This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
THE OPPORTUNITY OF THE FREE TRADE & WAREHOUSING ZONE (FTWZ)
& Arshiya’s Integrated Logistics Services
While Consumption in India will grow in real terms from US$ 378 billion presently to US$ 1.56 trillion by 2025 – a fourfold increase, reality is that :
- India ranks 17th in terms of importing world products, consuming just over 2% of globally produced merchandise, but growing @ 35%
While by 2020, India is projected to have an additional 47 million working population, almost equal to the total world shortfall, with an average Indian age of 29 fuelling our ability to become a manufacturing mecca of the world, reality is that:
- India ranks 26th as per WTO in terms of exporting world products contributing just over 1.3% of globally consumed merchandise, but growing @ 22%
India's container throughput in CY10 was just over 9.3 million TEU's, as compared to Dubai (12 million), Singapore (28 million) & China (169 million) - Indicating zero penetration to the Value Addition, Hubbing and Re-Export market leveraging our cost and skill arbitrage
THE BIG THREE REASONS AS TO ‘WHY FTWZ’
GOI Introduces the Free Trade & Warehousing Zones Policy, as a part of Foreign Trade Policy (FTP) 2004-2009
Governed by the SEZ ACT,2005 & SEZ Rules,2006
Free Trade Zones in other countries:Jebel Ali Free Zone (48 Sq. Km of area) in Dubai, Changi Airport in
Singapore, China (Shenzhen, Shanghai, Tianjin etc.) Activities allowed inside the FTWZ: packaging, re-packaging, labeling, re-labeling,
consolidation, kitting etc.• Authorized Services such as transportation from Port to FTWZ, documentation, packaging, re-packaging, labeling, re-labeling, strapping, refurbishment, crating, cartonisation, fumigation, choking, lashing, tagging, shrink/stretch/bubble wrapping, palletization, bagging, re-bagging, quality assurance, kitting, de-kitting, sorting assorting, making combination pack, consolidation, agglomeration, washing, cleaning, processing, repairs & maintenance, CKD/SKD assembly, bottling, blending, cutting, polishing, painting, coating, filming, re-sizing, splitting, threading, coupling etc.
ABOUT FREE TRADE & WAREHOUSING ZONES (FTWZ)
Minimum contiguous area required: 100 Acres & above, with minimum built up area of 100,000 Sqm
Acquisition of land at strategic locations (near Major Ports/Airport, manufacturing Hubs & Industrial areas
Multiple levels of approval process from the state & central government (Informal & Formal Approval and Notification)
FTWZ in a sector specific SEZ, cannot cater to any unit outside the sector specific SEZ
ENTRY BARRIERS FOR DEVELOPING & OPERATING FTWZs IN INDIA
Due to India’s unique geography & market demography, integrating FTWZs with
other critical logistics infrastructure such as Rail Connectivity & Domestic
hub for regional/global distribution post Value Addition activities
FTWZ - UNIQUE BENEFITS FOR RE-EXPORTS
GAME CHANGER BENEFITS OF FTWZ
CASE STUDY CASE STUDY –– BENEFITS OF HUBBING & VALUE BENEFITS OF HUBBING & VALUE
ADDITION OF PRODUCTS IN INDIA THROUGH ADDITION OF PRODUCTS IN INDIA THROUGH
THE FTWZ THE FTWZ (DEEMED FOREIGN TERRITORY)
GLOBAL MOBILE MANUFACTURER’S CURRENT SUPPLY CHAIN
CHINA
GERMANY
USA
Regional Value Addition, Hubbing &
Distribution Centre in
Singapore/Dubai
Indian Subcontinent
Middle East
Far East Asia
South East Asia
Africa/Eastern Europe
Supply of Charger, Earphone and packaging material
Supply of Charger, Earphone and packaging material
Supply of completely packaged mobile phones
Supply of completely packaged mobile phones
Supply of batterySupply of battery
Supply of handsetSupply of handset
VOS like Labelling, packaging, assembly and consolidation based on the country of export
VOS like Labelling, packaging, assembly and consolidation based on the country of export
ARSHIYA’S SOLUTION THROUGH FTWZ
CHINA
GERMANY
USA
