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THE GREAT INDIAN LOGISTICS OPPORTUNITY
FTWZs | Rail & Rail Infrastructure | Industrial & Distribution Hubs Forwarding | Supply Chain Technology & Management | Transport & Handling
INDIA’S GROWING CONTRIBUTION TO WORLD TRADE
INDIA’S GROWING MERCHANDISE EXPORTS
Export – India’s % contribution to world trade
2007 2008 2009 2010
%%
%%
%
%
%
%
% Growth of exports (2007-10)
INDIA’S GROWING MERCHANDISE IMPORTS
2007 2008 2009 2010
Import – India’s % contribution to world trade
%
%
%%
%%
%%
% Growth of imports (2007-10)
India’s world ranking in terms of importing globally produced merchandise moved from 18 to 13 during the period 2007 to 2010India’s world ranking in terms of exporting globally consumed merchandise moved from 26 to 20 during the period 2007 to 2010
INDIA & CHINA – A STUDY IN CONTRASTS
THE OPPORTUNITY OF INDIA
*PV: Passenger Vehicles
62%
28%
7%
2%
2005
Low
Middle
Upper Middle
High
49%
35%
13%
4%
2010
Low
Middle
Upper Middle
High
% of households across income brackets
19%
33%
32%
10%
2020E
Low
Middle
Upper Middle
High
Definitions:High: Above $10k Upper Middle: $5k-$10kMiddle: $2.5k-$5k; Low: Up to $2.5k
Low per capita consumption Demographic drivers India Opportunity
Paper (kg)
9
227
PV* (per 1000)
12
451
Toothpaste (gm)
127
500Steel (kg)
55
206
Copper (kg)
0.5
2.7
Aluminum (kg)
2
22
Cement (kg)
176
433
Per capita consumption
THE INDIAN BUSINESS EVOLUTION
1970 ONWARDS
KEEPING IT IN THE FAMILY
1980 ONWARDS
INDIA EMBRACES
TRADE
1990 ONWARDS
IT ENABLES INDIA
2005 ONWARDS
THE ERA OF INFRA
2012 ONWARDS
WHAT’S NEXT?
2000 ONWARDS
A VOICE TO THE PEOPLE
GDP growth from 2012 assumed at 6% p.a.
MAJOR SUCCESSES OF FTWZ – ‘game changer for global economies’
Source: PWC report for JAFZA FTZ
ATTRACTIVENESS OF JAFZA
EMPLOYMENT IN JAFZA AND TENANT COMPANIES (2006)
JAFZA contributes over 26% of Dubai’s GDP and generates 160,000 direct jobs by servicing over 6,400 companies from the zone and contributes to 25% of Dubai Port’s container traffic
JAFZA
Singapore FTZ’s has over 7,000 companies operate through these zones. Due to FTZs this island nation has become the gateway to Southeast Asia & a Global Distribution Hub for international companies
SINGAPORE
WAIGAOQIAO
Waigaoqiao FTZ in Shanghai has over 9,300 companies registered in the zone, including 135 of the Fortune 500 companies. From an economically backward country in 1970 to its gigantic success, FTZs have been the single most critical macroeconomic factor for China’s rise
6.8%
10.8%
13.1%
14.0%
16.2%
22.2%
46.7%
70.1%
Easy access to labour supply
Infrastructure offered by Jafza
Proximity to suppliers
Proximity to customers
Jafza 'brand name' and reputation
Proximity to Jebel Ali Port
50 year zero tax guarantee
100% Foreign Ownership
0
20000
40000
60000
80000
100000
120000
1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005
THE BIG THREE REASONS AS TO‘WHY FTWZ’ FOR INDIA
While Consumption in India will grow in real terms from USD 378 billion presently to USD 1.56 trillion by 2025 a fourfold increase, reality is that :
India ranks 13th in terms of importing world products, consuming just over 2% of globally produced merchandise, but growing @ 35%
4.1X(source: Mckinsey Report)
While by 2020, India is projected to have an additional 47 million working population, almost equal to the total world shortfall, with an average Indian age of 29 fuelling our ability to become a manufacturing mecca of the world, reality is that:
India ranks 20th as per WTO in terms of exporting world products contributing just over 1.4% of globally consumed merchandise, but growing @ 31%
India's container throughput in CY10 was around 9 million TEU's, as compared to Dubai (12 million), Singapore (28 million) & China (163 million)
Indicating zero penetration to the Value Addition, Hubbing and Re-Export market leveraging our cost and skill arbitrage
INDIA INCOMPETENT AS A REGIONAL HUB
The extended potential will also generate three times additional indirect revenues due to increased supporting activities and will contribute USD 22 billion (INR 110,000 crores) to India’s GDP
BUSINESS POTENTIAL FOR INDIA
Consolidation / De-consolidation cargo business constitutes approximately USD 12.47 billion to the GDP and 19.2 million TEUs
Thus, if India realizes 30% of Dubai’s & Singapore’s cargo volumes it will translate to an additional USD 7.36 billion (INR 36,000 crores) as a direct contribution to India’s GDP & increase container volumes at Indian ports by 7.56 million TEUs
Consolidation/ De-consolidation constitutes approximately USD 12.08 billion to the GDP and 6 million TEUs
30% of this potential translates to USD 3.62 billion to the GDP and 1.8 million TEUs for INDIA
30% of this potential translates to USD 3.74 billion to the GDP and 5.76 million TEUs for INDIA
To/FromSingapore
To/FromDubai
ABOUT FREE TRADE & WAREHOUSING ZONES (FTWZ)
WHAT IS IT ?
