<p>The warehousing, industrial, and logistics (WIL) sector is projected to be crucial for attaining India’s vision of being a $5 trillion economy by FY25. The warehousing market is predicted to reach $34.99 billion (Rs 2,872.10 billion), expanding at a compound annual growth rate of 15.64 per cent from 2022 to 2027, as per India Brand Equity Foundation (IBEF). Sharing the latest trends and investment flows in the sector, TVS Industrial and Logistics Park’s President <span>Nitin Aggarwal</span> also updated <span>DH’s</span> <span>Lavpreet Kaur </span>on his company’s expansion plans.</p>.<p><strong><span>How is the warehousing sector evolving after the e-commerce slowdown? </span></strong></p>.<p>Ecommerce, which was the main driver in the last few years, has come down to only 5-10 per cent now. The key driver today is manufacturing companies. With the advent of just-in-time (JIT) inventory systems, companies need to have limited raw materials in the factory as per company cycle, pushing the need for warehouses. Other players such as sub-assemblies are also fast catching up, storing individual components from various vendors and integrating the final product just before it is sent to the factory. There are also companies that export the products as kits - not doing complete assembly - creating the need for more kitting and storage space and hence boosting warehousing demand. </p>.<p><strong>Also Read | <a href="https://www.deccanherald.com/business/business-news/new-e-commerce-policy-aims-to-bring-parity-between-marketplaces-1227827.html">New e-commerce policy aims to bring parity between marketplaces</a></strong></p>.<p>Fast-moving consumer goods and consumer durables (FMCGs and FMCDs), which are now consolidating in the cities, are moving to better-graded parks. In addition, we also see multi-tenant facilities -- where in the same facility they can serve 20-30 customers – picking up on the back of third-party logistics companies. </p>.<p><strong><span>How is warehousing reorienting to meet the needs of these new customers? </span></strong></p>.<p>The challenge lies not in adapting the warehouse design for the new customers, but in getting them to the tier-II and tier-III cities, where e-commerce had penetrated taking with them warehousing infrastructure. </p>.<p><strong><span>What is driving investment into the warehousing sector? </span></strong></p>.<p>Historically the primary purpose of warehousing facilities was storage, whereas now users are realising that the real estate costs are increasing and restricting the usage only to storage may not be ideal. It has now become more like a service offering wherein space is only one of the services. This has increased the importance of these facilities in the entire value chain, stabilising revenue flow and drawing the global investor class to the sector. Improved regulatory compliance is another attraction. Just looking at the interest of the global funds in this sector. I can safely say that we are not hitting the saturation point in the next 5-7 years.</p>.<p><strong><span>What are some challenges that stand ahead of the warehousing industry? </span></strong></p>.<p>Land is becoming the most challenging factor for this industry. Once that is resolved, I will say more than 60-70 per cent of the battle has been won. Today there is so much demand in various markets, but there is a supply constraint. </p>.<p><strong><span>How has TVS ILP fared? </span></strong></p>.<p>TVS ILP’s FY23 revenue was Rs 150 crore. For the past 4-6 years, we have seen zero vacancy in all our facilities. We have been growing at a CAGR of 35 per cent year-on-year over the period of the last 5 years and aim to reach contracted revenue of $750 million in the next 4-5 years while incurring a capex of $70-$80 million dollars annually. Our immediate target is to reach a contracted revenue of at least $400 million dollars in the near future. </p>.<p><strong><span>What are TVS ILP’s expansion plans? </span></strong></p>.<p>There are already plans chalked out for the next 3-4 years down. TVS ILP is expanding its presence in another 30 cities across the country to double its warehousing infrastructure to 20 million sq ft. We are exploring a park every 400 km in the country. </p>.<p>We are focused on the eastern and north-eastern markets where the supply chain cost is always high mainly because of the non-availability of quality facilities. We are launching our second park in Bhubaneshwar in the coming months. In the South, projects are underway in the underserved markets of Vijayawada and Vizag in Andhra Pradesh. We are also developing facilities in Sri City in Tamil Nadu and Hubbali and Western Bangalore in Karnataka.</p>