Indian Subcontinent
Middle East
Far East Asia
South East Asia
Africa/Eastern Europe
Supply of Charger, Earphone and packaging material
Supply of Charger, Earphone and packaging material
Supply of completely packaged mobile phones
Supply of completely packaged mobile phones
Supply of batterySupply of battery
Supply of handsetSupply of handset
VOS like Labelling, packaging, assembly and consolidation based on the country of export
VOS like Labelling, packaging, assembly and consolidation based on the country of export
FTWZ
ARSHIYA’S FTWZ IN MUMBAI – INDIA’S FIRST,OPERATIONAL SINCE NOV 2010
165 Acre State-of-Art Facility 24km from JNPT Port featuring: • 24x7 On-Site Custom Clearance House• State-of-the-Art Infrastructure with World class Safety, Equipment & Maintenance
Facilities• Connectivity to our Pan-India Rail Network accelerating distribution through aggregation at
strategic locations• State-of-the-art ICD/CFS facility with superior Safety and Hazardous cargo handling
capacity of 10,000+ containers including reefers
FIRST MOVER ADVANTAGE IN INDIA’S LOGISTICS LANDSCAPE
ARSHIYA’S MUMBAI FTWZ
ARSHIYA’S MUMBAI FTWZ
World-class Warehouses of 13 M height with G+6 palletized racking system, super-flat flooring & state-of-the-art Material Handling Equipments (MHEs)
Dedicated & customized Office space & area for Value Optimising Services (VOS) within the Warehouse
Mezzanine storage area with temperature controlled HVAC system & optional humidity control
Warehouses designed as per Seismic Zone 4 requirements
Container Yard (CY) with Pavement Quality Concrete (PQC) flooring for stacking containers in a G+5 stacking system using state-of-the-art Rubber Tyre Gantry Cranes (RTGCs) & Reach Stackers
Over Dimensional Cargo (ODC) Yard with Paver-Block flooring for storage of cargo that cannot be stored in the Warehouse
FTWZ WORLD CLASS INFRASTRUCTURE: WAREHOUSES AND YARDS
CHAs that reduce operating costs for companies operating in the FTWZ Fire & Safety Amenities: Primary & Secondary fire fighting systems along with Tertiary Fire
Engine at FTWZ site with trained Fire Fighting Professionals. Personnel having expertise & certification in handling DG Cargo.
Secure IT Connectivity: Comprehensive IT system with network infrastructure such as a server room within each warehouse & a centralized data center with uninterrupted data, voice & video connectivity through primary & secondary vendors & 100% data back-up
Ancillary Buildings and Facilities: Covered ODC Yard, Maintenance & Repair (M&R) Yard, Scrap Yard & an Empty Container Yard, Food court, Medical dispensary with Ambulance at site
Supporting Infrastructure: Weigh bridge, road network with up to 6 lanes to avoid congestion, Fuel Station in the processing zone, uninterrupted water & power supply systems & 100% power back-up using DG Sets
Storm Water Drainage System: Having a capacity to handle rainfall with peak intensity of 156 mm/ hour or 10 cubic m per sec, i.e. 3 times the highest recorded level of rainfall in Mumbai
Environmental Consciousness: The FTWZ emits no Industrial effluents & contains Sewage Treatment Plants, Waste Disposal Units, Rain Water Harvesting facilities & Green Areas
FACILITIES & VALUE OPTIMISING SERVICES IN THE FTWZ
Transport & Handling
STANDARD WAREHOUSE
ODC YARD (OPEN & COVERED)
CONTAINER YARD (CFS)
CHILLER/FREEZER
HAZARDOUS STORAGE
TEMPERATURE CONTROLLED STORAGE
STRONG ROOM
OFFICE INFRASTRUCTURE
FACILITIES IN THE FTWZ
VALUE OPTIMISING SERVICES (VOS) IN FTWZ
VOS ON CONTAINERVOS ON CONTAINER
a.Customs Documentation
b.Incoming & Outgoing Transportation (Port to FTWZ &
return)
c. Gate Coordination (incoming & outgoing)
d. Survey of Cargo/Containers (incoming & outgoing)
e. Handling / Loading & Unloading (inbound & outbound)
f. Weighment of Containers
g. Fumigation of Containers
h. Scanning of Containers
i. Lashing / Unlashing Services etc.