GOI Introduces the Free Trade & Warehousing Zones Policy, as part of Foreign Trade Policy (FTP) 2004-2009 Governed by the SEZ ACT,2005 & SEZ Rules,2006 Warehousing zone designated as foreign territory within India
WHAT IS IT INTENDED FOR?
To make India into a global trading hub like China, Dubai and Singapore
ACTIVITIES ALLOWED WITHIN AN FTWZ
Packing Labeling Strapping CratingBubble wrapping
Tagging Painting Cutting Bagging
Quality Assurance
Repairs & Maintenance
Cartonization RefurbishmentPalletization Consolidation
WashingStorage Handling Transportation Documentation Bottling
BARRIERS TO ENTRY FOR DEVELOPING & OPERATING FTWZs IN INDIA
Min 100 Acres contiguous land with
100,000 SqMbuilt up area at strategic locations
Approvals from State & Central Govt (Informal &
Formal Approval,
Notification)
FTWZ in a sector specific
SEZ cannot cater to any unit outside the sector
specific SEZ
Expertise in developing &
operating FTWZs and in
logistics & supply chain
activities
Integrating hard and soft
logistics infrastructure to be able to
service clients pan-India
Offering ‘one throat to catch’ end-to-end unified logistics & supply chain services to global customers
LAND APPROVALS RULES EXPERTISE SERVICE CAPABILITY
ENTRY BARRIERS BUSINESS SCALABILITY BARRIERS
INDIA’S FIRST – ARSHIYA’S FTWZ NEAR JNPT (OPERATIONAL)
24x7 On-Site Custom Clearance House
State-of-the-Art Infrastructure with World class Safety, Equipment & Maintenance Facilities
Connectivity to our Pan-India Rail Network accelerating distribution through aggregation at strategic locations
State-of-the-art ICD/CFS facility with superior Safety and Hazardous cargo handling capacity of 10,000+ containers including reefers
165 Acre State-of-Art Facility 24km from JNPT Port featuring:
MUMBAIFTWZ MASTER PLAN
FTWZ – BENEFITS TO CUSTOMERS
FOR IMPORTS
§ Flexibility towards end-
distribution in India
§ Duty deferment benefits (freeing
up working capital)
§ Quality control capability prior to
duty- payment
§ Exemption on SAD, VAT & CST on
imports through FTWZ
§ Hassle-free re-export regulatory /
duty implications
§ Reduced buffer stocks
§ Service Tax exemption on
services availed; including
transportation inside India
§ Lowered product costs
§ Foreign exchange transaction
capability
FOR EXPORTS
§ Products from India entering the FTWZ
are treated as deemed export providing
immediate benefits to suppliers
§ Local Tax Exemption (eg. CST, Sales Tax,
Excise & VAT) on all activities conducted
inside the FTWZ
§ Export quotas able to be met for
companies exporting into FTWZ
§ Increased efficiency through lowered
reverse logistics through quality control
before dispatch from India
§ Foreign exchange transaction capability
§ Increasing supply chain efficiencies
(forward & reverse) while enhancing
capital cash flow
§ Service tax exemption on all activities
conducted inside the FTWZ including rental
& labour
§ Exemption from custom and stamp duty on
products imported into FTWZ; meant for re-
export out of India
§ Income tax exemption on profit where
applicable
§ Hassle-free re-export process
§ Permission of 100% FDI for the set-up of
units by the unit holder of the FTWZ
§ Ability to leverage India’s cost, skill &
geographic positioning advantage as a hub
for regional/global distribution post value
optimizing activities
FOR RE-EXPORTS
FTWZ - UNIQUE BENEFITS FOR IMPORTS
Flexibility towards end distribution in India
Duty deferment benefits (freeing up working capital & increasing sales )
Quality control capability prior to duty- payment
Exemption on SAD, VAT & CST on imports through FTWZ
Hassle-free re-export regulatory /duty implications
Reduced buffer stocks
Service Tax exemption on services availed; including transportation inside India
Lowered product costs
Foreign exchange transaction capability
GAME CHANGER BENEFITS OF FTWZ
CASE STUDY BENEFITS OF IMPORTING PRODUCTS INTO INDIA
THROUGH THE FTWZ (DEEMED FOREIGN TERRITORY)
GLOBAL AUTOMOBILE MANUFACTURER’S CURRENT SUPPLY CHAIN
International Suppliers
International Suppliers
International Suppliers
International Suppliers
International Suppliers
IndianPorts
India Manufacturing Plant
Dealers in India
Dealers in India
Dealers in India
Dealers in India
Dealers in India
Supply of spares and parts to Dealers in India for after sales and service
Rejection after duty payment
Storage of Spares, Parts and Components for after sales & service post duty payment
Rejection after duty payment
Duty paid storage of spares implicating higher working capital of the supply chain implicating higher cost of product
Limitations in volume of storage increasing lead time for customer delivery
Higher lead time for client delivery creating customers dissatisfaction (unauthorised spares in the market)
Quality control post duty payment increasing hassle for re-export and therefore cost
ARSHIYA’S SOLUTION THROUGH FTWZ
International Suppliers
International Suppliers
International Suppliers
International Suppliers
International Suppliers
FTWZ
