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- 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
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
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
Due to Indias unique geography & market demography, integrating FTWZs with other critical logistics infrastructure such as Rail Connectivity & Domestic Distribution hubs
Integrating Hard Infrastructure - (FTWZs, Rail Infrastructure & Domestic Distriparks) with Soft Infrastructure - Global 3PL, Domestic 4PL, Handling & Transportation and IT
Expertise not only in developing world class state-of-the-art logistics infrastructure, but also experience in operating FTWZs to mitigate customers logistics & supply chain challenges unique to India
Offering a One Throat to Catch end-to-end integrated logistics & supply chain services to global customers
Flexibility towards end distribution in India Duty deferment benefits (freeing up working capital & increasing sales )
BENEFITS OF IMPORTING PRODUCTS INTO INDIA THROUGH THE FTWZ (DEEMED FOREIGN TERRITORY)
Dealers in India
International Suppliers
Dealers in India
International Suppliers
Indian Ports
Dealers in India
International Suppliers
Storage of Spares, Parts and Components for after sales & service post duty payment
Dealers in India
International Suppliers
Dealers in India
Duty paid storage of spares implicating higher working capital of the supply chain implicating higher cost of product
Higher lead time for client delivery creating customers dissatisfaction (unauthorised spares in the market)
Quality control post duty payment increasing hassle for re-export and therefore cost
Dealers in India
International Suppliers
Dealers in India
International Suppliers
International Dealers
International Suppliers
FTWZ
International Dealers
International Suppliers
Regional distribution of spares and parts enabling the income tax exemption on the re-export of imported spares and parts
International Dealers
Duty deferred storage reducing working capital and therefore cost of product
Reduction in lead time in supplying the spares for after sales and limitless capability of spares storage Quality control before duty payment enabling hassle free re-export process and therefore lowering of associated supply chain costs Regional Distribution capability leveraging cost/skill arbitrage of India in addition to Income tax exemption of profits from this activity
Products from India entering the FTWZ are treated as deemed export
Supplier 1
Supplier 2
Store 2
Supplier 93
All the SKUs are sent by the suppliers directly to DC in Europe by suppliers
Store 173
Distribution Center (DC) in Europe maintained only due to invoicing regulatory limitations where consolidations of products sourced from India is done Increased supply chain cycle lead time and associated costs
Companys India trading arm responsible for any under/over invoicing or customs issues with respect to shipments of suppliers without having any control over process
Quality control currently in European DC causing higher product returns European DC doing labeling for products made in India/Asian sub-continent
Supplier 1 Supplier 2
Store 1
Supplier 93
Store 2
FTWZ
DC in FTWZ for Value addition
Store 173
FTWZ removes regulatory limitations of consolidating product from suppliers in India, Sri Lanka, Bangladesh & Pakistan in Asia Significant reduction in DC operations costs of India Vs. Europe
Value addition for end-distribution to world-wide stores done in FTWZ in India lowering costs.
Reduction in suppliers working capital due to faster payment cycle Lowered reverse logistics cost Enhanced control and efficiency in inventory management - closer to the suppliers
Service tax exemption on all activities conducted inside the FTWZ including rental & labour
Exemption from custom and stamp duty on products imported into FTWZ; meant
for re-export out of India Income tax exemption on profit where applicable Hassle-free re-export process Permission of 100% FDI for the set-up of units by the unit holder of the FTWZ Ability to leverage Indias cost, skill & geographic positioning advantage as a hub for regional/global distribution post Value Addition activities
Indian Subcontinent
Middle East
Supply of battery
USA
Supply of handset
GERMANY
VOS like Labelling, packaging, assembly and consolidation based on the country of export
Africa/Eastern Europe
Higher cost of operations in Singapore i.e. Labour, Water, Electricity, Materials etc.
Higher charges for Value Optimising Services (VOS) like labeling, packaging, assembly etc. Increasing cost of product
Indian Subcontinent
Supply of battery
Middle East
USA
Supply of handset
FTWZ
VOS like Labelling, packaging, assembly and consolidation based on the country of export
GERMANY
Africa/Eastern Europe
Lower cost of operations in India i.e. Labour, Water, Electricity, Material etc.
Minimum charges for Value Optimising Services (VOS) like kitting, labeling, packaging, assembly etc. decreasing cost of product Local tax exemptions (Excise, VAT etc.) on all the value added service inside FTWZ
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
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
FTWZ FTWZ
Technology Technology
STANDARD WAREHOUSE ODC YARD (OPEN & COVERED) CONTAINER YARD (CFS) CHILLER/FREEZER HAZARDOUS STORAGE
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..
c.
i.
Lashing / Unlashing Services etc.
