Indian warehousing and logistics industry

INDIAN WAREHOUSING &

LOGISTICS INDUSTRY

MAM600

Submitted to: Submitted by:Dr. Devendra Kumar Madhuri Muniyal(41417)

05/01/2023 INDIAN WAREHOUSING & LOGISTICS INDUSTRY

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Introduction

Logistics industry connects the Production centres to Consumption markets.

Warehousing sector constitutes only 15-35% of the total logistics cost, but it plays an important role in smooth functioning of Supply Chain Network.


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Scenario of Indian Logistics

Parameters India USLogistics Performance Index

2014, LPIScore3.08

Rank 54/160Score 3.92Rank 9/160

Logistics Cost as % of GDP 13% 8.5%Different sectors share of the

Logistic Cost :TransportationWarehousing

Others

63298

67223

Major Industries Driving the Logistics Sector

Auto components, Pharmaceuticals, Cement, Textiles

Food processing beverages, e-commerce

Major Challenges Loss during transportation.

High Employee Cost

*Source: World Bank Database


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Transportation Infrastructure in India

Investment(USD in Bn)

RoadwaysRailwaysSea PortAir PortPower

140

291.2

102.9

31.6

14


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The size of the Indian warehousing industry (across commodities and modes) is pegged at about INR560 billion (excluding inventory carrying costs, which amount to another ~INR4,340 billion).

The industry is growing at over 10% annually.

Multiple business models exist within the warehousing industry.

The key segments can be represented as:

1. Industrial/Retail warehousing: 55% share

2. CFS/ICD: ~14% share3. Agri warehousing: 15% share4. Cold stores: ~16% share

Current warehouse industry size with sub segments in FY13Source: EY Analysis, Crisil Report on Warehousing

Storage & Warehousing


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Demand Drivers in Warehousing & Logistics Industry

CONSUMPTION-lED DEMAND • Per capita income - Growth of 10.4% in 2013-14 • Boomimg e-commerce industry • E-commerce industry to reach USD 20 billion to USD 25 billion by 2017 • The fast-moving consumer goods (FMCG) market is also gaining traction

MANUFACTURING-lED DEMAND • Indian manufacturing GDP is approximately 15% of the total and stood at INR

8.6 trillion in 2013–14 • The manufacturing sector is growing at a compound annual growth rate

(CAGR) of 7.3% since the past nine years • The "Make in India" initiative is expected to boost the manufacturing sector to

10% growth • The manufacturing sector spends 2-20% of its revenue on logistics


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AGRICUlTURE-BASED DEMAND • India is the second largest producer of vegetables and fruits after China • Because of the lack of infrastructure and broken cold chain, more than

30% of agri-produce is lost in fields post harvesting • According to a report by KPMG and the Associated Chambers of

Commerce and Industry of India (ASSOCHAM), there is a shortage of more than 10 million tonnes of cold storage for agri-produce in India

EXIM-BASED DEMAND • In 2013-14, all major and non-major Indian Ports in India, as listed by Indian

Ports Association (IPA) handled about 972 Million Metric Tonnes (MMT) cargo.

• EXIM cargo is expected to increase to 2,800 MMT by 2020 • Containers handling is growing at about 11% CAGR


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Issues & Challenges in Indian Warehousing Industry

Transport Infrastructure Information Technology Fragmented Market Lack of trained Manpower Lack of Standardization Land Availability


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Warehousing SegmentsTypes Of Warehouses Key Features Major Players

Industrial/Retail Warehousing Driven by high retail demand and consumer appetite. Currently on

most promising growth trajectory

FedEx, DHL, Kuehne+Nagel, Safexpress, Continental

Warehousing, Indo Arya, Allcargo, Nippon Express

Liquid Storage Mainly refers to the storage of liquid bulk such as crude,

petroleum products, chemical and edible oil

IMC Ltd., Vopak India, Indian Oil Tanking, Kesar Terminal, Ganesh

Benzoplast, Aegis Logistics, Sealord.

