market research report : third party logistics market in india 2012

Insert Cover Image using Slide Master ViewDo not distort

Third Party Logistics Market – India

December 2012

2

SAMPLE

Executive Summary

Market

Competition

More than half of the gross revenue generated in global Third Party Logistics (3PL) market were accounted by top xx players in 2011

3PL Market in India is estimated to reach around INR xx bn by 20‐‐ at a CAGR of nearly xx% during 2011 ‐16

The market is rapidly evolving in India with more customers using outsourcing to reduce cost

Major Players

Company A Company B Company C

Company D Company E Company F

Company G Company H Company I

Drivers & Challenges

Drivers– Economic growth

– High cost of Logistics in India

– Growth in Consumer Electronics and Durables Industry

– Growth in Auto & Auto Components Sector

– Growth in Retail Sector

– Phased implementation of VAT

– Infra related Govt initiatives

Challenges– Infrastructure Congestion

– High Inventory Levels

– Lack of Skilled Manpower

– Lack of Trust and Awareness

TechnologyAdoption

Identification Technology – Barcode, RFID

Material Handling Technology ‐ Automated Guided

Vehicle System (AGVS) , Information directed System

Communication Technology ‐ Global Positioning System (GPS) Tracking

Information Technology – ERP, eBizNET –SC suite, Vin eRetail

THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT

3

SAMPLE


•Introduction

•Market Overview

Global

India

•3PL – Shipper Relationship

•Drivers & Challenges

•Technology Adoption

•Competition

•Recent Transactions

•Strategic Recommendations

•Appendix

4

SAMPLE Evolution of 3PL

• Importance on improved productivity, cost reduction and long‐term contracts

• Value‐added services such as packaging, labeling, systems support and inventory management were offered

1950’s & 1960s

1970s

1980s


• Higher outsourcing and more value‐added services (VAS*) are being offered

• Logistics outsourcing was limited to transportation and warehousing

• Mainly short‐term transactions

1990s ‐ Present

*VAS includes import/export management, customs clearance, clearance, freight forwarding, customer service, rate negotiation, order processing, assembly/installation, distribution, order fulfillment, reverse logistics, consulting services that include distribution network planning, site selection for facility location, fleet management, freight consolidation, logistics audit etc.

5

SAMPLE

Demand for services of expert logistics outsourcing providers is rising worldwide


Market Overview ‐Global Market Size & Growth

Global 3PL Revenues (2011)

•Global Third Party Logistics (3PL) market is currently

valued at around INR xx bn

•Major share of revenue generated is contributed by

Region A, Region B and Region C

• Factors contributing to the growth of global 3PL

market:

xx

Note: Gross Logistics Revenue of Top 50 Global 3PL players have been considered

a1%a5%

a3%

a4%

a2%

Region B

Region A

Region E

Region C

Region D

0

2,000

4,000

6,000

8,000

INR bn

x1

5.2%

20‐‐

x2

20‐‐

Note: Market size considers global 3PL gross revenues and the conversion is done using 2010 exchange rate

6

SAMPLE Major Players in Global 3PL Market

Share of Top 10 Global 3PL Players* (20‐‐)

Note: *among the top 50 global 3PL players

xx is the market leader in global 3PL

market

a5%

a4%

a3%

a2%

a1%

a11%

a10%a9%

a8%a7%

a6%

Player E

Player D

Player C

Player B

Player A

Player K

Player J

Player I

Player H

Player G

Player F


7

SAMPLE

Third party logistics is fast gaining popularity in the Indian logistics market

•Third party logistics (3PL) market in India is at a nascent stage, currently at around xx% of overall logistics market

• Findings

Market Overview ‐India (1/3) Market Size and Growth

INR bn

xx%

20‐‐

x6

20‐‐

x5

20‐‐

x4

20‐‐

x3

20‐‐

x2

20‐‐

x1

Share of 3PL in Total Logistics

Asset Based Non‐Asset Based

Own some of the assets used in supply chain management which often include trucks, distribution centres and warehouses

Does not own such assets

Possess flexibility that allows them to respond to clients’ needs on a case‐by‐case basis

3PL Market Comprises of Two Segments


a1%

a2%

xxxx

b1%

b2%

20‐‐ 20‐‐e

8

SAMPLE

Cost considerations are the major reasons for the outsourcing of various logistics services