Dealers in India
Dealers in India
Storage of Spares, Parts and Components for after sales & service without duty payment
Rejection without duty payment
Regional distribution of spares and parts enabling the income tax exemption on the re-export of imported spares and parts
Rejection without duty payment
International Dealers
International Dealers
International Dealers
Duty deferred storage reducing working capital and therefore cost of product
Reduction in lead time in supplying the spares for after sales and limitless capability of spares storage
Quality control before duty payment enabling hassle free re-export process and therefore lowering of associated supply chain costs
Regional Distribution capability leveraging cost/skill arbitrage of India in addition to Income tax exemption of profits from this activity
FTWZ - UNIQUE BENEFITS FOR EXPORTS
Products from India entering the FTWZ are treated as deemed export providing immediate benefits to suppliers
Local Tax Exemption (e.g. CST, Sales Tax, Excise & VAT) on all activities conducted inside the FTWZ
Export quotas able to be met for companies exporting into FTWZ
Increased efficiency through lowered reverse logistics through quality control before dispatch from India
Foreign exchange transactions capability
Increasing supply chain efficiencies (forward & reverse) while enhancing capital cash flow
GAME CHANGER BENEFITS OF FTWZ
CASE STUDY BENEFITS OF EXPORTING PRODUCTS INTO INDIA
THROUGH THE FTWZ (DEEMED FOREIGN TERRITORY)
GLOBAL FMCG MAJOR’S CURRENT SUPPLY CHAIN
93 suppliers from India , Karachi(18) Bangladesh(15), & Sri Lanka (4)
All the SKUs are sent by the suppliers directly to DC in Europe by suppliers
Breaking and re-invoicing of units as per different store demands is conducted before dispatches to the stores.
Reverse logistics of rejected materials
Supplier 93
Supplier 2
Supplier 1
DC in Europe
For value addition
Various Ports across
India
Store 1
Store 2
Store 173
Distribution Center (DC) in Europe maintained only due to invoicing regulatory limitations where consolidations of products sourced from India is done
Increased supply chain cycle lead time and associated costs
Company’s India trading arm responsible for any under/over invoicing or customs issues with respect to shipments of suppliers without having any control over process
Quality control currently in European DC causing higher product returns
European DC doing labeling for products made in India/Asian sub-continent
ARSHIYA’S SOLUTION THROUGH FTWZ
Supplier in Bangladesh & Sri Lanka
Supplier
in Pakistan
Supplier 93
Supplier 2
Supplier 1
FTWZ
DC in FTWZ forValue addition
Store 1
Store 2
Store 173
FTWZ removes regulatory limitations of consolidating product from suppliers in India, Sri Lanka, Bangladesh & Pakistan in Asia
Significant reduction in DC operations costs of India Vs. Europe
Value addition for end-distribution to world-wide stores done in FTWZ in India lowering costs.
Reduction in suppliers working capital due to faster payment cycle
Lowered reverse logistics cost
Enhanced control and efficiency in inventory management - closer to the suppliers
FTWZ - UNIQUE BENEFITS FOR RE-EXPORTS
Service tax exemption on all activities conducted inside the FTWZ including rental & labour
Exemption from custom and stamp duty on products imported into FTWZ; meant for re-export out of India
Income tax exemption on profit where applicable
Hassle-free re-export process
Permission of 100% FDI for the set-up of units by the unit holder of the FTWZ
Ability to leverage India’s cost, skill & geographic positioning advantage as a hub for regional/global distribution post Value Addition activities
GAME CHANGER BENEFITS OF FTWZ
CASE STUDYBENEFITS OF HUBBING & VALUE ADDITION OF
PRODUCTS IN INDIA THROUGH THE FTWZ (DEEMED FOREIGN TERRITORY)
GLOBAL MOBILE MANUFACTURER’S CURRENT SUPPLY CHAIN
CHINA
GERMANY
USA
Regional Value Addition, Hubbing & Distribution
Centre in Singapore/Dubai
Indian Subcontinent
Middle East
Far East Asia
South East Asia
Africa/Eastern Europe
Supply of Charger, Earphone and packaging material
Supply of completely packaged mobile phones
Supply of battery
Supply of handset
VOS like Labelling, packaging, assembly and consolidation based on the country of export
Higher cost of operations in Singapore i.e. Labour, Water, Electricity, Materials etc.
Higher charges for Value Optimising Services (VOS) like labeling, packaging, assembly etc. Increasing cost of product
Technically skilled manpower expensive and not abundant
Cost of economies of scale
ARSHIYA’S SOLUTION THROUGH FTWZ
CHINA
GERMANY
USA
Indian Subcontinent
Middle East
Far East Asia
South East Asia
Africa/Eastern Europe
Supply of Charger, Earphone and packaging material
Supply of completely packaged mobile phones
Supply of battery
Supply of handset
VOS like Labelling, packaging, assembly and consolidation based on the country of export
FTWZ
Lower cost of operations in India i.e. Labour, Water, Electricity, Material etc.