Agri Warehousing Targeted to store ag. Goods with larger shelf life

FCI, CWC, SWC and other government agencies apart from private players like Adani Agri

Logistics, Star Agriwarehousing, Shree Shubham Logistics, Ruchi

Infrastructure, Guru Warehousing, Para

Cold Storage Storage of perishable goods Gati Kausar, Snowman, Cold Star, ColdEx, Kelvin Cold Chain, RadhaKrishna Foodland, MJ

Logistics, Dev Bhumi Cold Chain

Container Storage Primary targeting export/import & container handling

Container Corporation of India (CONCOR), APM Terminals,

Arshiya, AllCargo


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Retail Warehousing Industrial/ Retail Warehousing contribute ~50% of the total

Warehousing Industry in India. Industrial/Retail warehousing has a market size of

~INR310 billion in FY13, Growing at a CAGR of 10%–12% over the last few years. Out of this, almost 50% space in 2014 was driven by e-

retail. The emerging e-retail segment took up ~1.7 million sq. ft.

of warehousing space across Mumbai, Chennai, Bangalore and the Delhi National Capital Region in 2014.


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Industry is expected to spend USD 1 billion to USD 2 billion on warehousing and logistics functions in the next two to three years to reduce distribution cost, faster delivery and increase market coverage. •

The e-retailing market has grown at a CAGR of 57% from 2009-14.

Major e-retail markets that require efficient logistics- COD, Free Delivery, Returns/Exchange, Insurance Cover, Existing Concerns,


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Liquid Storage The terms liquid storage mainly refers to the storage of liquid bulk

such as crude, petroleum products, chemical and edible oil. Tank farms facilitate a modal shift by providing intermediate storage

facility for liquid bulk cargo before these are taken to processing plants

IMC and Indian Oil Tanking (IOTL) are the largest tank farm operators in India.

The Liquid Storage Industry is expected to grow at a CAGR of ~4-5%

Customers • POL: oil marketing companies, industrial units • Chemical: industrial units across all segments such as textile,

pharmaceutical, agriculture, FMCG and paper • Edible oil: edible oil refining companies


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Indian Molasses Company Incorporated in 1935, primarily for import/export of molasses. Market leader in 3rd party bulk liquid storage in India. Active presence in 14 leading major ports on the west and east

coast of India with 22 terminals Track record of over 75 years in bulk liquid storage Existing total capacity of over 1 million KL First Company in India to handle Bitumen imports in bulk (at Haldia) Terminals conforming to statutory norms and equipped with built in

safety features. High quality and SHE (Safety, Health & Environment) standards committed to customer satisfaction by exceeding their expectations


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Cold Chain Infrastructure•Cold storage sector in India is highly fragmented.•One-Third of the total Cold Storages have less than 1000 MMT•Organized players only share 8-10% of market size.

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Government has made a Plan allocation of INR 786 Crore in the 12th five-year plan for implementation of Scheme of Cold Chain, Value Addition and Preservation Infrastructure*

*Source:Response to Lok Sabha Question# 352 dated 25th Nov, 2014)


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Continued…

Indian Cold Chain industry is expected to grow at a CAGR of~28%

There are more than 3,500 companies in the whole value system

Organized players contribute only ~8%-10% of the cold chain industry market

Most equipment in use is outdated and single commodity based

Thereby, presenting a great opportunity for foreign companies


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Container Handling & Storage CFS/ICD accounts for ~14% of total warehousing market in India Net worth of~125Bn USD in 2015. The Container traffic at major ports has almost doubled in the past 5-6

years. Containerized cargo traffic is growing at 12-15% CAGR in India and it

has grown dynamically in recent years across all ports with JNPT topping the list.

There are as many as 247 listed container terminals in India. Most of these are CFSs located closer to the port.

The Government run Container Corporation of India (CONCOR) continues to be the largest player operating 48 terminals which handle EXIM cargo, while 14 others handle domestic traffic only.


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Agri Warehousing in India India's food grain production was 252.68 MT in

2014-15. India incurs post harvest losses in fruits and

vegetables worth 2 lakh crores/year due to lack of storage and processing facilities.

Approx 10MMT of food grain lost every year. Around 90% of the warehousing market is

Unorganized. Out of 10% Organized Market: The PSU,s

accounts for around 70% of Agri-warehousing capacity.


