Interviews

Tech-enabled Solutions and Growth Prospects: Stellar Value Chain Solutions’ Journey

CXOToday has engaged in an exclusive interview with Mr. Amitabh Singh, Chief Growth Officer, Stellar Value Chain Solutions

 

  1. Tell us about your company Stellar Value Chain Solutions?

Stellar Value Chain Solutions is one of the largest tech-enabled 3PL warehousing and distribution solutions provider. We have a pan-India Grade A warehousing footprint spanning 16 million sq ft of space across 21 major production and consumption centres.

Technology has always been the bedrock of every service that is created for the customers of Stellar. Proprietary tools have been built to consistently enhance the service levels to customers at different stages.

Stellar has built its service capability to cater to:

  1. Consumer (Fashion, Retail, Durables, CPG)
  2. Automotive & Industrial sectors and
  3. E Commerce

All the services are aimed at partnering customer’s growth by reducing cost thereby increasing profitability, enhancing cash flows, and improving their service levels to their consumers.

  1. How do you assess the opportunities and challenges in cold supply chain?

The cold chain industry has a lot of potential to grow and an urgent need for it as well. The major requirement for cold chain is in the dairy, meat, poultry & fruits & pharma sector. India is the world’s largest producer of milk and second largest producer of fruits and vegetables. The production of seafood, meat, and poultry products happens in India. However, almost 1.3 billion tonne or 33 % of total food produced is lost due to poor cold chain infrastructure. Having said there is tremendous potential and the government is also encouraging the industry by taking measures like Pradhan Mantri Kisan Sampada Yojana to drive integrated cold chain projects.

Challenges in cold chain sector

  • Extremely fragmented market with over 90% unorganized market
  • Cost of power is very high resulting in higher storage cost
  • Power disruptions
  • High transportation cost because of temperature sensitivity

At Stellar, we have built a strong repertoire of customers across categories providing muti temperature warehousing and transportation solutions. The management team at Stellar come with diverse industry exposure and therefore understand the finer nuances of the business which is leveraged to provide solutions to our customers.

  1. How do you see growth opportunities in contract logistics?

While the overall warehousing business is expected to grow at 15 %, the organized 3PL is expected to grow at 35 %.

3PL players like Stellar are helping bring down the overall cost of supply chain by providing scalable, flexible, and tech enabled supply chain solutions. More and more companies are now exploring possibilities of outsourcing the function by partnering with 3PL players like us.

With a pan India Infrastructure, deep understanding of process, strong pan India team, phenomenal execution capabilities, tech enabled industry wise solutions and learning from operations across sectors, we at Stellar are able to increase the efficiency, enhance productivity in the supply chain of our clients resulting in reduction in their overall cost.

At Stellar, we are driven by our DNA of Thinking Big. We are one of the fastest growing 3PL companies of scale and foresee huge growth momentum in the years ahead.

We operate 16 mn sqft warehousing space across 21 consumption and distribution centres and had acquired 3 logistics companies and offer integrated warehousing and transportation solutions. We are targeting 50 mn sqft warehousing space in next 4 years.

  1. Can you share your views on the concept of Green Logistics and EV adoption?

As per the Paris agreement of United Nations, emissions need to be reduced by 45% by 2030 and reach net zero by 2050. India has set for itself a target of net zero greenhouse gas emissions by 2070. We have a target of 30@30, which is 30 % electrification of the country’s fleet by 2030.

Economic growth is resulting in warehousing expansion across India which is also a source of greenhouse gas emissions because of high energy consumption primarily because of cooling, heating, lighting, air-conditioning, inventory wastage.

At Stellar, we are adopting all necessary measures to minimize emissions.

  • Rainwater harvesting. We had initiated it at locations in order to ensure we optimise the natural resource.
  • We recycle and reuse water at our warehouse for washrooms and horticulture purposes.
  • We have increased the stack height of our DG sets to reduce the effect of pollution caused around the place.
  • Reduced the carbon footprint, via an optimal route plan for employee transportation.
  • Rented Battery powered MHEs instead of fossil fuelled MHEs.
  • Reuse (repair) rental pallets
  • Efficient packaging & recycling of scrap
  • Efficient disposal of DG effluent
  • Use of low emission/ energy efficient HVACs
  • Skylights created in warehouse to reduce the use of lights during daytime.
  • We have also started the process of solar panel installation at our warehouses to reduce our dependence of external power sources and maintain consistency of operations during power fluctuations.
  • Land Usage/ Deforestation: All our properties are compliant and not created by deforestation.

Today, transport accounts for 15% of total global CO2 emissions and there is an urgent need to shift to EVs. Government is taking all measures to drive EV manufacturing and adoption in India. It has proposed an investment of USD 631 million for FAME (Faster adoption of manufacturing of electric vehicles). At stellar we are already working on the road map to start the transitioning to EV for our distribution service offering.

At Stellar Value Chain Solutions, we are sensitive to the significance of sustainability and adaptability for green initiatives to make our planet a better place for the generations to come and so it is only natural that we are at the forefront of the initiatives.

  1. How do you see the change in trend from Grade A warehouses to fulfilment centres? What is your take on the omnichannel model?

Clients are looking at flexible and scalable tech enabled supply chain solutions at a reduced cost and this has resulted in their requirement of complaint large Grade A warehouses which can cater to shared spaces and infra.

Stellar was a pioneer in creating Built-To-Suit Grade A facilities pan India. We cater to supply chain requirements of companies across Consumer, Auto & Industrial and E-Commerce space and we have witnessed a growing requirement for Grade A warehouses across Tier 1 & Tier 2 cities.

Grade A stock in India stood at 134 mn sq.ft. in 2021 translating to a 3-year CAGR of 27% from 66 mn sqft in 2018. The Grade A share in the stock has also increased from 39 % in 2018 to 48 % in H1 2022

Benefits of Grade A warehousing

  • Fully compliant with all necessary safety requirements.
  • Enough space for vehicle parking and turning radius.
  • FM2 flooring with dock levellers
  • Clear height of anywhere between 11 to 13 meters
  • Thermal insulation
  • Advanced fire control systems such as sprinklers & fire hydrants
  • 6 air changes/ hr

As per research reports, average size of the warehouses has doubled from 80,000 in 2016 to 160,000 in FY21 and the cubic capacity has tripled from 2.4mn sqft to 6.4mn sqft

Grade A warehouse results in reduction of storage cost. While the overall rent for Grade A warehouse is higher, there is substantial saving in the per pallet rental because of the higher cubic capacity utilisation.

Customers’ expectations have also changed in recent years mostly influenced by delivery speeds of e-commerce companies, from weekly delivery to next day to same day to 10 mins.

With the reducing time to market, companies are trying to get as close to the customers as possible resulting in growth of fulfilment centres and dark stores.

A fulfilment centre (FC) is a warehousing facility where inventory is received, put away, and stored until it’s ordered. When the fulfilment centre receives an order, we pick, pack and ship the product to the end customer.

Many companies are opening dark stores which are smaller fulfilment centres within the city for quick servicing of orders. Dark stores manage limited SKUs and have much lesser delivery time.

  1. Can you tell us about the company’s future plan?

Stellar was founded with the aim to unlock value in the Indian economy by modernising the supply chain of the nation and propelling the economic growth.

We remain true to our vision and are make strides in the direction with ambition to scale upto 50 mn sq ft of modern warehousing space across 60 logistics parks with a distribution capability to support our endeavour. We have a forward outlook and will keep adding new categories through capabilities that we build through knowledge and expertise.

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