GST- a boon for CWC
Over the years Central Warehousing Corporation (CWC) has diversified its activities from food grain storage to handling and transportation and also gained from expanding e-commerce business, says Harpreet Singh, MD, CWC in an interaction with SMART AGRIPOST.
- What has been the performance of CWC over last six decades of its journey?
Ans: CWC was set up for providing scientific storage facilities for food grains, other inputs and some notified commodities. It initially started with seven warehouses with storage capacity of 7000 tonnes. With expansion of economic activities and increasing needs, CWC has been augmenting its storage capacity by construction of its own godowns and also by hiring storage worthy godowns. Now, we have 448 warehouses with storage capacity of 102 lakh MTs.
CWC also provides complete logistics support including facilitating export and import operations.
CWC has diversified its activities and is now operating a large network of general warehouses, bonded warehouses, industrial warehouses, Container Freight Stations (CFS) / ICDs and Air Cargo Complexes. Since 2005-06, we are also running Container Trains between Loni-JNP, Loni-Mundra and Loni–Pipavav sectors. The latest diversification has been in the area of the Integrated Check Posts (ICPs) where CWC is managing three ICPs on behalf of Land Ports Authority of India (LPAI) i.e. ICP, Attari (Punjab), ICP, Agartala (Tripura) and ICP, Petrapole (West Bengal).
In the financial year 2015-16, CWC achieved a record turnover of Rs. 1640 Crore with Profit before Tax of Rs.284 Crore and Profit after Tax of Rs. 198 Crore.
Q. CWC provides logistics support primarily to the agricultural sector which is not a very lucrative business segment. How challenging it has been from business perspective?
Ans: Historically, CWC has been providing storage facilities for storage of foodgrains including for the Public Distribution System (PDS). Almost 50 to 60% of CWC storage capacity is utilized for storage of food grains every year. The food grains are the low cost commodities and as compared to industrial commodities, their storage rates have to be lower. The profit margin on storage of foodgrains is nominal and there has always been a pressure for reduction of costs. We have over a period of time curtailed our establishment and other administrative costs. CWC also diversified into more profitable areas and adopted the scientific warehousing techniques for better performance.
Q. What are your future plans?
Ans: At present, Corporation has 448 warehouses with a storage capacity of 10.2 million tonnes. We are going to add storage capacity of 1.09 lakh tonnes in the year 2016-17 and about 1.00 lakh tonne in the year 2017-18 with the cost of Rs. 132 crore and Rs. 112 crore respectively. The work of setting up of Private Freight Terminal at Nabha is also at the final stage of completion. CWC is also going for Silos. One facility with 50,000 MT capacities is being set up at Nabha. Feasibility Study for Silos at three places (Amritsar, Sriganganagar and Hanumangarh ) of upto 1,00,000 MT is also under way. We will further invest in Silos based on the opportunities available.
With e-commerce expanding in a big way in the country in recent years, we have also tied up and provided storage facilities to e-commerce companies like Amazon and Flipkart.
GST will give a big boost to CWC operations as the requirement for large storage space shall go up.
Q. Do you foresee more business opportunities with increasing e-commerce trade?
Ans: As already stated, we have made storage arrangements for e-commerce companies at selected centres. We are also making substantial expenditure for upgrading and modernizing of our warehouses to cater to the requirement of trade and industry. Our effort to partner with e-commerce companies, which is a sun rise sector, shall continue.
Q. You have now stepped into the area of clearing & forwarding, handling & transportation also. What has been response?
Ans: Now-a-days, besides storage services, customers also seek handling and transportation services. The corporation is providing handling & transportation services at its warehouses, wherever required by the customers. It is providing Container Rail Transportation services at selected routes i.e. between Loni to Jawaharlal Nehru Port (Navi Mumbai), Loni to Mundra and Loni to Pipavav. Further, transportation arrangements by road are also being provided to the customers as per their requirements for CFS.
Q. Cash less transactions and third party inspection of facilities are some of the emerging challenges. How you are prepared?
Ans: We have already geared up for making cashless transactions. Majority of our transactions are cashless already both on the payments and receipts side. The input service providers have also been advised to make cashless payments to their workers.
Further, in addition to a discount of 30% on storage charges to farmers, an additional discount of 5% is also offered for cashless transactions to farmers in order to encourage them cashless working.
Corporation has engaged services of Project Management Consultants for supervising and ensuring the quality of construction for major projects. We have an elaborate procedure for inspections, including inspection by in-house staff in the warehouses as well as outside to maintain quality. All our warehouses are ISO certified and this work is assigned to reputed Inspection and Certifying Agencies.
Q. What is your vision for 2017?
Ans: My vision for 2017 is to maintain CWC as an efficient public warehouse operator in the Country. We are committed to provide best services to the customers, better use of Information Technology, well maintained warehouses and reasonable storage rates. We shall continue to be known for high standards of food grain preservation. We shall explore new areas such as Silos for storage and remain as a pioneer modern food grain warehousing agency. We shall also extract maximum advantage from the implementation of GST, which shall change the warehousing requirements drastically from decentralized systems to centralized large warehouses. We shall strive to meet the requirements created by implementation of GST taking advantage of large storage spaces available with the corporation.