Status & Leverage of Logistics Parks in India. Nirav Kothary Head, Industrial Services, India Presentation Structure Logistic Parks – Current Scenario Case Study China Challenges and Way Ahead Jones Lang LaSalle Brief Industrial & Logistic Services, India Logistics – Where are we placed? Your Point of Contact © 2011 Jones Lang LaSalle. All rights reserved. Logistics – Where are we placed? © 2011 Jones Lang LaSalle. All rights reserved. India - Huge Market Size Indian GDP and Population Growth Indian GDP and Population Growth 1.40 60.0 1.20 44.9* Population (Billion) 1.03 1.00 0.68 0.20 30.0 0.55 0.60 0.40 40.0 0.85 0.80 0.36 2.2 50.0 18.6 0.44 20.0 10.8 3.3 4.7 6.4 10.0 - GDP at Factor Cost (INR Trillion) 1.21 India has the size and its growing fast 1951 1961 1971 1981 Population (Bn) 60 Year’s CAGR for Population = 2.0% 59Year’s CAGR for GDP at Factor Cost and Constant Price = 5.2 % 1991 2001 2011 GDP at Factor Cost (INR Trillion) * GDP figures relate to 2009-10 Source: Economic Survey of India, 2010 -11 and Census of India Note: GDP at factor cost at constant prices relates to 1999-2000 prices upto 2000-01. From 2006-07 onwards, data are based on new series (2004-05) prices. © 2011 Jones Lang LaSalle. All rights reserved. India - Strong Industrial Growth Healthy Industrial Production growth among Top 10 performing countries Industrial Production Growh Rate, 2010 Industrial Production Growth Rate (%) 18% 15.70% 16% Strong Industrial production 16.60% 14% 12% 10.80% 9.70% 10% 8% 10.50% 8.20% 6.10% 6% 5.30% 5.10% 4% Is India’s Logistic Scenario ready to absorb it? 2.10% 2% 0% France Brazil UK Russia Germany India Japan China USA EU Source: CIA World Factbook, 2010 © 2011 Jones Lang LaSalle. All rights reserved. Indian Logistics – Only in transforming state – Long way to go “India is 39th in Logistics Performance Index (LPI) in world.” Figure 2: Logistics Index Performance Index of BRIC Nations Logistic Performance of BRIC Nations Customs 5.0 LPI Rank 4.0 Timeliness 3.0 Infrastructure 2.0 1.0 Domestic logistics costs Tracking & tracing 0.0 International shipments Logistics competence Source: World Bank Survey "Connecting to Compete", 2007 Countries 1 Singapore 30 China 39 India 61 Brazil 99 Russian Federation Still a long way to go….. © 2011 Jones Lang LaSalle. All rights reserved. Drivers of Warehousing Industry • 5th largest consumer Market in the world by 2025 (McKinsey) • Retail market to grow to US$ 420Bn by 2025 (McKinsey) • Containerized traffic to grow by average rate of 18% annually over the next decade (SCI) • 18.5% of India’s GDP • Agri exports grew by 25% in 08-09, expected to be US$ 18 Bn by 2014-15 (APEDA) • Govt. Investment target of US$ 20.38 Bn over the next 2 yrs. in the infrastructure sector. (Planning Commission) • Top 12 producers of manufacturing value added (MVA) • Investment prospect of US$ 180 Bn. in 5 yrs. (Investment Commission) • Expected phase out of Central Sales tax and implementation of Goods and Services Tax (GST) • Free Trade Warehousing Zones © 2011 Jones Lang LaSalle. All rights reserved. Logistic Parks – Current Scenario © 2011 Jones Lang LaSalle. All rights reserved. Warehousing Hubs in India Primary Hubs Secondary Hubs Tertiary Hubs NCR-Delhi Surat Vijayawada Mumbai Goa Jalandhar Chennai Chandigarh Mysore Kolkata Pune Bhopal Bangalore Vadodara Amritsar Hyderabad Vizag Patna Ahmedabad Kochi Lucknow Coimbatore Kanpur Nagpur Agra Trivandrum Bhubaneshwar Jaipur Jodhpur Nashik Guwahati Mangalore Allahabad Indore Varanasi Ludhiana Meerut Source: Jones Lang LaSalle © 2011 Jones Lang LaSalle. All rights reserved. Logistic Parks in India Major Logistic Parks in India Avg. Land Cost1 Avg. Rents2 Major Warehousing Locations NCR Mumbai Chennai Bangalore Kolkata Hyderabad Pune 5 -22 6 – 32 5 -16 8 - 22 12 - 29 5 - 23 6 – 20 10 - 18 9 - 23 12 - 16 9 - 14 14 - 21 7 -14 9 - 19 Palwal Bhiwandi Sriperumbudur Tumkur rd. Dhulagarh Kompally Chakan Jamalpur Panvel Irungatukottai Haskote Ankurhati Gundlapochampally Talegaon Bhorah Kalan Taloja Oragadam Mysore Rd. Hide Rd. Medchal Wagholi Lohari Rasayani Maraimalainagar Devanahalli Kona Patancheru Shirval Dharuhera Patalganga Madavaram Hasur Rd. Dankuni Shamshabad