•Findings

Increase in Share of Local Companies Outsourcing Services

Top 5 Reasons for Outsourcing Logistics Services

0

20

40

60

x1

%

20‐‐

x2

20‐‐

Share of local companies outsourcing has increased by almost xx times in xx years

Note: Approximate % share


Market Overview ‐India (2/3)

Use of 3PL Services

~xx%

Logistics cost goes down by…

… thereby attracting more customers in this sector

IMPACT

Low Medium High

Logistics cost reduction

Focus on core competencies

Improved customer services

Improve return on assets

To increase inventory turn

9

SAMPLE

3PL Market Presence in India


North East

City A City J

City B City K

City C City L

City D City M

City E City N

City F

City G

City I

South West

City O City Y

City P City Z

City Q City A’

City R City B’

City S City C’

City T City D’

City U City E’

City V City F’

City W City G’

City X

10

SAMPLE

3PL Market Insights (2/2)

•Highest demand for 3PL services comes from the Consumer electronics & durables and pharmaceuticals

•Region wise West accounts higher demand for 3PL services in India

Demand from Various Sectors (2011) Demand from Different Regions (2011)

Sector H

Sector G

Sector F

Sector E

Sector D

Sector C

Sector B

Sector A

a8%

a7%a6%

a4%

a4%

a3%a2%

a1%

b3%

b4%

b2%

b1%

Region D

Region C

Region B

Region A


11

SAMPLE Changes in Use of 3PL Services Globally

Survey Result on Use of 3PL Services Worldwide

Positive Responses on Returning to In sourcing

Result

Positive Responses on Increased Usage of 3PL Services

0

50

100

% Respondents

Shipper

y

3PL

x

0

50

100

% Respondents

Region D

y4

Region C

y3

Region B

y2

Region A

y1

0

20

40

% Respondents

Shipper

q

3PL

p

0

50

100n

3PL

m

% Respondents

Shipper

Result


Survey results

Note: 1,561 industry executives and managers representing users and non‐users of 3PL services (shippers respondents) and 697 executives and managers representing firms that provide 3PL services (3PL respondents) across the globe were surveyed in “XX”

Positive Responses on Reduction of 3PLs Used

12

SAMPLE Shipper – 3PL Relationship

0

50

100

Benefit B

a2

Benefit A

a1

Benefit E

a5

Benefit D

a4

Benefit C

a3

% Respondents

Shipper’s Benefits from Use of 3PL Services

Success Factors

Openness, transparency & good communication

Flexibility to hold current & future business needs

Interest in “gainsharing”between 3PLs & shippers

0

50

100

% Respondents

Shipper

y

3PL

x

Result

0

50

100

% Respondents

Shipper3PL

q

p

Result

0

20

40

60

% Respondents

Shipper

n

3PL

m

Result

Result


Note: 1,561 industry executives and managers representing users and non‐users of 3PL services (shippers respondents) and 697 executives and managers representing firms that provide 3PL services (3PL respondents) across the globe were surveyed in “XX”

13

SAMPLE

Drivers & Challenges

Drivers

Economic growth

High cost of Logistics in India

Growth in Consumer Electronics and Durables Industry

Growth in Auto & Auto Components Sector

Growth in Retail Sector

Phased implementation of VAT

Government Infrastructure Initiatives

Challenges

Infrastructure Congestion

High Inventory Levels

Lack of Skilled Manpower

Lack of Trust and Awareness


14

SAMPLE

Impact

Economic growth is creating demand for 3PL services and is a major driver in the market

Economic Growth(1/2)

• xx

Key Economic Indicators

GDP Growth Trend* Rapid Urbanization

0

2

4

6

8

10

%

20‐‐

a5

20‐‐

a4

20‐‐20‐‐

a3a2

20‐‐

a1

0

10

20

30

40

20‐‐

b2b1

20‐‐

b5

20‐‐

b4

20‐‐

b3

20‐‐

%

*Note: Figures for financial year – April to March


15

SAMPLE

Impact

Simultaneous cost reduction coupled with high productivity by electronics manufacturers will drive the 3PL market

Growth in Consumer Electronics and Durables Industry

• xx


India’s Consumer Electronics and Durables Market Sales Trends in Consumer Electronics