VOS ON PALLETS / VOS ON PALLETS / BREAK-BULK OF PALLETSBREAK-BULK OF PALLETS
a.Carting & Shifting of the Pallets
b.Palletization
c. Carbonization
d.Strapping
e.Shrink Wrapping
f. Packaging / Re-packaging (into smaller parcels/cases /cartons)
g.Labeling / Re-Labeling
h.Bar-Coding
i. Strapping, refurbishment
i. Tagging, shrink / stretch / bubble wrapping etc.
a.Quality Control (QC)
b.Sorting / Assorting
c. Kitting / De-kitting
d.Bottling/ Blending
e.Assembling
f. Cutting & Threading
g.Consolidation
h.Agglomeration
i. Repairs & Maintenance
j. CKD/ SKD assembly
k. Cutting/ Polishing
l. Painting/ Coating
m.Filming/ Re-sizing
n.Splitting
o.Threading
p.Coupling, etc..
HIGH END VOSHIGH END VOS
Understanding of client’s business model and Pain areas Creating consolidated business proposal specific to client’s business model with one price inclusive of all elements like Transportation to and from FTWZ, Storage, VOS etc.. Pricing strategy based on client’s VOS scope and throughput Also based on client’s industry standard pricing practices e.g.,
For Steel Industry: Per ton basis For Wine Industry: Per case/piece basis For Large Importers and Exporters: Per Container Basis (Movement from
Port to FTWZ and back including storage and all other services)
HOW DO WE CHARGE OUR CUSTOMERS
REVENUE MODEL OF AN FTWZ CLIENT REVENUE MODEL OF AN FTWZ CLIENT
Client Name V-XYZ
Sector Trading (Import & Re-Export)
Product TypeFMCG Products such as Perfumes, Sports Items,
THE FTWZ REVOLUTIONIZING THE INDIAN LOGISTICS LANDSCAPE
Transport & Handling
Logistics cost in India is fairly high – at around 14% of GDP, as against 9%-10% in most developed nations:
- On a 1.6 trillion GDP; this represents absolute value of in-efficiency and therefore logistics market potential of over US$65 billion
- Even with the poor Road infrastructure & disorganized trucking network in the country, road currently accounts for approximately 65% of the total Indian freight transport, while Rail having only about 30% market share
- India burns nearly US$2.5 billion worth of fuel on account of trucks standing idle on state check-posts
India's level of containerization is less than 25% as against global average of 60% -70%
The average time taken to clear import & export cargo at ports is about 19 days in India, against 3 to 4 in Singapore
World Bank’s 2010 Logistics Performance Index (LPI) ranks India 47th in terms of logistics in-efficiency as compared to 130 countries globally – in terms of - Customs Clearance, Infrastructure, Timelines, Shipments, Logistics Competences, Tracking & Tracing
INDIAN LOGISTICS IN-EFFICIENCIES BECAUSE OF LACK OF HUBS
Free Trade Warehousing Zones (FTWZs) To enable EXIM cargo Consolidation, Value Addition and allow
India to become a Regional Trading Hub Domestic Distriparks
For Domestic distribution, cargo value addition and consolidation for Rail transportation to remove dependency on road
Rail Infrastructure Solutions Comprising of innovative Customized Containers for specific product types, Service
Level agreements on timeline and deliver with Key Performance Indicators State-Of-The-Art Rail Terminals, at strategic locations across India with modern
equipment to increase speed of loading/unloading and churn Integrate Logistics Infrastructure with Global Logistics, Domestic Supply Chain
Management , Handling & Transportation and IT Global ocean & air logistics, domestic forward and reverse supply chain
management with ownership on reduction of working capital and product visibility & control, through technology
CAPITALIZING ON INDIA’S LOGISTICS OPPORTUNITY What does it take?What does it take?
