Air Cargo - India July 2009

Executive Summary SAMPLE Market Drivers & Challenges Government Initiatives Competition Changing FDI policy to attract investors Introduction of the Open Sky policy Various bi-lateral agreements Large scale investment to develop infrastructural capabilities Many domestic and international players have entered the market in order to capitalize on the growing opportunities Market valued at INR X bn in 2007-08; Expected to grow at x% p.a. Cargo transported is dominated by pharma, textiles fashion goods, telecom, IT hardware, gems and machinery parts x % of all cargo is transported as belly cargo in domestic airlines International operations expected to grow at x% p.a. while domestic operations expected to grow at x% p.a. by 2011-12 Drivers Strong macroeconomic fundamentals Growth in retail Development of transportation system Growth in clearing and forwarding agents Challenges Rising air traffic fuel (ATF) prices Growing congestion at airports Delays in cargo handling & clearance XX WW VV UU International Players DD CC BB AA Domestic Players

Changing FDI policy to attract investors

Introduction of the Open Sky policy

Various bi-lateral agreements

Large scale investment to develop infrastructural capabilities

Many domestic and international players have entered the market in order to capitalize on the growing opportunities

Market valued at INR X bn in 2007-08; Expected to grow at x% p.a.

Cargo transported is dominated by pharma, textiles fashion goods, telecom, IT hardware, gems and machinery parts

x % of all cargo is transported as belly cargo in domestic airlines

International operations expected to grow at x% p.a. while domestic operations expected to grow at x% p.a. by 2011-12

Drivers

Strong macroeconomic fundamentals

Growth in retail

Development of transportation system

Growth in clearing and forwarding agents

Challenges

Rising air traffic fuel (ATF) prices

Growing congestion at airports

Delays in cargo handling & clearance

Introduction Market Overview Drivers & Challenges Government Initiatives Competition Key Developments

Introduction

Market Overview

Drivers & Challenges

Government Initiatives

Competition

Key Developments

Air cargo traffic in India has been growing due to strong domestic demand and rising international trade Air cargo market is estimated to grow at x% p.a. and reach INR X bn by 2011-12 Largely dominated by pharmaceuticals, textiles fashion goods, telecom (like mobiles), IT hardware, gems and machinery parts which are time critical x % of all cargo is transported as belly cargo in domestic airlines SAMPLE Overview Market Size and Growth Cargo Traffic Source: V 2007-08 W 08-09e X 09-10e Y 10-11e Z 11-12e x% INR bn Growth Rate of Modes of Transportation x% Air – Import Cargo y% Ports (cargo) z% Railway (freight) v% Air – Export Cargo Air cargo observed the highest growth in the cargo transportation sector (2007-08) A 2001-02 B 02-03 C 06-07 05-06 03-04 E 04-05 D F G 07-08 Domestic International ‘ 000 tonnes

Air cargo market is estimated to grow at x% p.a. and reach INR X bn by 2011-12

Largely dominated by pharmaceuticals, textiles fashion goods, telecom (like mobiles), IT hardware, gems and machinery parts which are time critical

x % of all cargo is transported as belly cargo in domestic airlines

Cargo Terminals: International SAMPLE Overview Source: Cargo Traffic Infrastructure and Developments A 2001-02 B 02-03 C 03-04 D 04-05 E 05-06 F 06-07 G 07-08 H 08-09 Export Import ‘ 000 MT +13% x airport terminals with one dedicated to cargo flights; equipped with modern cargo handlers such as forklifts and power hydraulic pallet trucks. A new Integrated Cargo Terminal This is being planned and is expected to span over x sq. m. and Phase 1 has been commissioned Expansion of the airport is expected and is going to be constructed in Sriperumbudur taluk at an investment of INR X bn Location: Chennai x sq. m. Total Area X sq. m. each, 0 o -4 o C Cold Chambers Examination: x sq. m., 12 o -18 o C Work Station: x sq. m.,7 ton capacity Receiving Area: x sq. m., 15 o -18 o C Other Sections Perishable Cargo Facility x sq. m. Covered Area Import Wing x wide bodied aircrafts with ULD parking area, hydrant refueling set-up Cargo Apron Capacity X sq. m. Covered Area x manual Build up Stations Export Wing Established Feb 1, 19-- Area x sq. m.

x airport terminals with one dedicated to cargo flights; equipped with modern cargo handlers such as forklifts and power hydraulic pallet trucks.