Minimum charges for Value Optimising Services (VOS) like kitting, labeling, packaging, assembly etc. decreasing cost of product
Local tax exemptions (Excise, VAT etc.) on all the value added service inside FTWZ
Abundance of technically skilled manpower
ARSHIYA’S MUMBAI FTWZ
Main Gate Custom office Entry Customs Office
Warehouse External View Container Yard Stuffing at Container Yard
Docking Area Docking AreaCargo storage inside
Warehouse
ARSHIYA’S MUMBAI FTWZ - Over Dimensional Cargo (ODC) Yard
ARSHIYA MUMBAI FTWZ : SNAPSHOTS
Warehouse Internal View Temp. Controlled Area VOS Area
Marshalling Area Server Room Electrical Sub-Station
CCTV CamerasGenerators for Power Backup Security System at Warehouse
FTWZ WORLD CLASS INFRASTRUCTURE: WAREHOUSES AND YARDS
World-class Warehouses of 13 M height with G+6 palletized racking system, super-flat flooring & state-of-the-art Material Handling Equipments (MHEs)
Dedicated & customized Office space & area for Value Optimizing Services (VOS) within the Warehouse
Mezzanine storage area with temperature controlled HVAC system & optional humidity control
Container Yard (CY) with Pavement Quality Concrete (PQC) flooring for stacking containers in a G+5 stacking system using state-of-the-art Rubber Tyre Gantry Cranes (RTGCs) & Reach Stackers
Maintenance & Repair (M&R) Yard, Scrap Yard & an Empty Container Yard, Food court, Medical dispensary with Ambulance at site
Open & covered Over Dimensional Cargo (ODC) Yard with Paver-Block flooring for storage of cargo that cannot be stored in the Warehouse
FTWZ WORLD CLASS INFRASTRUCTURE
Business Ancillary Services: On-site Office spaces, Banks, Insurance, Currency Exchanges & CHAs that reduce operating costs for companies operating in the Foreign Territory
Fire & Safety Amenities: Primary & Secondary fire fighting systems along with Tertiary Fire Engine at FTWZ site with trained Fire Fighting Professionals. Personnel having expertise & certification in handling DG Cargo
Secure IT Connectivity: Comprehensive IT system with network infrastructure such as server room within each warehouse & a centralized data center with uninterrupted data, voice & video connectivity & 100% back up
Supporting Infrastructure: Weigh bridge, road network with up to 6 lanes to avoid congestion, Fuel Station in the processing zone, uninterrupted water & power supply systems & 100% power back-up using DG Sets
Earthquake Resistant & Storm Water Drainage System: Warehouses designed as per Seismic Zone 4 requirements. In addition the FTWZ has a capacity to handle rainfall with peak intensity of 156 mm/ hour or 10 cubic m per sec, i.e. 3 times the highest recorded level of rainfall in Mumbai.
Corporate Social Responsibility: Ambulance and Fire Tender to service not only Arshiya’s FTWZ but also the residents of the neighboring area
FTWZ – THERE’S A WAY TO SUSTAINABILITY
STP: By way of a sewage treatment plant, recycled water is used for irrigation purposes
Reutilization of excavated rocks: Excavated rocks are used for project construction thereby conserving resources
Green Zone: At Arshiya we ensure that more than 10% of the project area is covered under green zone along with specific selection of plant species
Natural Lighting & Insulation: Optimum, natural sunlight presence along with provision for ambient temperature at the FTWZ Site via articulate architecture planning/construction ensures optimal electricity consumption and ensures harmony at workplace
Rain Water Harvesting: Bore wells, recharge pits and natural ponds provide for maintenance of ground water level
Environmental Consciousness: At Arshiya it is our constant effort to emit no Industrial effluents and contribute towards maintaining sanctity of the environment through Waste Disposal Units
At Arshiya, we believe there is a way to contribute to the environment, play a pertinent sustainable role through varied eco friendly and environment effective measures. Here’s a look at few :
FACILITIES IN THE FTWZ
STANDARD WAREHOUSE
ODC YARD (OPEN & COVERED)
CONTAINER YARD (CFS)
CHILLER/FREEZER
HAZARDOUS STORAGE
TEMPERATURE CONTROLLED STORAGE
STRONG ROOM
OFFICE INFRASTRUCTURE
VALUE OPTIMISING SERVICES (VOS) IN FTWZ
VOS ON CONTAINER
§ Customs Documentation
§ Incoming & Outgoing Transportation
(Port to FTWZ & return)
§ Gate Coordination (incoming &
outgoing)
§ Survey of Cargo/Containers
(incoming & outgoing)
§ Handling / Loading & Unloading
(inbound & outbound)
§ Weighment of Containers
§ Fumigation of Containers
§ Scanning of Containers
§ Lashing / Unlashing Services etc.
