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Reforms to India's GST prompts Patel Integrated to open 10 warehouses

PATEL Integrated Logistics plans to invest INR80 million to set up 10 warehouses over the next two years with a combined space of one million square feet in the key traffic regions across India, to take advantage of the government's newly introduced goods and services tax (GST) for the logistics sector.

According to chief financial officer Mahesh Fogla, the first warehouse is being set up in Bengaluru for which the company has already taken land from the Karnataka Industrial Areas Development Board on a 99-year lease. "We will invest around INR10 million in this facility which will be ready in a few months," he said reported the Times of India.

In the first phase, more warehouses will built in Ahmedabad, Chennai, and Gurgaon this financial year, while the second phase, which will begin next year, will see warehouses opened in Pune, Mumbai and Hyderabad.

Currently, the company has only one warehouse in Chennai. Mr Fogla said the new warehouses will be located on two to three acres of land, and will also be on long-term lease ranging from 40 to 99 years.

When asked about the savings deriving from GST, Mr Fogla said the new tax regime that dismantles border check posts will ensure at least a 30-40 per cent rise in truck trips per month. At present a truck makes 10 trips a month to Delhi from Mumbai, meaning that with the GST trucks can make 13-14 trips.

"Similarly, the savings on fuel will be around five to 10 per cent. So we see GST adding at least INR3 million to INR4 million savings to us on a monthly basis," Mr Fogla said, adding the company has already started hiring more drivers to meet the demand.