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Premiere Warehousing Agency in India. Established in 1957 Storage capacity:11.59mt National presence:18 Regional Offices Total number of warehouses: 465 Total Number of employees:5658 Its is governed by The Warehousing Corporation

Act, 1962 & CWC Regulations, 1965


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Services by CWC Storage ICD/CFS services Bond Facility Air Cargo Operations Container Train Operations Pest Control Services Farmer’s Extension Services Intermediate godown Integrated Check Post Terminal


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State Warehousing Corporations1. Andhra Pradesh2. Assam3. Bihar4. Chhattisgarh5. Gujarat6. Haryana7. Karnataka8. Kerala9. Madhya Pradesh

10. Maharashtra11. Meghalaya12. Orissa13. Punjab14. Rajasthan15. Tamil Nadu16. Uttar Pradesh 17. West Bengal


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Food Corporation of India

Government owned Corporation established in 1965 Headquarters: New Delhi, India The largest Supply Chain Management in India 5 zonal offices, 24 regional offices & 1451 warehouses. Every year FCI purchases 15-20% of India’s Wheat output & 12-

15% of rice output at MSP It supplies food grain to PDS It is governed by the Ministry of Consumer Affairs, Food and

Public Distribution and Ministry of Agriculture.


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Star Agri warehousing and Collateral Management Limited Founded in 2006 Asia’s leading post harvest solutions company with global

ambitions. First year turnover-2.84 crores(2007-08) Current turnover-160 crores(2014-15) Holds commodities worth INR 75 billion across over 200

collateral management locations. Employees 1500 people.


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Continued… 800+ warehouses across 16 states and over

1.5 million tonnes of warehousing capacity. direct relationships with more than 100,000

farmers across India Services: Warehousing, Collateral

Management, Procurement, Testing Labs, Logistics, Private Mandi, Agri exports & other value added services

Some of the empanelled banks & financial institutions in collateral management with Star Agri are:

Axis Bank, Dena Bank, IDBI Bank, Central Bank of India, Allahabad Bank, HDFC Bank, Kotak Mahindra, Reliance Capital, SBI etc.


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National Bulk Handling Corporation Pvt. Ltd. One of India's leading provider of integrated

commodity and collateral management services Successfully managed assets worth Rs 78,000 crores

for 51 banks 1500 warehouses across 59 cities and 23 states 3.2 million metric tonnes agri commodities under

management. It has 42 functional QA labs and 200-plus mobile labs

for quality testing of around 160 agri-commodities Pest management services across 14 states


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NBHC Milestones Only such service provider in India to have three ISO

accreditations and the prestigious membership of the UK-based GAFTA.

NBHC wins SCM Pro Best Warehouse for Agri Commodity NBHC signs MoU with UCO Bank, Corporation Bank for

Strategic Collaboration in Commodity Management It has launched a Whistle Blower Policy to ensure working

on ethical and moral grounds. Surpass cumulative AUM of Rs 71,900 cr with funding of

Rs 50,400 CII Scale Special Award for Innovation under their National

Award for Supply Chain &Logistics Excellence


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Government Policies & Regulations1. Warehousing Development Regulation

Act 2007 (WDRA Act


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2. Free Trade and Warehousing Zone (FTWZ)


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Impact of Goods & Service Tax(GST) on Warehousing Industry

Goods and Services Tax (GST) is a multi-stage tax on domestic consumption charged on all taxable supplies of goods and services in India except those that are specifically exempted.

How is it going to do it? • Dual GST model is proposed: central GST (CGST) to be governed by the central authority and

state GST (SGST) by state-level authorities. • Integrated GST (IGST) will be levied by the Centre on all interstate

transactions, which will be CGST + SGST. • Cross-utilisation of tax credit will not be allowed between CGST and

SGST except in interstate transactions where IGST is applicable.

The anticipated implementation of the GST from April 1, 2016


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Foreign & Private Equity Investments in Logistics & Warehousing Industry

In 2011 Warburg Pincus invested in

Continental Warehousing Corporation (Nhava Seva) Limited- INR 625 Crores

Standard Chartered Private Equity invested in Redington India- INR 365 Crores

Fidelity Growth Partners invested in Transpole Logistic- INR 81 Crores

Infrastructure India Holdings Fund llC invested in Aegis Logistics- INR 68 Crores

Tara India Fund III invested in JICS Logistic- INR 40 Crore

In 2012 OPIC invested in IndoSpace

Logistics Parks Ltd- INR 625 Crore

Everstone Capital invested in AS Cargo-INR 277 Crores

KKR invested in TVS Logistics Services- INR 242 Crores

New Silk Route (NSR) invested in VRL Logistics- INR 206 Crores


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Continued…

In 2013

Everstone Capital invested in Transpole Logistics-INR 220 Crores

In 2015

Warburg Pincus to invest in Ecom Express-INR 813 Crores

Warburg Pincus to invest in Embassy group-INR 625 Crores

Source: JLL India Pvt. Ltd.


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Emerging Trends in Warehousing Industry.

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Indian warehousing and logistics industry