A new Integrated Cargo Terminal

This is being planned and is expected to span over x sq. m. and Phase 1 has been commissioned

Expansion of the airport is expected and is going to be constructed in Sriperumbudur taluk at an investment of INR X bn

Drivers and challenges Development of Transportation System Drivers Strong Macroeconomic Fundamentals Growth in Retail Growth in Clearing and Forwarding Agents Growing Congestion at Airports Rising Air Traffic Fuel (ATF) Prices Challenges Delays in Cargo Handling & Clearance

Government has taken various measures towards developing this segment by introducing major changes in the FDI policy FDI Policy Source: SAMPLE FDI up to x % is permitted through automatic approvals and up to y% with special permission from FIPB Existing Airports x% FDI is allowed in domestic airlines under the automatic route (but not by foreign airline companies) y% equity ownership by Non-Resident Indians (NRIs) is permissible Domestic Airlines x% FDI in maintenance, repair and overhaul (MRO) organizations, flying training institutes (FTIs) and helicopter services y% tax exemption for airport projects for a period of X years in order to attract investors Others FDI up to x % is permitted through automatic approvals Greenfield Airports Hiked to x % FDI from the initial permissible rate of y% Cargo and Non-scheduled Airlines Policy Sector

FDI up to x % is permitted through automatic approvals and up to y% with special permission from FIPB

x% FDI is allowed in domestic airlines under the automatic route (but not by foreign airline companies)

y% equity ownership by Non-Resident Indians (NRIs) is permissible

x% FDI in maintenance, repair and overhaul (MRO) organizations, flying training institutes (FTIs) and helicopter services

y% tax exemption for airport projects for a period of X years in order to attract investors

FDI up to x % is permitted through automatic approvals

Hiked to x % FDI from the initial permissible rate of y%

Domestic Players (1/10) SAMPLE It expanded its operations by introducing new daily flights between Delhi-Srinagar via Jammu and Mumbai-Srinagar Plans on introducing flights between Dubai-Nagpur as Nagpur is expected to become a major logistic hub in India Cargo carried ranges from carriage of various perishables, household pets, life saving drugs, valuables and general goods Corporate Information Financial Performance Business Highlights Source: Company Snapshot: ABC Ltd X 2005-06 Y 06-07 Z 07-08 Revenue Profit / Loss 0 Revenue INR mn Profit INR mn Operational Performance A 2001-02 B 02-03 C 03-04 D 04-05 E 05-06 F 06-07 G 07-08 Average Weight Load Factor Cargo Carried Tonnes/day % Financial Performance Headquarters New Delhi Founded 19-- Fleet Size X Parent ABC Subsidiaries N.A. Key People Mr.-- (Founder) Mr. -- (Owner, Jet Airways) Mr. -- (CEO)

It expanded its operations by introducing new daily flights between Delhi-Srinagar via Jammu and Mumbai-Srinagar

Plans on introducing flights between Dubai-Nagpur as Nagpur is expected to become a major logistic hub in India

Cargo carried ranges from carriage of various perishables, household pets, life saving drugs, valuables and general goods

Mr.-- (Founder)

Mr. -- (Owner, Jet Airways)

Mr. -- (CEO)

Thank you for the attention About Netscribes Netscribes is a knowledge-consulting and solutions firm with clientele across the globe. The company’s expertise spans areas of investment & business research, business & corporate intelligence, content-management services, and knowledge-software services. At its core lies a true value proposition that draws upon a vast knowledge base. Netscribes is a one-stop shop designed to fulfil clients’ profitability and growth objectives. The Air Cargo – India report is a part of Netscribes’ Aviation Industry Series. For more detailed information or customized research requirements please contact: Disclaimer: This report is published for general information only. Although high standards have been used the preparation, Research on India, Netscribes (India) Pvt. Ltd. or “Netscribes” is not responsible for any loss or damage arising from use of this document. This document is the sole property of Netscribes (India) Pvt. Ltd. and prior permission is required for guidelines on reproduction. Natasha Mehta, CFA Phone: +65 8448 0449 E-Mail: [email_address] Gagan Uppal Phone: +91 98364 71499 E-Mail: [email_address] Research on India is a product of Netscribes (India) Pvt. Ltd. Research on India is dedicated to disseminating information and providing quick insights on “hot” industries in India and other emerging markets. Track our new releases and major updates in these industries on