<p>The warehousing, industrial, and logistics (WIL) sector is projected to be crucial for attaining India’s vision of being a $5 trillion economy by FY25. The warehousing market is predicted to reach $34.99 billion (Rs 2,872.10 billion), expanding at a compound annual growth rate of 15.64 per cent from 2022 to 2027, as per India Brand Equity Foundation (IBEF). Sharing the latest trends and investment flows in the sector, TVS Industrial and Logistics Park’s President <span>Nitin Aggarwal</span> also updated <span>DH’s</span> <span>Lavpreet Kaur </span>on his company’s expansion plans.</p>.<p><strong><span>How is the warehousing sector evolving after the e-commerce slowdown? </span></strong></p>.<p>Ecommerce, which was the main driver in the last few years, has come down to only 5-10 per cent now. The key driver today is manufacturing companies. With the advent of just-in-time (JIT) inventory systems, companies need to have limited raw materials in the factory as per company cycle, pushing the need for warehouses. Other players such as sub-assemblies are also fast catching up, storing individual components from various vendors and integrating the final product just before it is sent to the factory. There are also companies that export the products as kits - not doing complete assembly - creating the need for more kitting and storage space and hence boosting warehousing demand. </p>.<p><strong>Also Read | <a href="https://www.deccanherald.com/business/business-news/new-e-commerce-policy-aims-to-bring-parity-between-marketplaces-1227827.html">New e-commerce policy aims to bring parity between marketplaces</a></strong></p>.<p>Fast-moving consumer goods and consumer durables (FMCGs and FMCDs), which are now consolidating in the cities, are moving to better-graded parks. In addition, we also see multi-tenant facilities -- where in the same facility they can serve 20-30 customers – picking up on the back of third-party logistics companies. </p>.<p><strong><span>How is warehousing reorienting to meet the needs of these new customers? </span></strong></p>.<p>The challenge lies not in adapting the warehouse design for the new customers, but in getting them to the tier-II and tier-III cities, where e-commerce had penetrated taking with them warehousing infrastructure. </p>.<p><strong><span>What is driving investment into the warehousing sector? </span></strong></p>.<p>Historically the primary purpose of warehousing facilities was storage, whereas now users are realising that the real estate costs are increasing and restricting the usage only to storage may not be ideal. It has now become more like a service offering wherein space is only one of the services. This has increased the importance of these facilities in the entire value chain, stabilising revenue flow and drawing the global investor class to the sector. Improved regulatory compliance is another attraction. Just looking at the interest of the global funds in this sector. I can safely say that we are not hitting the saturation point in the next 5-7 years.</p>.<p><strong><span>What are some challenges that stand ahead of the warehousing industry? </span></strong></p>.<p>Land is becoming the most challenging factor for this industry. Once that is resolved, I will say more than 60-70 per cent of the battle has been won. Today there is so much demand in various markets, but there is a supply constraint. </p>.<p><strong><span>How has TVS ILP fared? </span></strong></p>.<p>TVS ILP’s FY23 revenue was Rs 150 crore. For the past 4-6 years, we have seen zero vacancy in all our facilities. We have been growing at a CAGR of 35 per cent year-on-year over the period of the last 5 years and aim to reach contracted revenue of $750 million in the next 4-5 years while incurring a capex of $70-$80 million dollars annually. Our immediate target is to reach a contracted revenue of at least $400 million dollars in the near future. </p>.<p><strong><span>What are TVS ILP’s expansion plans? </span></strong></p>.<p>There are already plans chalked out for the next 3-4 years down. TVS ILP is expanding its presence in another 30 cities across the country to double its warehousing infrastructure to 20 million sq ft. We are exploring a park every 400 km in the country. </p>.<p>We are focused on the eastern and north-eastern markets where the supply chain cost is always high mainly because of the non-availability of quality facilities. We are launching our second park in Bhubaneshwar in the coming months. In the South, projects are underway in the underserved markets of Vijayawada and Vizag in Andhra Pradesh. We are also developing facilities in Sri City in Tamil Nadu and Hubbali and Western Bangalore in Karnataka.</p>