ARSHIYA INTERNATIONAL LTD. Capitalizing on India’s mammoth logistics opportunity
through Integrated Supply Chain & Logistics Infrastructure Solutions
By partnering towards: FTWZs Rail Infrastructure Domestic Distriparks Technology Supply Chain Management International Logistics Handling & Transportation
(Go Live Q2FY’12) followed by Nagpur, Chennai & one in the East
5 Domestic Distriparks - Planned Pan-India, Complimenting the FTWZ Network
First of the Domestic Distriparks (in Khurja near Delhi) operational by Q2FY’12
150 Train Pan-India Rail Operations Providing unique and customized solutions
to marquee customers with long term contracts
Inducted 16 trains since FEB’09 and one of the most profitable Private Container Train Operators (PCTO)
Pan-India Rail Terminal Network complimenting each FTWZ, Domestic Distripark & Rail Operations accelerating cargo distribution through aggregation
ARSHIYA’S KHURJA FTWZ : LOCATION ADVANTAGE
18 km from the new Yamuna Expressway connecting Noida to
Agra 12 km from proposed international airport at Jewar in UP Sikandarabad – the neighbouring Developed Industrial City is < 30 km from the FTWZ Tughlakabad – 80 km Dadri – 60 km Bulandshahr – 20 km About 70 km away from the National Capital Region (NCR)
• 315 Acre Comprehensive Facility 90 km from Delhi• Side-by-Side FTWZ (135 Acres) and Domestic Distripark (130 Acres) • Arshiya Rail Infrastructure (50 Acres), including on-site Rail Siding• Operations live as of Q2FY’12 to be joined by similar models in Chennai, Nagpur & East• State-of-the-art ICD/CFS facility with superior Safety and Hazardous cargo handling capacity of 10,000+ containers including reefers
Open top containers increasing speed of loading heavy cargo
Multi-purpose containers for dry-cargo increasing return utilization
Enhanced cargo locking facility inside the containers
Customized containers for carrying various types of cargo
ARSHIYA RAIL INFRASTRUCTURE Customized Containers & Long Term Charter ContractsCustomized Containers & Long Term Charter Contracts
INTEGRATED REVENUE STREAMS THROUGH ARSHIYA’S INFRASTRUCTURE
Captive Revenue Coming into Arshiya’s FTWZ/Domestic Distripark 3PL revenues (Freight Forwarding + Local Transportation + Document Management)
for product being pulled from outside India into FTWZ/Domestic Distripark Rail/Road/Supply Chain Management revenues for product being pulled from inside
India to the FTWZ/Domestic Distripark.
Captive Revenue Inside Arshiya’s FTWZ/Domestic Distripark: Warehouse Management Warehouse and Equipment Rentals Value Optimising Services (Labeling, Assembly, Packaging, Re-packaging,
Captive Revenue from Product moving out of Arshiya’s FTWZ/Domestic Distripark:
3PL revenues (Freight forwarding + Local Transportation + Document Management) for product being pushed from the FTWZ/Domestic Distripark to international markets
Rail/Road/Supply Chain Management & Distribution revenues for product being pushed back into India from the FTWZ/Domestic Distriparks, including various services in the domestic hubs and sub-hubs
Revenue Streams: Core Services Supporting all of the above enhancing customer value:
IT Solutions/Legal & Regulatory consultancy services across the value chain and revenue streams
*Operating income and EBITDA excludes income from sale of software marketing rights at INR 38.89 cr whereas PAT includes the same ** For 9M FY12 # not annualized
Notes :1.Company has invested further Rs. 93 crore as equity in Arshiya Central FTWZ (Nagpur) for land acquisition purpose.2.Above Capex will be spent by June 2013 & balance equity funding of Rs. 84 crore will be met through internal accruals.
ARSHIYA’S GLOBAL ADVISORY BOARD
Dr. Frank-Jürgen RichterPresident of Horasis: The Global Visions
Community ,Former Director of World Economic Forum (WEF), Economic Columnist for The
International Herald Tribune & The Wall Street Journal
Prof. G RaghuramProfessor: Indian Institute of Management,
Ahmedabad(IIM A), Author of Books on Logistics & Supply Chain & Public Private Partnerships
Dr. Jerry (Yoram) Wind Wharton School of Business – Lauder Professor
of Marketing Strategy, Founder & Director of SEI Center for Advanced Study in Management at
Wharton, Founder & Academic Director Wharton Fellows Program
Dr. John L Gattorna Chairman & Advisory Board-Macquarie Graduate School of Management (MGSM) Institute for Logistics & Supply Chain Management, Former Managing Partner for over 36 years at Accenture - Supply Chain Practice
Michael ProffittFormer CEO Dubai Logistics City, Logistics Director for Danzas Switzerland, Director of Logistics & Supply Chain Group – Dubai, Over 25 years of experience in Logistics & Supply Chain
Paul W Bradley Chairman & CEO, Caprica International, Vice Chairman, Supply Chain Asia, Senior Leadership position at Li & Fung Group, NYK Line & BDP Asia
Richard Taffet Partner, Bingham McCutchen LLP and Co-Chair, Bingham's Intellectual Property Litigation and Patent Prosecution Group
William P AdamopoulosPresident & Publisher: Forbes Asia, Former Publisher & Managing Director The Asian Wall Street Journal
Prof. Ashutosh VarshneyProfessor of Political Science at Brown
University, Former Advisor to World Bank & United Nations Development Program(UNDP), Carnegie
Scholar & Winner of Guggenheim Fellowship Award
Flemming JacobsFormer Partner & CEO
AP Moller Maersk, Advisory Council Member of Port of Singapore & On Advisory Board of
Panama Canal Authority
James Beltran Chief Executive Officer & Director,Malaysian Assurance Alliance Berhad (MAA) International Assurance Ltd
FTWZ SAI - JULY 2009
FTWZ SAI - JULY 2009
SAME VIEW – AUGUST 2010
CONTAINER YARD - AUGUST 2009
CONTAINER YARD - SEPTEMBER 2009
CONTAINER YARD - JULY 2010
CONTAINER YARD - JULY 2011
SUCCESS OF FTWZ - GAME CHANGER FOR GLOBAL ECONOMIES Dubai
• Established in 1985, Jebel Ali Free Trade Zone (JAFZA) is spread across an area of 48 sq kms, with over 6,400 companies operating in the zone, including 120 of the Fortune Global 500 enterprises
• Accounts for 25% of all container throughput at Jebel Ali port & 12% of all air freight at Dubai International Airport.