HOW DO WE CHARGE OUR CUSTOMERS Understanding of clients business model and Pain areas Creating consolidated business proposal specific to clients business model with one price inclusive of all elements like Transportation to and from FTWZ, Storage, VOS etc.. Pricing strategy based on clients VOS scope and throughput Also based on clients 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)
REVENUE MODEL COMPONENTS Rental Warehouse Rent @ INR 800/Pallet Storage Space - Mezzanine Office Space - Mezzanine Container Yard Rent ODC Yard rent Total Rent/Container Total Rent/Pallet REVENUE COMMENTS
16,000
16,000 800
COMMENTS
Per Container
Per Container
Per Container
Per Container
Per Container
Per Container
4,000
20,000 5,000 4,400 4,400
a) 1 Pallet = 10 Cartons, b) Total Cartons/Container = 200 c) Packaging Rate of INR 20/Carton a) Total Pieces/Container = 10,000 (50 pieces/carton) b) Labeling Rate of INR 2/Piece a) Bar Coding Rate of INR 0.50/Piece
Labeling Bar coding Transportation per container (Inbound) Transportation per container (Outbond)
All the cargo will be re-exported In this case all the incoming cargo will be palletized again for re-export
Palletization
Total VOS Revenue /Container/Turn
10,000
52,400
2,620
3.3 3 9.9
CUSTOMERS
CUSTOMERS
3PL CUSTOMERS
FTWZ FTWZ
Technology Technology
To enable EXIM cargo Consolidation, Value Addition and allow India to become a Regional Trading Hub For Domestic distribution, cargo value addition and consolidation for Rail transportation to remove dependency on road 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
Domestic Distriparks
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
By partnering towards: FTWZs Rail Infrastructure Domestic Distriparks Technology Supply Chain Management International Logistics Handling & Transportation
Mumbai (Operational since Nov10), Delhi (Go Live Q2FY12) followed by Nagpur, Chennai & one in the East
First of the Domestic Distriparks (in Khurja near Delhi) operational by Q2FY12
Providing unique and customized solutions to marquee customers with long term contracts Inducted 16 trains since FEB09 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
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 Q2FY12 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
ARSHIYA RAIL INFRASTRUCTURE Customized Containers & Long Term Charter Contracts
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.
Warehouse Management Warehouse and Equipment Rentals Value Optimising Services (Labeling, Assembly, Packaging, Re-packaging, Consolidation, De-consolidation, Quality Control etc.) Container Yard (CY) / Maintenance & Repairs
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
FINANCIAL PERFORMANCE
Revenue 102% EBITDA
176%
PAT 81%
EBITDA Margins
14.4 %
17.0 %
16.8 %
19.6 %
FY 08 FY 09 FY 10 FY11
Consolidated Highlights Operating Income INR Cr. EBITDA INR Cr. EBITDA MARGIN % PAT INR Cr. PAT MARGIN % EPS INR per share
*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
Capex Projects
Arshiya Rail Infrastructure (Phase I)
TOTAL
2,271
889
3,160
1725
805
2530
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.
James Beltran
Chief Executive Officer & Director, Malaysian Assurance Alliance Berhad (MAA) International Assurance Ltd
Flemming Jacobs
Former Partner & CEO AP Moller Maersk, Advisory Council Member of Port of Singapore & On Advisory Board of Panama Canal Authority
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 Proffitt
Former 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
Prof. G Raghuram
Professor: Indian Institute of Management, Ahmedabad(IIM A), Author of Books on Logistics & Supply Chain & Public Private Partnerships
Richard Taffet
Partner, Bingham McCutchen LLP and Co-Chair, Bingham's Intellectual Property Litigation and Patent Prosecution Group
William P Adamopoulos
President & Publisher: Forbes Asia, Former Publisher & Managing Director The Asian Wall Street Journal
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 Dubais GDP at 25% on a year-to-year basis Accounted for more than 50% of Dubais 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
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)
From an economically backward country in 1970 to its gigantic success, FTZs have been the single most critical macroeconomic factor for Chinas rise
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
Due to FTZs this island nation has become the gateway to Southeast Asia & a Global Distribution Hub for international companies
Dubai
Mumbai
Singapore
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--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
India is worlds 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 Indias fast paced GDP growth
LOGISTICS INFRASTRUCTURE A MAJOR HINDARENCE TO INDIAS 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 doesnt 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
Corporate HQ: 301 Ceejay House, Level 3, Shiv Sagar Estate, F-Block, Dr. Annie Besant Road, Worli, Mumbai - 400 018. Maharashtra, India. Ph: +91 22 4230 5500 /1 /2 Fax: +91 22 4230 5555
Registered Office: Arshiya House, 3rd Floor, Plot No.61, Road No.13, M.I.D.C., Andheri (East), Mumbai - 400093,Maharashtra, India. Ph: +91 22 4048 5300
Want to know more? Or, get in touch with us? Or, need assistance? Theres a way. Just write to us at: info@arshiyainternational.com or visit to www.arshiyainternational.com
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