Reliance Industries Ltd (RIL), controlled and managed by billionaire Mukesh Ambani, is diversifying into the business of running container trains in an attempt to tap the growing market for moving cargo in the world’s second fastest growing major economy.
Reliance Logistics Ltd, an arm of RIL, plans to buy railway wagons to serve the needs of its parent’s various businesses including retail and to also serve other companies. “We will run container trains on our own by taking a licence from the railway ministry or tie up with an entity that has already secured a licence,” said an RIL executive familiar with the matter who did not wish to be identified because he is not authorized to speak to the media. Yogesh Kundra, vice-president, Reliance Logistics, declined comment on the issue.
According to the executive at the company, Reliance Logistics will finalize its plans regarding the container trains by the time the logistics park at Rewas port is ready.
Reliance Industries chairman Mukesh Ambani
Reliance Industries is part of the consortium developing this port. The all-weather port with a deep draught (usually a depth of more than 16m), located just 10km away from India’s busiest container port, the Jawaharlal Nehru Port in Mumbai, is being implemented in three phases with phase I costing approximately Rs4,000 crore. In two rounds of bidding conducted by the railway ministry since 2005, 13 private operators, including the Anil Ambani-run Reliance Infrastructure Engineers Pvt. Ltd and two state-owned firms—Container Corporation of India Ltd (Concor) and Krishak Bharati Cooperative Ltd—have received licences to run container trains between various ports and inland locations in the country.
Some firms, such as India Infrastructure & Logistics Pvt. Ltd, Boxtrans Logistics (India) Services Pvt. Ltd, Hind Terminals Pvt. Ltd, Gateway Rail Freight Pvt. Ltd and Innovative B2B Logistics Solution Pvt. Ltd, have begun operations.
RIL did not apply for a licence to operate container trains in the first two rounds of bidding, but it will look at this option in the next round, the executive said.
He claimed that the company was also approached by an existing licence holder, Delhi Assam Roadways Corp. Ltd, to collaborate in running container trains.
Executives at Delhi Assam Roadways could not immediately be reached for comment on Monday.
Reliance Industries has a joint venture with Concor, christened Infinite Logistics Solutions Pvt. Ltd, to move the raw materials it requires and finished goods between various places. “We have formed a joint venture company with Reliance which will start operating soon,” confirmed P. Alli Rani, executive director, finance, at Concor. Reliance Logistics will hold a 51% stake in the joint venture with Concor holding the balance.
The Reliance executive said the company thinks it makes business sense to operate its own container trains once the company’s retail business, Reliance Retail Ltd, moves up a gear in a year or two. “Together with other businesses, we will have more than 10 lakh tonnes of cargo to move to various parts of the country,” he added. It is investing up to Rs25,000 crore to set up retail stores across the country, spanning various formats.
RIL isn’t the only company interested in running container trains. French firm CMA-CGM that runs the world’s third biggest container shipping line is also exploring ways to enter the business.
The Marseille-based firm said it had held talks with the Adani Group to buy a stake in Adani Logistics Ltd that holds a licence to run container trains. “We did have a conversation with the Adani Group,” said Omar Sait, general manager and the head of CMA-CGM’s Indian unit.
But the company is yet to decide on its strategy.
If it chooses not to pick up a stake in Adani Logistics, CMA-CGM could pick up a licence in the next round of bidding. Bids to run container trains will now be an annual feature.