VOS ON PALLETS / BREAK-BULK OF PALLETS
§ Carting & Shifting of the Pallets
§ Palletization
§ Carbonization
§ Strapping
§ Shrink Wrapping
§ Packaging / Re-packaging
(into smaller parcels/cases /cartons)
§ Labeling / Re-Labeling
§ Bar-Coding
§ Strapping, refurbishment
§ Tagging, shrink / stretch / bubble
wrapping etc.
§ Quality Control (QC)
§ Sorting / Assorting
§ Kitting / De-kitting
§ Bottling/ Blending
§ Assembling
§ Cutting & Threading
§ Consolidation
§ Agglomeration
§ Repairs & Maintenance
§ CKD/ SKD assembly
§ Cutting/ Polishing
§ Painting/ Coating
§ Filming/ Re-sizing
§ Splitting
§ Threading
§ Coupling, etc.
HIGH END VOS
HOW DO WE CHARGE OUR CUSTOMERS
Understanding of client’s business model and Pain areas
Creating consolidated business proposal specific to client’s business model with one price inclusive of all elements like Transportation to and from FTWZ, Storage, VOS etc..
Pricing strategy based on client’s VOS scope and throughput
Also based on client’s industry standard pricing practices e.g.,§For Steel Industry: Per ton basis§For Wine Industry: Per case/piece basis§For Large Importers and Exporters: Per Container Basis (Movement from Port to FTWZ and back including
storage and all other services)
MAJOR CUSTOMERS
All above logos are property of respective owners
REVENUE MODEL OF AN FTWZ CLIENT
Sector Trading (Import & Re-Export)
Product Type FMCG Products such as Perfumes, Sports Items, Deodrant, Shoes etc.REVENUE MODEL
Rental Per Pallet Per TEU
Racked Warehouse Rent INR 800/pallet 800 16,000 Avg. 20 Pallets/Container
Value Optimizing Services (VOS) Comments
Activity Rate Per Pallet Per TEU
Gate Charge (Inbound) INR 150/TEU 7.5 150
Survey Charges (Inbound) INR 150/TEU 7.5 150
Handling (Inbound) INR 100/Pallet 100 2,000
Handling (Outbound) INR 100/Pallet 100 2,000
Gate Charge (Outbound) INR 150/TEU 7.5 150
Survey Charges (Outbound) INR 150/TEU 7.5 150
Total Compulsory VOS 230 4,600
Packaging INR 20/Carton 200 4,000 A. 1 Pallet = 10 CartonsB. 50 pieces per carton
C. Total Cartons/Container = 200 D. Total Pieces/Container = 10,000
Labeling INR 2/Piece 1,000 20,000Bar coding INR 0.50/Piece 250 5,000
Transportation (Inbound) Rs. 4400/TEU 220 4,400
Transportation (Outbond) Rs. 4400/TEU 220 4,400 In this case all the incoming cargo will be palletized again for re-exportPalletization INR 500/Pallet 500 10,000
Total Discretionary VOS 2,390 47,800
Total VOS 2,620 52,400Ratio (VOS Revenue / Rental Revenue) 3.28
No. of Cycle in a month 3Actual VOS/Rental ratio 9.83
Per Piece Rate – INR 6.9934% reduction on current cost for
customer
THE FTWZ REVOLUTIONIZING THE INDIAN LOGISTICS LANDSCAPE
SOURCES OF REVENUE THROUGH THE FTWZ
RENTAL
VOS ON CONTAINER
FORWARDING
HIGHER END VOS
VOS ON PALLETS
RAIL & RAIL INFRASTRUCTURE
TRANSPORT & HANDLING
SUPPLY CHAIN TECHNOLOGY & MANAGEMENT
INDUSTRIAL & DISTRIBUTION
HUBS
THROUGHPUT
REVENUE FROM RENTALS OF WAREHOUSE, CHILLER/FREEZER, CONTAINER &ODC YARD, OFFICE
SPACE
REVENUE FROM VALUE OPTIMISING SERVICES (VOS) ON
CONTAINERS AND PALLETS
REVENUE FROM UNIFIED SUPPLY CHAIN INFRASTRUCTURE
SOLUTIONS
INDIAN LOGISTICS IN-EFFICIENCIES
LOGISTICS SPEND AS A % OF GDP INEFFICIENCIES IN LOGISTICS IN INDIA
Absolute Value inefficiency & market potential of USD 80 Billion on USD 1.6 Trillion GDP owing to excess spending on Logistics
India burns nearly USD 2.5 Billion of fuel due to trucks idling on interstate check-posts
Avg time to clear cargo at ports in Singapore is 3-4 days vs 19 days at ports in India
% OF CONTAINERIZATION OF TRADE SHARE OF ROAD VS RAIL TRANSPORT
An Economies of Scale problem requires an Economies of Scale solution
CAPITALIZING ON INDIA’S LOGISTICS & SUPPLY CHAIN OPPORTUNITY - WHAT DOES IT TAKE?
