market research report : project logistic market in india 2012

Project Logistics Market IndiaProject Logistics Market – India

September 2012

Executive Summary

Market

• Project logistics refers to the handling of shipments such as heavy transports, ODC and cargo experiencing time, security and location constraints

• The project logistics market is currently valued at INR x1 units and is expected to reach INR x6units by 2016

Drivers Challenges

Drivers & Challenges

DriversGrowth in energy sectorRising number of infrastructure projectsDemand accruing from mining sectorGrowing logistics demand from

Challenges Poor quality infrastructure Project delays slowing down project logistics sector Lack of skilled manpowerChallenges

automotive sectorGrowing Warehousing Facilities

Difficulty in permits attainment and unfriendly taxation policy Technology issues Inefficient Material Handling Equipments

T d Technology TrendsTrends Market Trends Service‐wise diversification Region‐wise diversification

Technology Trends Identification technologyMaterial handling technology Communication technology Information technology

Competition

Key Players

Public Player A, Player B, Player C, Player D, Player E

Private Player F, Player G, Player H, Player I, Player J, Player K, Player L, Player M, Player N,

gy

2PROJECT LOGISTICS MARKET IN INDIA 2012.PPT

Private y , y , y , y , y , y , y , y , y ,Player M, Player O, Player P

•Introduction

•Market Overview

•GST Implementation

•Project Logistics Management Solution

•Key Success Factors

•Issues Hampering Project Logistics

•Drivers & Challenges•Drivers & Challenges

•Market Trends

•Technology Trendsec 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

Container Rail Transport

STORAGE

Modern Warehousing

VALUE ADDED SERVICE

Road Transport

Express Logistics

Modern Warehousing

Logistics Park

Inland Container Depot

Freight Forwarding

3PL/ 4PL

Coastal Shipping

Cold Chain

Inland Container Depot

Container Freight Station

Port

Courier Service

•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

f

Project Logistics Port


segments while in transportation segment container train and project logistics is projecting a promising future outlook

Growing investments in key sectors of the economy is driving the project logistics market in India

•The Indian logistics market forms approximately a% of the global logistics market in value terms

Market Overview Market Size and Growth (Value‐wise)

600

INR bn

x6g g• The term project logistics refers to the handling of global shipments with special characteristics such as

Heavy transports

Over dimension cargo 200

300

400

500 X%x6

x5x4

x3x2x1

g

Cargo with time and or security constraints

Cargo to remote and locations which are difficult to access

• Economic growth in India in addition to huge demand for infrastructure development is simultaneously leading to

0

100

200

20‐‐e20‐‐e20‐‐e20‐‐e20‐‐20‐‐

infrastructure development is simultaneously leading to growing demand for project logistics activity

•The project logistics market is currently valued at INR x1 units and growing at a rate of approximately X% is expected to reach INR x2 units

b%

Cargo Transport Segmentation

Segmentation on basisexpected to reach INR x2 units• Cargo transportation business that is usually segmented into A and B composes of a% and b% respectively of total quantum of business

•The Indian market is highly fragmented with large sectiona%

Segmentation on basis of quantum of business done


• The Indian market is highly fragmented with large section of unorganized players playing a dominant role

BA

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

Transport Cost

KeyIssues

Technology Adoption Hired EquipmentsTechnology Adoption Hired Equipments


Drivers & Challenges‐ Summary

Challenges

Drivers

Poor quality infrastructure

Project delays slowing down project logistics sector

Growth in energy sector

Rise in number of infrastructure projects

Difficulty in permits attainment and unfriendly taxation policy

Technology issues

Demand accruing from mining sector

Increase in logistics demand from automotive sector

Inefficient Material Handling Equipments

automotive sector

Rise in warehousing facilities


Non‐Conventional Energy Sources (1/3)

WIND

• India is ranked 5th worldwide in terms of wind power installed capacity and 3rd in terms of annual capacity 30

MW ‘000 Moderate AdvancedReference

Cumulative Wind Power Capacity

additions As on Jan 2012, Indian wind energy sector has an installed capacity of 16,179 MW

•A number of companies are entering into production of 2015e20102009

b3c2c1

c3

0

10

20

a2a1 a3b1 b2

wind turbines due to India’s expansive opportunity in India’s wind energy sector• Foreign wind turbine manufacturing companies like Vestas, GE Wind, Enercon and Gamesa have established their units in India

•Wind turbine is manufactured in parts each of the parts

ReferenceA 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

Moderate Takes into account all measures to support renewable energy and successful implementation of targets as well as modest implementation of new policies

Advanced Most ambitious with assumption of clear and unambiguous commitment to renewable energy along with political support for implementation of projects

•Wind turbine is manufactured in parts, each of the parts are considered as an ODC for logistic purpose The manufactured parts treated as ODC has to be transported to the required installation site which is generally in remote place

Plant Owner State Plant Capacity (MW)

Suzlon Energy Ltd. Andhra Pradesh 3000

Gujarat Flurochemicals Ltd

Rajasthan, Gujarat, K t k 1000

Planned Projects

p– Generator, rotor and blades are some of the component termed as ODC

The wind power generation projects would require smooth transportation of equipments thereby generating demand for project logistics sector

Ltd. Karnataka 1000

Welspun Energy Ltd. Andhra Pradesh 500

Tiana Power Projects Pvt. Ltd. Maharashtra 300

Greenko Wind Project Pvt Ltd Karnataka 300


p j gPvt. Ltd.

