Market Research Report : Project logistic Market in India 2012

Project Logistics Market – India
Project Logistics Market India
September 2012

Executive Summary
• Project logistics refers to the handling of shipments such as heavy transports, ODC and cargo
experiencing time, security and location constraints
Market • The project logistics market is currently valued at INR x1 units and is expected to reach INR x6
units by 2016
Drivers Challenges
 Growth in energy sector  Poor quality infrastructure
 Rising number of infrastructure projects  Project delays slowing down project logistics
Drivers &  Demand accruing from mining sector sector
 Growing logistics demand from  Lack of skilled manpower
Challenges automotive sector  Difficulty in permits attainment and
 Growing Warehousing Facilities unfriendly taxation policy
 Technology issues
 Inefficient Material Handling Equipments
Technology Trends
Technology Trends
Trends
T d Market Trends  Identification technology
 Service‐wise diversification  Material handling technology
 Region‐wise diversification  Communication technology
 Information technologygy

Key Players
Public Player A, Player B, Player C, Player D, Player E
Competition
Player F, Player G, Player H, Player I, Player J, Player K, Player L, Player M, Player N,
y , y , y , y , y , y , y , y , y ,
Private Player M, Player O, Player P

PROJECT LOGISTICS MARKET IN INDIA 2012.PPT 2

•Introduction
•Market Overview
•GST Implementation
•Project Logistics Management Solution
•Key Success Factors
•Issues Hampering Project Logistics
•Drivers & Challenges
•Drivers & Challenges
•Market Trends
•Technology Trends
ec o ogy e ds
•Competition
•Strategic Recommendations
•Appendix

Logistics primarily deals in transportation and storage
operations and is significantly aided by value added service
LOGISTICS
SECTOR

TRANSPORTATION STORAGE VALUE ADDED SERVICE

Container Rail Transport Modern Warehousing
Modern Warehousing
Freight Forwarding
Road Transport
Logistics Park
Express Logistics 3PL/ 4PL
Inland Container Depot
Inland Container Depot
Coastal Shipping
Container Freight Station Courier Service
Cold Chain

Project Logistics Port

• The logistics sector comprises mainly of 3 major segments – Transportation, Storage and Value‐added service
• The growing Indian economy has a positive impact on players operating in storage and value‐ added services
segments while in transportation segment container train and project logistics is projecting a promising future
f
outlook


Growing investments in key sectors of the economy is
driving the project logistics market in India
Market Overview Market Size and Growth (Value‐wise)
INR bn
• The Indian logistics market forms approximately a% of
600
g g
the global logistics market in value terms x6
• The term project logistics refers to the handling of global 500 X%
x5
shipments with special characteristics such as 400 x4
x3
 Heavy transports 300 x2
x1
 Over dimension cargo
g 200
 Cargo with time and or security constraints 100
 Cargo to remote and locations which are difficult to access 0
• Economic growth in India in addition to huge demand for 20‐‐ 20‐‐ 20‐‐e 20‐‐e 20‐‐e 20‐‐e
infrastructure development is simultaneously leading to
infrastructure development is simultaneously leading to
growing demand for project logistics activity Cargo Transport Segmentation
• The project logistics market is currently valued at INR x1
units and growing at a rate of approximately X% is b%
expected to reach INR x
expected to reach INR x2 units Segmentation on basis
Segmentation on basis
of quantum of
• Cargo transportation business that is usually segmented
business done
into A and B composes of a% and b% respectively of total
quantum of business
a%
• The Indian market is highly fragmented with large section
The Indian market is highly fragmented with large section
of unorganized players playing a dominant role
A B


Project logistics service providers face certain criticalities in
while operating their business

Transport Cost

Key
Issues

Technology Adoption
Technology Adoption Hired Equipments
Hired Equipments


Drivers & Challenges‐ Summary

Challenges

Poor quality infrastructure

Project delays slowing down project
Drivers logistics sector
Difficulty in permits attainment and
Growth in energy sector unfriendly taxation policy
Rise in number of infrastructure
Technology issues
projects
Inefficient Material Handling
Demand accruing from mining sector
Equipments
Increase in logistics demand from
automotive sector
automotive sector

