Evolving Warehousing Infrastructure
The increasing need for Indian industries to compete in a global market across cost, quality and service dimensions require efficient warehousing strategies. Anshul Singhal, CEO, Embassy Industrial Parks elaborates.
India’s Third Party Logistics (3PL) market is expected to grow with CAGR of 6% over the next five years. As per the JLL report, 2018 forecasted supply for warehouses stock is 157 million sq. feet in Grade A and Grade B while, the incremental demand between 2016 and 2020 is expected to be 218 million sq. ft. Further, led by GDP revival, ramp up in transport infrastructure, e-commerce penetration, GST implementation, and other initiatives like ‘Make in India’, India’s logistic and warehousing sector is poised for accelerated growth,
With the implementation of GST, many manufacturing industries would shift focus towards the hub-spoke model of warehousing which would eventually reduce the smaller warehouses present across locations and increase bigger warehouses.
The warehouse and distribution centers form important nodes in a supply chain network. They support the movement of materials, storing goods, processing products, de-aggregating vehicle loads and creating stock keeping & assembling shipments. Thus, efficient management of warehouses helps to optimise the production and distribution processes, cost reduction and service enhancement. In sync, warehousing industry in India has evolved from just brick and mortar shelters for storing goods to highly sophisticated stockrooms. With advanced tracking mechanism, each consignment can be tracked on a real time basis at the click of a button. Without these state-of-the-art facilities, the rise of e-tail in India would have remained but a fairy tale.
Company’s present projects and locations
Embassy Industrial Parks is a joint venture between the Embassy Group and Warburg Pincus. The tie up has helped and allowed Embassy Industrial Parks to leverage the global experience of Warburg Pincus in industrial real estate to bring quality Grade A industrial, light manufacturing and warehousing spaces in India.
Since our commencement, over the last 2.5 years, we have acquired important parcels of land across the country. Embassy Industrial Parks aims to build 15-20 million square feet of industrial and warehousing space over the next 5 years across India. We have already signed lands which are at various stages of acquisition in Chennai, Delhi, Pune, Mumbai & NCR and we are actively working to acquire lands in Gujarat and Kolkata. Embassy Industrial Parks has invested a total cost of INR 140 crore in Gurgaon project and has also invested INR 350 crore to build a 1.1-million sq ft industrial park at Chakan, Pune.
Embassy Industrial Parks provides build-to-suit factory building and 100% legally compliant warehouses on lease rental basis which means no upfront capital investment by the company. The value proposition that Embassy Industrial Parks offers to clients include:
- Using pre-engineered steel buildings
- Taking strategic land positions
- Deploying capital to scale with the clients
- Following customers across key markets in India
- Employing consultative approach and domain expertise to optimize control costs and improve efficiency
- Execute projects “on time, at cost and as per defined specs”
- Follow due audit, contractual, leasing, legal, and statutory & governance processes to meet the needs of MNC clients –
- Offer post construction facility management through Embassy Services, the property & facility management wing
We provide rain water harvesting, solar panels, energy management and so on. Our parks have the right amenities such as truck parking, traffic management, 24/7 CCTV controlled security, fire management, Incubation warehouses, ATM’s emergency medical services and so on.
The future outlook for the sector
The main challenges the industrial and logistics companies face are inventory accuracy & locations, infrastructure issues, redundant process and picking optimization. The logistic sector in India is also fragmented and under developed with relatively high logistics costs due to poor infrastructure and a layered tax system contributing to significant delays & inefficiency. GST regime promises one country; one tax that will immensely enable logistics and transportation sectors and improve the ease of doing business.
The domestic warehousing industry will see consolidation with the roll-out of the goods and services tax. Facilities will relocate to consumer-driven and transportation network areas from the current tax-friendly locations. We even expect sectors like ecommerce, automotives, consumer electronics, pharmaceuticals; FMCG will own/lease larger warehouses at prime locations like Mumbai, Delhi, Ahmedabad, Chennai, Bengaluru and Hyderabad.
GST will ensure that India for the first time will be exposed to consolidated large space central warehousing parks instead of the current scattered poor quality standalone spaces. The company plans to build about 20 million sq ft of logistics parks over the next five years at a total investment of about USD 1 billion. We are currently focusing at taking good land positions in key markets—close to consumption centers with active industrial presence like Mumbai, Delhi, Bengaluru, Chennai and Pune.
Warehousing and industrial logistical requirements are growing and this growth is here to stay. The biggest indicator of its future is that the government of India plans to build multi modal logistic parks across the country with an investment of INR 33,000 crore in a bid to bring down costs incurred n logistics. It will also lay low the overall freight cost reduce vehicular pollution and congestion and will enable reduction of warehousing costs of the country.