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Distribution Logistics Infra battles funding blues

Terminals at Palwal and Anekal are near completion but are unable to commence material operations without further investment

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Distribution Logistics Infrastructure (DLI), one of the largest private operators in the country in logistics space, is facing funding problems, which have hit the company's expansion projects that are near completion.

"The primary challenge for DLI has been funding constraints. As a result, very little construction progress was achieved during the period. The terminals at Palwal (National Capital Region) and Anekal (Bengaluru) remain close to completion but are unable to commence material operations without further investment," DLI promoter Infrastructure India Plc has said.

According to company officials, the demonetisation of high-value currency notes last year, overall economic slowdown and the implementation of goods and services tax put a speed-bump in DLI's business.

The rail-linked logistics company, fully acquired by the UK-based Infrastructure India, operates Freightstar branded railway-based logistics service. It has infrastructure like automated large-scale warehousing with multimodal transportation at several locations including integrated logistics park and liquid tank farm at Borkhedi in Nagpur, Maharashtra and also a fleet of over 140 trailers and more than 700 containers.

This year, the company had expected to complete projects like integrated logistics parks at Bengaluru and Palwal and the container freight station-linked free trade and warehousing zone in Chennai, Tamil Nadu.

"DLI is seeing increasing demand in the bulk cargo segment (but) funding constraints have overshadowed progress and with the inability to bring additional terminals on line, DLI has focused on streamlining and improving its existing operations," said a joint statement issued by chairman Tom Tribone and chief executive Sonny Lulla.

At Palwal as well as in Bengaluru, key infrastructure relating to export and domestic freight operations is almost complete.

The Bengaluru-headquartered company has been in talks to get funding to repay bridge loan taken from Cedar Valley Financial and working capital fund from Guggenheim Global Infrastructure, both Infrastructure India group companies, but the negotiations have been taking time.

The lack of funding further strains a company just recovering from the initial blows of implementation glitches of goods and services tax.

"While the impact of demonetisation on overall economic activity in India has largely recovered, some of DLI's key customers are continuing to transport reduced freight volumes. Growth is, however, picking up," the senior officials had earlier said in September.

To add to DLI's woes, rupee has depreciated significantly against British Pound since March.

Rupee weakened from a level of Rs 80.82 in March to Rs 87.44 before recovering to Rs 85.67 now.

BUMPS IN THE WAY

  • DLI has been in talks to get funding to repay bridge loan taken from Cedar Valley Financial and working capital fund from Guggenheim Global Infrastructure
     
  • With the inability to bring additional terminals on line, DLI has focused on streamlining and improving its existing operations
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