Source: Jones Lang LaSalle; Note:  = Avg. Land Cost in INR Million / acres &  = Avg. Rents are in INR / sft / month Major demand generators for warehousing EXIM Cargo Ahmedabad Bangalore Chennai Hyderabad Kolkata Mumbai NCR-Delhi Retail Goods Automotive Textiles Pharmaceuticals IT & Telecom Source: Jones Lang LaSalle © 2011 Jones Lang LaSalle. All rights reserved. Case Study China © 2011 Jones Lang LaSalle. All rights reserved. Case Study China Logistic Hotspots in China • Beijing and Tianjin - An Integrated Economy and Logistics Market • Dalian and Qingdao - Regional Shipping Centres • Cities in Greater Yangtze River Delta - Support Shanghai • Pearl River Delta - More Ports Along the Coastal Line - Enhanced Connection with Hong Kong • Chengdu and Chongqing - Service West China © 2011 Jones Lang LaSalle. All rights reserved. Case Study China Focus Shanghai: Major Logistic Parks Shanghai – China © 2011 Jones Lang LaSalle. All rights reserved. Case Study China Lessons Learnt Changing WH Usage International Operator Presence • Deregulation and sophistication • International operators increase efficiencies • Growing FDI also globalizes the logistic market © 2011 Jones Lang LaSalle. All rights reserved. Challenges and Way Ahead © 2011 Jones Lang LaSalle. All rights reserved. Critical Challenges Faced by Warehousing Industry in India Availability of affordable land at desired locations • Non – transparent and unorganized warehouse real estate market. Unclear title and approvals hassles • Land values attaining peaks in the past 3 – 5 years, the availability of affordable land is a concern. Integration of various modes of logistics • Key challenge is to integrate all these modes (road, rail, air & sea) to ensure efficient delivery though cost effective means. • Exploring the opportunity of multimodal transport system integrating different geographical scales from the global to the local. Taxation & regulatory policies • Government’s role to promote organized warehousing with clear cut rules and regulations • The expected phase-out of Central Sales Tax and implementation of Goods and Services Tax (GST) Standardization of warehouse specifications across geographies • Lack of standards - Quality and flexibility of available warehousing space is a major concern. •There is a dearth of quality temperature controlled storage spaces across the region, Infrastructure •The widening gap between the growth of infrastructure sector and that of organized warehousing • While significant outlay has been done at a macro-level, infrastructure at the warehouse level also needs focus. Trained and professional manpower • Skilled work force to manage warehouses of tomorrow will mitigate risks of high inventory levels and poor service offerings © 2011 Jones Lang LaSalle. All rights reserved. Optimization of Cost Elements of Logistic Cost in India Customer Shopping, 6% Handling & Warehousing, 9% Packaging, 11% Optimization might be achieved by: Minimizing Losses •Efficient storage facilities - warehouses •Unbroken Cold chain Effective Planning of WH positioning Transportation, 35% • Locating warehouse in optimal locations keeping in mind both supply and distribution networks. Reducing transportation cost • Efficient transportation fleet • Shifting to cost efficient transportation mode Losses, 14% Effective inventory management Inventories, 25% • Extensive use of RFID Tagging • Professional Management of inventory Source: CII Institute of Logistics, India. © 2011 Jones Lang LaSalle. All rights reserved. Jones Lang LaSalle Brief © 2011 Jones Lang LaSalle. All rights reserved. Locally focused, Regionally co-ordinated, Globally aligned Americas EMEA Asia Pacific Key Statistics 2011 Revenue $3.6B Sq ft under management 1.8 Billion Employees 42,000+ Licensed Brokers 2,600 Research staff 300+ 70 offices 535 cities 14 countries 60 offices 126 cities 31 countries 77 offices 156 cities 13 countries Locations 1,000 © 2011 Jones Lang LaSalle. All rights reserved. Jones Lang LaSalle, India •Largest geographical footprint – 14 offices in 11 cities •A growing base of employees, currently over 4,000 •Two out of five professionals in the organised Indian real estate