Rise in warehousing facilities


Non‐Conventional Energy Sources (1/3)
WIND Cumulative Wind Power Capacity

MW ‘000 Reference Moderate Advanced
• India is ranked 5th worldwide in terms of wind power
30
installed capacity and 3rd in terms of annual capacity
20
additions c3
10 c1 c2
 As on Jan 2012, Indian wind energy sector has an installed b1 b2 b3
a1 a2 a3
capacity of 16,179 MW 0
• A number of companies are entering into production of 2009 2010 2015e
wind turbines due to India’s expansive opportunity in Reference
A conservative estimate taking into account existing policies but includes
assumptions like continuing electricity and gas market reform, liberalization of
cross border energy trade and policies aimed at pollution reduction
India’s wind energy sector Takes into account all measures to support renewable energy and successful
Moderate
• Foreign wind turbine manufacturing companies like Vestas, GE implementation of targets as well as modest implementation of new policies
Most ambitious with assumption of clear and unambiguous commitment to
Wind, Enercon and Gamesa have established their units in India Advanced renewable energy along with political support for implementation of projects
• Wind turbine is manufactured in parts each of the parts
Wind turbine is manufactured in parts, each of the parts Planned Projects
are considered as an ODC for logistic purpose
 The manufactured parts treated as ODC has to be transported Plant Owner State Plant Capacity (MW)
to the required installation site which is generally in remote Suzlon Energy Ltd. Andhra Pradesh 3000

p
place Gujarat Flurochemicals Rajasthan, Gujarat, 1000
Ltd.
Ltd Karnataka
K t k
– Generator, rotor and blades are some of the component termed as
ODC Welspun Energy Ltd. Andhra Pradesh 500
 The wind power generation projects would require smooth Tiana Power Projects
Pvt. Ltd. Maharashtra 300
transportation of equipments thereby generating demand for
p j
project logistics sector
g Greenko Wind Project Karnataka 300
Pvt. Ltd.
Pvt Ltd


Automobile industry’s dependence on transport of bulk
auto components enhances demand for project logistics
Automotive
Automobile Sector Growth
• Indian automobile sector is growing at a healthy rate over
the years
the years INR tn
 The sector is expected to grow at m% CAGR between 20‐‐ to 8
m% b
20‐‐
• Individual automobile parts need to be transported 6
from various areas through logistics networks to 4 a
assembling centre
2
• Project logistics plays an integral role where automobile
parts in huge numbers are to be shipped 0
20‐‐ 20‐‐e
 Meeting automobile business demands with efficiency and
timely transport of accessories and spare parts makes logistics
timely transport of accessories and spare parts makes logistics
business crucial to the industry Operating Cost Revenue Earning
• The automobile sector incurs between m% ‐ n% of its
operating cost on logistics service a% c%
 Logistics outsourcing is estimated to save freight cost of
automobile companies by approximately s%‐t%
 Logistics being a non‐core function for the sector makes it
advantageous for the automobile manufacturers to depend on
logistics service providers who help in timely replenishment of
depleting inventories smoothly

A B C D


IT adoption in logistics sector particularly project logistics
will help scale up efficiency in business operations
• IT implementation comprises
mainly enterprise application
packages
• ERP is one of the most popular IT
ERP is one of the most popular IT
tool being used across logistics

mation
ology
Techno
Inform
• Direct data entry into
• Communication plays a key
computer
role in logistics business
• Technologies like bar
• Ensures speed and
coding, RFID, data Identification Communication
Competitive accuracy in customer
communication, magnetic Technology Technology
Advantage
g service
strip and voice recognition
strip and voice recognition
• Helps in bringing in
are used
competitiveness among
• Used for tracking rail cars

Handling
and carton movement Material service providers

• Loading, unloading and storage of
goods in warehouses
• Reduces need of labor force
• Automated material handling
becomes useful in areas of
hazardous goods


Major Public Companies – Summary
Net Profit/Loss
8
Size of the Bubble represents Market
7
Capitalization in INR bn
6
5
4
3
2
1
0
‐1
‐2
‐3
‐4
‐5
‐200 ‐180 ‐160 ‐140 ‐120 ‐100 ‐80 ‐60 ‐40 ‐20 0 20 40 60 80 100 120 140
Total Income
A B C D E


