delhi, they should come up with some good alternatives. They should work on the KMP highway. It will automatically divert traffic away from Dlhi. Government is giving benefits to poor, but making it difficult for others.
Q- What is your companys USP?
A- We specialize in containerization. We deal in multimode transportation. We are indulged in many sectors at once. We deal in automobile, FMCG, Public sectors, Engineered goods, white goods, perishable goods and many more. We have seen a continuous growth rate from 1994.
Q- What is the most profitable sector for you?
A- There is not much difference in the profit margins, but generally speaking, FMCG market is more stable. There is a continuous flow of demand and supply in this sector, which makes it a bit more preferrable segment than others.
There is a continuous flow of demand and supply in this sector, which makes it a bit more preferrable segment than others.