Free Trade & Warehousing Zones (FTWZs) :
To enable EXIM cargo Consolidation, Value Addition and allow India to become a Regional Trading Hub
Industrial and Distribution Hubs:
For Domestic distribution, cargo value addition and consolidation for Rail transportation to remove dependency on road
Rail and Rail Infrastructure :§ Comprises innovative Customized Containers for specific product types, Service Level agreements on timeline
and deliver with Key Performance Indicators
§ State-Of-The-Art Rail Terminals, at strategic locations across India with modern equipment to increase speed of loading/unloading and churn
Unified Logistics & Supply Chain Infrastructure with Supply Chain Technology & Management, Transport & Handling and Forwarding :
Global ocean & air logistics, domestic forward and reverse supply chain management with ownership on reduction of working capital and product visibility & control, through technology
ARSHIYA LIMITED
FTWZs with integrated ICD/CFS
Rail and Rail Infrastructure
Industrial & Distribution Hubs
Supply Chain Technology & Management
Capitalizing on India’s mammoth logistics opportunity through Unified Supply Chain Infrastructure & Solutions
Partnering towards
Transport & Handling
Forwarding
FTWZ SAI - JULY 2009
FTWZ SAI - JULY 2009
SAME VIEW – AUGUST 2010
CONTAINER YARD - AUGUST 2009
CONTAINER YARD - SEPTEMBER 2009
CONTAINER YARD - JULY 2010
CONTAINER YARD - FEBRUARY 2012
SUCCESS OF FTWZ - GAME CHANGER FOR GLOBAL ECONOMIES
§Established in 1985, Jebel Ali Free Trade Zone (JAFZA) is spread across an area of 48 sq kms, with
over 6,400 companies operating in the zone, including 120 of the Fortune Global 500
enterprises
§Accounts for 25% of all container throughput at Jebel Ali port & 12% of all air freight at Dubai
International Airport.
§Over the years it has created over 1,60,000 direct jobs in the UAE through its companies
§Increased its revenue at an average of 34% year-on-year
§Contributed to Dubai’s GDP at 25% on a year-to-year basis
§Accounted for more than 50% of Dubai’s total exports
§Accounted for 20% of all FDI inflow into the UAE
§Grown its customer base by over 60% in the last four years
Even with an economy which is purely a transhipment hub, with comparatively low level of domestic consumption, FTWZ has been a game changer for Dubai
DUBAIDUBAI
SUCCESS OF FTWZ - GAME CHANGER FOR GLOBAL ECONOMIES
CHINA
§FTZs are operational since 1980
§Waigaoqiao FTZ in Shanghai is spread across an area of 10 sq kms & over 9,300 companies
registered in the zone, including 135 of the Fortune 500 companies
§Other zones being - Zhuhai (3 sq kms), Ningbo (2.3 sq kms), Xiamen (5 sq kms),
§Futian (1.35 sq kms), Shatoujiao (0.27 sq kms) & Yantian Port (0.85 sq kms)
From an economically backward country in 1970 to its gigantic success, FTZs have been the single most critical macroeconomic factor for China’s rise
§FTZs were first established in the island nation in 1969, today the entire country is a Free
Trade Zone
§Notable FTZs being – Keppel (2.59 sq kms), Pasir Panjang (0.65 sq kms), Jurong (0.61 sq
kms),
§Sembawang (0.19 sq kms) & Air Logistics Park of Singapore at Changi Airport
§Over 7,000 multinational companies operate through these zonesDue to FTZs this island nation has become the gateway to Southeast Asia & a Global Distribution Hub for international companies
SINGAPORE
SINGAPORE
CHINA
Dubai
Mumbai
Singapore
At present, majority of product hubbing & value addition is done in Dubai & Singapore
70% to 80% of these value additions, is done for products meant for Indian market
Compared to Dubai or Singapore, India is much larger market for product consumption and is an emerging manufacturing hub
India has tremendous advantages in terms of cost & skill arbitrage vis-à-vis Dubai & Singapore
Due to its strategic positioning, India is much better suited for being a Transhipment , Value Addition & Global Distribution hub than other economies
INDIA’S STRATEGIC POSITIONING
FTWZ : A GAME CHANGER FOR INDIA
India is world’s 2nd largest developing & fastest growing economy just behind China
With a population of approx 1.1 billion, our domestic consumption comprises 58% of our GDP
Strategically located between South East Asia & Middle East, we have 7,000 kms of coastline & unlike China our population is evenly spread across hinterland
Unlike Dubai, India has a strong manufacturing base where global companies are producing products for domestic as well as export opportunities
