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

Jubin Mehta
12th Oct 2015
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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.

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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.

 

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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.

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