Public: Domestic Company – Player A (1/3)
Company Information Offices and Centres – India
Player A
Corporate Address 5th Road, 6th Street,
City A – 700 xxx
y
Tel No. 91 22 6679 xxxx
Fax No. 91 22 6679 xxxx
Website www.playera.com
Year of Incorporation 19‐‐
Ticker Symbol 53xxxx (BSE)
Stock Exchange Bombay Stock Exchange City X Head Office

Products and Services
Category Products/Services Key People
CFS / ICD, Project & Engineering
Solutions, NVOCC, Ship owning, 3PL &
Solutions NVOCC Ship owning 3PL & Name Designation
Logistics solutions warehousing, import handling, export Person A MD
handling, LCL shipment and
transportation Person B CFO

Person C CEO


Private: Foreign Company – Player A (2/3)
Financial Snapshot
i i lS h Key Ratios
K i
y‐o‐y change
Total Income Net Profit/Loss Particulars
(2011‐10)
2011 2010 2009 2008

INR units INR units Profitability Ratios
Operating Margin
250 ‐20
20
Net Margin
200 a Profit Before Tax Margin
‐40 Return on Equity
150 d
b c R4 Return on Capital Employed
100 R3 Return on Working Capital
‐60
50 R2 Return on Assets
R1 Return on Fixed Assets
0 ‐80 Cost Ratios
20‐‐ 20‐‐ 20‐‐ 20‐‐ Operating costs (% of Sales)
Administration costs (% of
Sales)
Financial Summary Interest costs (% of Sales)
Interest costs (% of Sales)
• The company incurred a net loss of INR d units in FY 20‐‐, as Liquidity Ratios
Current Ratio
compared to net loss of INR c units in FY 20‐‐
Cash Ratio
• The company reported total income of INR R4 units in FY 20‐‐, Leverage Ratios
registering an increase of m% over FY 20‐‐ Debt to Equity Ratio
Debt to Capital Ratio
b i l i
• The company earned an operating margin of f% in FY 20‐‐, an Interest Coverage Ratio
increase of g percentage points over FY 20‐‐ Efficiency Ratios
• The company reported debt to equity ratio of d in FY 20‐‐, a Fixed Asset Turnover
decrease of h% over FY 20‐‐ Asset Turnover
Current Asset Turnover
Working Capital Turnover
Capital Employed Turnover
Improved Decline


Private: Foreign Company – Player A (3/3)
Key Business Segments Key Geographic Segments

A B C A B C D E F G

% %
100% 100%

50% 50%

0% 0%
20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐

Business Highlights
Description News

Overview

Acquisitions


Appendix

Ratio Calculations Ratio Calculations
(Operating Current Assets / Current
Operating Margin Current Ratio
Income/Revenues)*100 Liabilities

Net Margin (Net Profit / Revenues) *100 {(Cash & Bank Balance +
Cash Ratio Marketable Securities) / Current
(Income Before Tax / Revenues Liabilities)}
Profit Before Tax Margin
*100
Total Liabilities / Shareholders
q y
Debt to Equity
(Net Income / Shareholders
(N I / Sh h ld Equity
E it
Return on Equity (ROE)
Equity)*100
{Total Debt / (Shareholders
Debt to Capital Ratio
EBIT / (Total Assets – Current Equity + Total Debt)}
Return on Capital (ROCE)
Liabilities)*100
Interest Coverage Ratio EBIT / Interest Expense
(Net Income / Working Capital)
(N I / W ki C i l)
Return on Working Capital
*100
Fixed Asset Turnover Sales / Fixed Assets
Return on Assets (Net Income / Total Assets)*100
Asset Turnover Sales / Total Assets
Return on Fixed Assets (Net Income / Fixed Assets) *100

(Operating Expenses / Sales) Current Asset Turnover Sales / Current Assets
Operating Costs (% of Sales)
*100

Administration Costs (% of (Administrative Expenses / Sales) Working Capital Turnover Sales / Working Capital
Sales) *100

Interest Costs (% of Sales) (Interest Expenses / Sales) *100 Capital Employed Turnover Sales / Shareholders Equity
/


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