Logistics infrastructure is the single largest challenge as well as the biggest opportunity for sustaining India’s fast paced GDP growth
In-efficiencies due to lack of logistics infrastructure & organized logistics, costs India an additional USD 65 billion per year
In a growing economy if logistics infrastructure doesn’t grow at faster pace than the GDP, it would cost India very dearly
Indian economy is losing around 1.5% in GDP growth, due to lack of logistics infrastructure
India loses approximately INR 55,000 crores per year of food produce due to lack of logistics infrastructure
LOGISTICS INFRASTRUCTURE A MAJOR HINDRANCE TO INDIA’S GROWTH
ARSHIYA’S PAN-INDIA INFRASTRUCTURE FOOTPRINT
Planned 150 Train Pan-India Rail Operations with Rail Terminals at strategic locations
RAIL & SUB HUBS
Planned Pan-India, Complimenting the FTWZ Network
INDUSTRIAL & DISTRIBUTION HUBS
FTWZ
Rail Connected, Planned Pan-India
North
West
East
South
Central
ARSHIYA’S KHURJA FTWZ : LOCATION ADVANTAGE
§ 18 km from the new Yamuna Expressway connecting Noida
to Agra§ 12 km from proposed international airport at Jewar
in UP § Sikandarabad – the
neighbouring Developed Industrial City is <
30 km from the FTWZ§ Tughlakabad – 80 km§ Dadri – 60 km§ Bulandshahr – 20 km§ About 70 km away from the National Capital Region (NCR)
State-of-the-art ICD/CFS facility with superior Safety and Hazardous cargo handling capacity of 10,000+ containers including reefers
Operations live as of H2FY’12 to be joined by similar models in Central, South & East
315 Acre Comprehensive Facility 90 km from Delhi
Arshiya Rail Infrastructure (50 Acres), including on-site Rail Siding
Side-by-Side FTWZ (135 Acres - launched in Jan 2012) and Industrial & Distribution Hub (130 Acres)
ARSHIYA’S KHURJA FTWZ
Khurja Integrated Infrastructure
Masterplan
ARSHIYA’S KHURJA FTWZ
CURRENT FREIGHT TRANSPORT DISTRIBUTION IN INDIA VIS-À-VIS USA & CHINA
5,275 billion ton-km100% = 5,930
billion ton-km1,325
billion ton-km
Mode Share (percent of Ton-Km)Share estimated for 2007 excluding pipelines
Freight Transport in India is
dominated by road
%
%
%
%
%
%
%
%
%
…. shows India’s high dependency on roads as compared to US/China who have developed rail infrastructure ….
% % %
%
%
%
%
%
%
%
%
%
China’s ratio of Wagons to Locomotives is worse than India (33 against 25), still it had better wagon utilization efficiency.
As far as wagon efficiency is concerned (Tonnage carried X Distance carried), China is 67 % more efficient than India and USA is 150 % more efficient than India.
The real parameter is NTKM or Tonne –Km (Tonnes multiplied by Km travelled). In utilizing the network, China was 5 times more efficient and Russia was 4 times more efficient. (Ton-Km divided by Network Length)
ASSESSMENT OF INDIA’S RAILWAY EFFICIENCY
CountryNetwork
length
Freight Tonne carried
Tonne -Kms
No. of Locos
No. of Wagons
Freight Lead
NTKM/ Employee
NTKM/ Route Length
NTKM/ Wagon/ Day
(Km) (Millions) (Millions) (Km) (Millions) (Millions) (Millions)
USA 226,706 1,775 2,820,061 23,990 475,416 1,589 15.08 12.44 16,251
India 63,327 728 480,993 8,110 207,719 661 0.34 7.60 6,344
China 63,637 2,624 2,211,246 17,222 571,078 843 1.07 34.75 10,608
Russia 84,158 1,344 2,090,337 12,063 566,802 1,555 1.85 24.84 10,104
With almost same network length as India, China was carrying more than 4 times India’s Tonnage.
China 63,637 2,624
OVERVIEW OF ARIL
BACKGROUND AND OPERATIONS
SELECTED CLIENTS AND AWARDS
§ Acquired Category I pan-India rail license in 2008, permitting it to transport containerized cargo throughout India
§ Provides pan-India customized container rail freight movement, and rail terminal services and facilities for transporting domestic and EXIM cargo
§ Currently has 20 rakes, 4,500 containers and a rail terminal siding at Khurja (New Delhi)
§ #1 Company in the domestic container segment; #2 PCTO in terms of number of operational rakes
SCOPE OF OPERATIONS
Handling at
Client
Premises
Transportation
by Road
Handling at
Source
Terminal /
Siding
Rail Movement
Handling at
Receiver
Premises
Handling at
Destination
Terminal /
Siding
Transportation
by Road
Mumbai
Sanand
Morbi KolkataJogbani
Mundra
Pipavav
Guwahati
Chennai
Durai
Jamshedpur
Khurja
Cochin
Ahmedgarh
Malanpur
Vizag
Nagpur
Bilaspur RoadFaridabad
Lapanga Haldia
Bangalore
Vizag
Bangalore
Mumbai
Chalthan
KolkataSanand
Haldia
Rourkela
Jharsuguda
Milavittan
Morbi
Lonand
LoniPatli
Ahmedgarh
ACTL-Faridabad
Batala
Nawa City
Sahnewal
Guwahati
PROPOSED ROUTESEXISTING ROUTES
2012: Private Train Operator of the Year - 2nd Indian Supply Chain & Logistics Excellence Awards 2012