sector work for Jones Lang LaSalle CHANDIGARH •Perfect combination of global best practices and local, grass-root level insights DELHI •An expanded presence in growing Tier II and Tier III cities AHMEDABAD Tier 1 Cities Chandigarh, Ahmedabad, Pune, Kolkata, Kochi, Coimbatore Tier 3 and Other Cities – Foothold in 90 + cities Tier 2 Cities Allahabad Agra Amritsar Anand Aurangabad Baroda Bhavnagar Bhilai Bhubaneshwa r KOLKATA Delhi, Mumbai, Hyderabad, Bangalore, Chennai Durgaur Goa Gorakhpur Guwahati Gwalior Hawra Hubli Indore Jabalpur Jodhpur Kalyan Kanpur Kharagpur Kolhapur Lucknow Ludhiana Mangalore Meerut Mehsana Moradabad Mysore Nashik Nanded Panipat Raipur Rajkot Siliguri Surat Thane Thiruvananthapuram Ujjain Vapi Vizag Vijaywada MUMBAI PUNE HYDERABAD BANGALORE CHENNAI COIMBATORE KOCHI © 2011 Jones Lang LaSalle. All rights reserved. What keeps us ahead of the Curve ? Rigid Code of Ethics World’s Most Ethical Companies (for fourrow) years in a Ethics Inside Certification Account Management • Single point of contact Research Suite • Empowered account managers • Ensures consistent delivery © 2011 Jones Lang LaSalle. All rights reserved. Industrial & Logistic Services, India © 2011 Jones Lang LaSalle. All rights reserved. Jones Lang LaSalle – Global Industrial & Logistic Footprint Americas 196 industrial professionals US: Canada: Mexico: Brazil: 169 9 11 3 Asia Pacific EMEA Panama: Argentina: Chile: 1 2 1 132 industrial professionals Belgium: CEE: France: Germany: Holland: 2010 6 8 11 28 13 Italy: Russia: Spain: UK: 4 9 20 33 181 industrial professionals Australia: China: Hong Kong: India: Indonesia: Japan: Korea: New Zealand: 2010 # Industrial transactions: 1,146 Total $ consideration: Total s.f.: Total s.f.: 76 million Philippines: Singapore: Taiwan: Thailand: Vietnam: Malaysia: Asia Regional: 2 4 2 4 2 2 2 2010 # Industrial transactions: Total $ consideration: $3.7 billion 74 60 5 14 1 2 1 10 850 $1.6 billion 53 million # Industrial transactions: 900 Total $ consideration: $2.1 billion Total s.f.: 109 million © 2011 Jones Lang LaSalle. All rights reserved. Industrial & Logistic Service Offerings & Footprint in India Our Service Offerings: Business Location Consulting 40+ Consulting Industrial tenant representation Supply chain & Logistics Solutions Site selection/incentives Industrial property marketing Port, airport & multi modal services Industrial asset disposition Project Development Services Energy and sustainability Industrial Valuation 100+ Transactions 12+ Mn. Sft. transacted 14 Team Members 7 City Presence © 2011 Jones Lang LaSalle. All rights reserved. 24 Select Clientele and Testimonial Consulting Built to Suit Acquisition / Disposition “I would like to commend JLL’s performance in managing our Chakan MIDC transaction to a successful outcome. JLL managed the purchase process from concept through to negotiation and completion in a very efficient and professional manner. This delivered a result by the team which met our expected timeframe and targeted purchase value and savings.” Ruairi McCafferty Manager of Real Estate Europe, Middle East & Africa Federal-Mogul Corporation “Jones Lang LaSalle had worked with us for a few months on the relocation & expansion project of our plant at Bangalore. JLL gave us valuable inputs with their excellent market knowledge and technical expertise in this assignment. They were professional in their approach and efficient. I thank JLL for their close collaboration and support on this important project.” David Stanley Managing Director & CEO AMC India “JLL has found a very good location and followed up very diligently on all the items, with the landowners and was very professional & competent in the managing of the real estate aspects.” Peter Allen Lubricants LSC Business Development Manager Shell © 2011 Jones Lang LaSalle. All rights reserved. Your Point of Contact © 2011 Jones Lang LaSalle. All rights reserved. Your Point of Contact Your Point of Contact Nirav Kothary Sr. Vice President Head – Industrial Services, India E-Mail: [email protected] Hand phone: +91-97277 58027 © 2011 Jones Lang LaSalle. All rights reserved. Thank You © 2011 Jones Lang LaSalle. All rights reserved.