SKIL Infra plans to invest up to Rs5,000 crore in the logistics segment

The Nikhil Gandhi-promoted entity has planned investments of around Rs5,000 crore in the logistics segment in the next five years

SKIL Infrastructure Ltd (SKIL Infra), which plans to come out with a public issue soon, is looking at investments of up to Rs5,000 crore in the logistics segment in the next five years. The group plans to emerge as a complete door-to-door multi-modal logistics company.

"We were the first private players in the Indian railway arena and now we plan to become a multi-modal logistics firm providing complete door-to-door services," said Nikhil Gandhi, group chairman and executive chairman, SKIL Infrastructure.

The group was responsible for the first public-private project with the Indian Railways involving conversion of metre gauge to broad gauge.

The group plans an investment of around Rs1,500 crore to Rs2,000 crore in the next three years for horizontal expansion in the logistics segment. Going forward, it also envisages scope for vertical expansion investments of up to Rs3,000 crore.

"Horizontal and vertical (expansion) put together, there is an opportunity to invest up to Rs5,000 crore in the next five years," said Mr Gandhi.

Currently, the group is developing logistics facilities at two locations-Navi Mumbai and Jhansi. The facilities are being developed on the hub-and-spoke model. In the next five years, SKIL plans to have around 60 such hubs all over India.

Apart from developing these hubs, the group is also actively looking at the new rail freight privatisation schemes announced last week. Indian Railways had announced entry of private players in the freight terminal and train operations business through two schemes-PFT and SFTO. The private freight terminal (PFT) segment will allow private players to operate rail freight terminals, while the special freight train operator (SFTO) scheme facilitates private players to own and operate freight trains for movement of certain commodities. SKIL is closely pursuing both these schemes.

Mr Gandhi is optimistic over the growth prospects in the logistics segment.
"In the next ten years, this sector will grow from $80 billion (currently) to a market of $200 billion to $300 billion. There will be only 10 to 15 large players who will occupy around 90% of this space. Experience will help us become a strong player," he said.

The SKIL group soon plans to raise around $300 million through the initial public offer (IPO) route. A few months back, the group purchased a significant stake in Pipavav Shipyard from engineering giant, Punj Lloyd.

The group also plans huge expansions in the power and port sectors. Mr Gandhi in one of his earlier interviews (see to Moneylife had detailed plans for setting up thermal power capacity of up to 1,320MW. The company also plans two ports, one each on the western and eastern coasts. This infrastructure group is looking at partnerships with international players for its expansion plans.


Where is the hotel industry headed?

Occupancy rates are going up, but average revenues per room seem to be witnessing a fall

Declining room rates have been a concern for hoteliers across the country. Though occupancy rates are going up, this is not having a direct impact on the average revenues per room in the major metros and other tourist destinations across the country.

The International Air Transport Association (IATA) has said that it expects airlines to earn $2.8 billion in 2010 on a global basis. IATA is also bullish on the prospective growth in demand from carriers in the Asia-Pacific region.

This means that inbound travel should not be severely impacted as far as India is concerned. But according to a research report released by CRISIL Research, average room rents (ARRs) across the country have fallen by 2.7% year-on-year (y-o-y) to Rs8,300 in April 2010. The report also states that occupancy levels have marginally gone up on a y-o-y basis to 67% from the 60% recorded in April 2009. All these figures are for the premium hotel segment in India.

Shreenath Shastry, national director, hospitality and leisure, Knight Frank (India) Private Limited, told Moneylife, "Declining ARRs are not a nationwide phenomenon at this stage. It is seen in cities which have been hit by oversupply of newly-developed hotel rooms combined with a slower pick-up of demand. Secondly, the decline has to be seen in view of the fact that in 2007, ARRs had reached astronomical proportions. Now if ARRs have declined in most cases, it is merely a correction and not a reflection of a slowdown in the business. But the business today is back to earlier levels." Mr Shastry said that this correction is mainly visible in cities like Pune, Hyderabad and Jaipur where there has been an oversupply of hotel rooms.

As the CRISIL report states, "Pune witnessed the steepest decline in ARRs, as supply additions forced hoteliers to reduce ARRs by 13% (y-o-y) to Rs5,600 in April 2010."

Commercial travel (despite the positive IATA projections) might still take a backseat as many corporate houses are going after their travel budgets with a vengeance. After all, with the latest developments in teleconferencing technologies, it makes little sense to fly down top executives to exotic locales-and falling exchange rates in currencies like the euro are also not helping either.

However, destinations that depend on tourism might not bear the brunt of any possible slowdown. Ramesh Ramanathan, managing director, Mahindra Holidays & Resorts India Limited seems positive about the leisure space, "Our occupancies are over 75% and are to a great extent immune to changes in economy-or the traffic of domestic and international tourists. If analysts speak of (a decline in room rents in) major cities, the reference is possibly to business travel and not leisure."

Sridhar Chandrashekar, Head, CRISIL Research said, "ARRs in leisure destinations such as Goa and Agra recovered to some extent from their low levels last year, increasing by 5%-10% in April 2010."

According to Thomas C Thottathil, head-corporate communications, Cox & Kings India Limited, "The April-June quarter witnesses a decline in hotel rates in the metros as we are in the midst of the holiday season and corporate travel is down. However, this quarter is a strong period for hotels in tourist destinations such as Goa and places in the North-East as this is where people travel for holidays. So, it is natural that there has been a decline in room rates in metros." He also added, "Come 15th June, the occupancy in metro hotels where the big chains are located will witness an increase in demand and the rates would firm up once again."

Developers are also monitoring the situation due to credit issues and astronomical real-estate prices.

According to industry analysts, in the months to come, the hospitality industry is expected to report a marginal improvement in occupancies. ARRs, however, will still remain under pressure. Mr Shastry seems positive about the industry's growth, "Timing of new launches (of hotels) and continuing political stability will be the key issues impacting growth in the Indian hospitality industry. Overall, I would rate the outlook in 2010 to be positive."

Neha Pathak from Kisan Ratilal Choksey Shares & Securities Private Limited told Moneylife that hotels will post better growth in 2010, "Going ahead, we feel that the hotel industry will surely improve."


IRDA bans over 4,000 corporate agents

The IRDA website, which displayed the names of corporate agents that were banned, has cautioned insurance companies and general public not to transact any insurance business through them

The Insurance Regulatory and Development Authority (IRDA) has said that as many as 4,261 corporate agents, out of the total 7,000 in the country, are not authorised to sell policies from March 31, this year, reports PTI.

The IRDA website, which displayed the names of corporate agents that were banned, has cautioned insurance companies and general public not to transact any insurance business through them.

The list of banned agents includes HDFC Bank (General Insurance), Oswal Consultancy, India Bulls Insurance Advisors Pvt Ltd in Mumbai; Prosoft Technologies and Tangent in Bangalore; Rishab Investments and Cosmos Financial Services in Chennai; Pact Brokerage and Atluri Travels in Hyderabad.

"These corporate agencies were due for renewal on or before March 31, 2010 but have not been renewed till date. All these agency licences have been withdrawn," IRDA said in a circular on Tuesday.

According to a senior IRDA official, the policies purchased after March 31 and till date could be valid and the full implications are being worked out.

The business is likely to hit as almost all life and general insurers including Life Insurance Corporation of India engaged these agencies.

The IRDA is in the process of verifying the quantum of business done through these agencies after March 31.



Vishnu @ beautiful minds

7 years ago

shocking to hear that the big shots like HDFC, oswall and india bulls are in the list..

What will be the fate of policies that was to be issued to them post march?

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