• Over the years it has created over 1,60,000 direct jobs in the UAE through its companies• Increased its revenue at an average of 34% year-on-year• Contributed to Dubai’s GDP at 25% on a year-to-year basis• Accounted for more than 50% of Dubai’s total exports• Accounted for 20% of all FDI inflow into the UAE• Grown its customer base by over 60% in the last four years
Even with an economy which is purely a transhipment hub, with comparatively low level of domestic consumption, FTWZ has been a game changer for Dubai
SUCCESS OF FTWZ - GAME CHANGER FOR GLOBAL ECONOMIES China
FTZs are operational since 1980 Waigaoqiao FTZ in Shanghai is spread across an area of 10 sq kms & over 9,300 companies
registered in the zone, including 135 of the Fortune 500 companies Other zones being - Zhuhai (3 sq kms), Ningbo (2.3 sq kms), Xiamen (5 sq kms), Futian (1.35 sq kms), Shatoujiao (0.27 sq kms) & Yantian Port (0.85 sq kms)
Singapore• FTZs were first established in the island nation in 1969, today the entire country is a Free Trade
Zone• Notable FTZs being – Keppel (2.59 sq kms), Pasir Panjang (0.65 sq kms), Jurong (0.61 sq kms), Sembawang (0.19 sq kms) & Air Logistics Park of Singapore at Changi Airport• Over 7,000 multinational companies operate through these zones
From an economically backward country in 1970 to its gigantic success, FTZs have been the single most critical macroeconomic factor for China’s rise
Due to FTZs this island nation has become the gateway to Southeast Asia & a Global Distribution Hub for international companies
INDIA’S STRATEGIC POSITIONING
DubaiDubaiMumbaiMumbai
SingaporeSingapore
• At present, majority of product hubbing & value addition is done in Dubai & Singapore• 70% to 80% of these value additions, is done for products meant for Indian market • Compared to Dubai or Singapore, India is much larger market for product consumption and is an emerging manufacturing hub• India has tremendous advantages in terms of cost & skill arbitrage vis-à-vis Dubai & Singapore • Due to its strategic positioning, India is much better suited for being a Transhipment , Value Addition & Global Distribution hub than other economies
FTWZ : A GAME CHANGER FOR INDIA
India is world’s 2nd largest developing & fastest growing economy just behind China
With a population of approx 1.1 billion, our domestic consumption comprises 58% of our GDP
Strategically located between South East Asia & Middle East, we have 7,000 kms of coastline & unlike China our population is evenly spread across hinterland
Unlike Dubai, India has a strong manufacturing base where global companies are producing products for domestic as well as export opportunities
Logistics infrastructure is the single largest challenge as well as the biggest opportunity for sustaining India’s fast paced GDP growth
LOGISTICS INFRASTRUCTURE A MAJOR HINDARENCE TO INDIA’S GROWTH
In-efficiencies due to lack of logistics infrastructure & organized logistics, costs India an additional USD 65 billion per year
In a growing economy if logistics infrastructure doesn’t grow at faster pace than the GDP, it would cost India very dearly
Indian economy is losing around 1.5% in GDP growth, due to lack of logistics infrastructure
India loses approximately INR 55,000 crores per year of food produce due to lack of logistics infrastructure
Want to know more? Or, get in touch with us?Or, need assistance? There’s a way.Just write to us at: [email protected] visit to www.arshiyainternational.com