2011: Private Rail Operator of the Year – Gateway Excellence Awards: Supply Chain Management & LogisticsPrivate Rail Operator of the Year, Domestic Cargo – Maritime and Logistics AwardsPCTO of the Year – 5th Express Supply Chain and Logistics AwardRail Operator of the Year – Gateway Media
CUSTOMIZED CONTAINERS
Enhanced Security Arrangement Customized Solutions (Auto Shipments)
Customized Containers for Steel Cargo
§ Multi-purpose containers for dry-cargo increasing return utilization
§ Enhanced cargo locking facility inside the containers
§ Customized containers for carrying various types of cargo
Open top containers increasing speed of loading heavy cargo
ARSHIYA’S INTEGRATED SERVICE ADVANTAGE
Provides end-to-end supply & demand chain solutions
SUPPLY CHAIN TECHNOLOGY & MANAGEMENT
Logistics solutions including end-to-end freight management & transportation services in over 150 countries world-wide
FORWARDING
Implementation and operations of Free Trade & Warehousing Zones (FTWZs)
FREE TRADE & WAREHOUSING ZONES
First and last mile domestic transportation services
TRANSPORT & HANDLING
Strategically located warehousing hubs and rail consolidation across India
INDUSTRIAL AND DISTRIBUTION HUBS
Customized and Chartered Pan India Rail Freight services and state-of-the-art Rail terminal facilities
RAIL AND RAIL INFRASTRUCTURE
AIL – FINANCIAL PERFORMANCE
428%
EBITDA
164%
Revenue
166%
PAT EBITDA Margins
Consolidated Highlights FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 H1FY13
Operating Income— ₹ Cr. 401.2 503.0 525.9* 821.5 1057.3 714.4
EBITDA — ₹ Cr. 51.4 73.5 86.1* 159.2 271.6 201.6
EBITDA MARGIN % 12.8% 14.6% 16.4% 19.4% 25.7% 28.2%
PAT — ₹ Cr. 45.4 65.6 98.3 82.0 120.8 70.1
PAT MARGIN % 11.3% 13.0% 18.7% 10.0% 11.4% 9.8%
EPS — ₹ per share 9.7 11.3 16.7 13.9 20.5 11.9
Financial Year ending 31 Mar * Excluding income from sale of software marketing rights at ₹ 38.89 cr
FY08 FY09 FY10 FY11 FY12FY08FY09FY10FY11FY12 FY08 FY09 FY10 FY11 FY12
12.8%
14.6%
16.4%
19.4%
25.7 %
FY 08FY 09FY 10FY11 FY12
SEGMENTAL REVENUES
Forwarding
` 195.05 Cr. ` 247.96 Cr. ` 372.57 Cr.
Rail
FTWZ
66
FTWZ
Rail
ForwardingOthers
Others
Rail
Forwarding
H1 2011 H1 2012 H1 2013
Forwarding
`372.00 Cr. ` 470. 56 Cr. ` 714.41 Cr.
Rail
FTWZ
Rail
ForwardingOthers
Others
Rail
Forwarding
FTWZ
Q2 FY 2011 Q2 FY 2012 Q2 FY 2013
PROJECT SUMMARY (in INR Cr.)
Project (` in crore) Debt Equity Total O/s debt
Panvel FTWZ – Phase I & II 850 329 1179 850
Khurja FTWZ – Phase I 259 270 529 259
Rail Infrastructure 400 341 741 360
Khurja Industrial & Distribution Hub 399 249 648 399
Total 1908 1189 3097 1868
Notes (Not included in table above):1. Total Debt including non-project loans and working capital loans is Rs. 2430 crore.2. Company has invested 93 crore as equity in Arshiya Central FTWZ (Nagpur) for land acquisition purpose.₹3. Company has also invested equity of 112 crore in Khurja FTWZ Phase II₹
INDUSTRY RECOGNITIONS
2012
Private Train Operator of theYear 2012
Institute of Public Enterprise (IPE) HR Leadership Awards 2012
2nd Shine Awards 2012CFO 100 Roll of Honour 2012
Best Managed Company in India 2012
Best ELSC Logistics InfrastructureCompany of the Year 2012
Supply Chain Visionary of the Year 2012
INDUSTRY RECOGNITIONS
Best Rail Operatorof the Year 2011
Private Rail Operatorof the Year 2011
Achievement Award for Best Project-Urban Infrastructure (2011)
SAP ACE 2011 – SAP Implementation Award
Leading Business Woman of the Year 2011
Private Container Rail Operator of the Year-Domestic Cargo 2011
2011
EVERYTHING YOU HEAR ABOUT INDIA . . .
11th JANUARY, 2O12 6TH JANUARY, 2O12
§ Delivered with ready state-of-the-art hubbing and rail infrastructure
§ The FTWZ claiming business from other regional hubs like Dubai and Singapore
§ Ten year services legacy leveraged with infrastructure offering a ‘one stop shop’ logistics solution for customers
§ Fully unified logistics and supply chain delivery capability
§ Rightly positioned to enable and capitalize on India’s growth
THE OPPORTUNITY OF ARSHIYA
Corporate HQ: Arshiya Limited, 301 Ceejay House, Level 3, Shiv Sagar Estate, F-Block, Dr. Annie Besant Road, Worli, Mumbai - 400 018. Maharashtra, India.Ph: +91 22 4230 5500 /1 /2 Fax: +91 22 4230 5555
Registered Office: Arshiya Limited, 402/403 Ceejay House, Level 4, Shiv Sagar Estate, F-Block, Dr. Annie Besant Road, Worli, Mumbai - 400 018, IndiaT: +91 22 4230 5500/502F: +91 22 4230 5555
For more info please write to us at: [email protected]
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