Automobile industry’s dependence on transport of bulk auto components enhances demand for project logistics

Automotive

• Indian automobile sector is growing at a healthy rate over the years INR tn

Automobile Sector Growth

the years The sector is expected to grow at m% CAGR between 20‐‐ to 20‐‐

• Individual automobile parts need to be transported from various areas through logistics networks to 4

6

8m% b

a

assembling centre•Project logistics plays an integral role where automobile parts in huge numbers are to be shipped Meeting automobile business demands with efficiency and timely transport of accessories and spare parts makes logistics

0

2

20‐‐e20‐‐

timely transport of accessories and spare parts makes logistics business crucial to the industry

•The automobile sector incurs between m% ‐ n% of its operating cost on logistics service Logistics outsourcing is estimated to save freight cost of

a% c%

Operating Cost Revenue Earning

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


BA DC

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

olog

y

• Communication plays a key role in logistics business

• Ensures speed and accuracy in customer service

• Direct data entry into computer

• Technologies like bar coding, RFID, data communication, magnetic strip and voice recognition

Inform

Techno

CommunicationTechnology

CompetitiveAdvantage

IdentificationTechnology

• Helps in bringing in competitiveness among service providers

strip and voice recognition are used

• Used for tracking rail cars and carton movement

g

Material

Han

dling

• 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

6

7

8

Net Profit/Loss

Size of the Bubble represents Market Capitalization in INR bn

3

4

5

6

‐1

0

1

2

‐4

‐3

‐2

‐1

‐5

‐200 ‐180 ‐160 ‐140 ‐120 ‐100 ‐80 ‐60 ‐40 ‐20 0 20 40 60 80 100 120 140

Total Income

EDCBA


Public: Domestic Company – Player A (1/3)

Company Information Offices and Centres – India

Corporate Address

Player A

5th Road, 6th Street,

City A – 700 xxxy

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 Head OfficeCity X

Key People

Products and Services

Category Products/Services

CFS / ICD, Project & Engineering Solutions NVOCC Ship owning 3PL & Name Designation

Logistics solutions Solutions, NVOCC, Ship owning, 3PL & warehousing, import handling, export handling, LCL shipment and transportation

Name Designation

Person A MD

Person B CFO

Person C CEO


i i l S h K i

Private: Foreign Company – Player A (2/3)

Financial Snapshot Key Ratios

Particulars y‐o‐y change (2011‐10)

2011 2010 2009 2008

Profitability RatiosOperating Margin

Net Profit/LossTotal Income

INR units

‐20

INR units

250Net MarginProfit Before Tax MarginReturn on EquityReturn on Capital EmployedReturn on Working CapitalReturn on Assets

20

‐40

‐60

250

200

150

100

50

dR4c

R3b

R2

a

Return on Fixed Assets

Cost RatiosOperating costs (% of Sales)Administration costs (% of Sales)

Interest costs (% of Sales)Financial Summary

‐80

50

020‐‐20‐‐20‐‐20‐‐

R1

Interest costs (% of Sales)

Liquidity RatiosCurrent RatioCash Ratio

Leverage RatiosDebt to Equity Ratio

b i l i

• The company incurred a net loss of INR d units in FY 20‐‐, as compared to net loss of INR c units in FY 20‐‐

• The company reported total income of INR R4 units in FY 20‐‐, registering an increase of m% over FY 20‐‐

Debt to Capital RatioInterest Coverage Ratio

Efficiency RatiosFixed Asset TurnoverAsset TurnoverCurrent Asset Turnover

• The company earned an operating margin of f% in FY 20‐‐, an increase of g percentage points over FY 20‐‐

• The company reported debt to equity ratio of d in FY 20‐‐, a decrease of h% over FY 20‐‐


Working Capital TurnoverCapital Employed Turnover

Improved Decline

Private: Foreign Company – Player A (3/3)

Key Business Segments Key Geographic Segments

%

CBA

%

GFEDCBA

50%

100%

50%

100%

%

Business Highlights

0%

20‐‐20‐‐20‐‐

0%20‐‐20‐‐20‐‐

Description News

Overview

Acquisitions


Appendix

Ratio Calculations

Operating Margin (Operating Income/Revenues)*100

Ratio Calculations

Current RatioCurrent Assets / Current Liabilities

Net Margin (Net Profit / Revenues) *100

Profit Before Tax Margin (Income Before Tax / Revenues *100

(N I / Sh h ld

Cash Ratio{(Cash & Bank Balance + Marketable Securities) / Current Liabilities)}

Debt to Equity Total Liabilities / Shareholders E it

Return on Equity (ROE) (Net Income / Shareholders Equity)*100

Return on Capital (ROCE) EBIT / (Total Assets – Current Liabilities)*100

(N I / W ki C i l)

q yEquity

Debt to Capital Ratio{Total Debt / (Shareholders Equity + Total Debt)}

Interest Coverage Ratio EBIT / Interest Expense

Return on Working Capital (Net Income / Working Capital) *100

Return on Assets (Net Income / Total Assets)*100

Return on Fixed Assets (Net Income / Fixed Assets) *100

Fixed Asset Turnover Sales / Fixed Assets

Asset Turnover Sales / Total Assets

Operating Costs (% of Sales) (Operating Expenses / Sales) *100

Administration Costs (% of Sales)

(Administrative Expenses / Sales) *100

Current Asset Turnover Sales / Current Assets

Working Capital Turnover Sales / Working Capital

/


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

Thank you for the attentionThe Project LogisticsMarket – India report is part of Netscribes’ Transportation & Logistics Series.For more detailed information or customized research requirements please contact:Phone: +91 33 4064 6214Phone: +91 33 4064 6214E‐Mail: [email protected]

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