0

200

400

600

INR bn

xx%

20‐‐

x2

20‐‐

x1

0

5,000

10,000

15,000

20,000 xx%

20‐‐

b4b3

‘000

a4a3

a2

a1

b2

20‐‐

b1

Type B

Type DType C

Type A

16

SAMPLE

Impact

Growing dependence on 3PL services from automobiles and auto components sector to facilitate market growth

Growth in Auto & Auto Components Sector• xx


Growth in Automobile Market Growth in Auto Components Market

0

5,000

a2a1

20‐‐

INR bna%

20‐‐

a5

20‐‐

a4

20‐‐

a3

20‐‐

0

5,000

10,000

b5

INR bn

c%b%

20‐‐

b6

20‐‐

b4

20‐‐20‐‐

b3

20‐‐

b2

20‐‐

b1

Note: Auto components includes Engine Parts, Drive Transmission & Steering Parts, Body & Chassis, Suspension & Braking Parts Equipments, Electrical Parts, Others

Growth in Passenger Car Exported from India Growth in Vehicles Sold in India

0

50,000

Units d%

20‐‐

c1c2

20‐‐

e%

20‐‐

d2

20‐‐

d1

‘000 Units

2,000

1,000

0

e6%e3% e5%e2%

e4%

e1%

Type F

Type C

Type E

Type B

Type D

Type A

17

SAMPLE

Impact

3PL providers need to customize their services and charge competitive rates so as to benefit from India’s retail boom

Growth in Retail Sector

• xx


0

20

40

60

20‐‐e

y

y1%

y2%

20‐‐

8.4%

x

x1%x2%

Type A Type B

Growth in Retail Market in India

18

SAMPLE

Poor and inadequate infrastructure acts as a major obstacle to growth of 3PL market in India

•xx

Infrastructure Congestion

Average speed of Commercial Vehicle (20‐‐)

0

50

100

Country B

kmphy

Country A

x

• xx


Result

Impact

19

SAMPLE

Lack of trust and awareness is hampering the growth of 3PL sector

• xx

Lack of Trust and Awareness

3PL Activity as % of Total Logistics Operations (20‐‐)

0

20

40

60

80

%

Country D

z

Country C

yx

Country BCountry A

w


xxxx

xx

Vicious Cycle

Impact

20

SAMPLE

3PL is witnessing better productivity with rising investments in GPS, RFID, online analytics & new supply chain tools

• xx

• xx

• xx

• xx

Enterprise

App

lications

CommunicationTechnology

CompetitiveAdvantage

Material

Han

dling

IdentificationTechnology


21

SAMPLE

Major Public Companies – Summary

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

2,600

2,800

5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000

Net Profit/Loss

Total Income

m4

m2m3

m1

Size of the Bubble represents Market Capitalization in INR bn


Company BCompany A

Company C Company D

Note: All figures are in INR mn and are based on the latest financials available

22

SAMPLE

Key People

Products and Services

Company Information Offices and Centres – India

Corporate Address

Tel No.

Fax No.

Website

Year of Incorporation

Ticker Symbol

Stock Exchange

Category Products/Services

Name Designation

Head Office

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

Mumbai


23

SAMPLE

Financial Snapshot Key Ratios

Financial Summary

• The company earned a net profit of INR 2,345.9 mn in FY 2012, ascompared to net profit of INR 2,228.7 mn in FY 2011

• The company reported total income of INR 35,858.4 mn in FY 2012, registering an increase of 4.3% over FY 2011

• The company earned an operating margin of 8.78% in FY 2012, a decrease of 0.19 percentage points over FY 2011

• The company reported debt to equity ratio of 0.86 in FY 2012, a decrease of 1.63% over FY 2011

Key Financial Performance Indicators

Indicators Value (27/11/2012)Market Capitalization (INR mn) xx

Total Enterprise Value (INR mn) xx

EPS (INR) xx

PE Ratio (Absolute) xx

Improved Decline

Net Profit/LossTotal Income

35,858.434,381.028,803.1

20,836.4

0

10,000

20,000

30,000

40,000

0

1000

2000

3000

INR mnINR mn

2012201120102009

Public: Domestic Company ‐ Player A (2/3)

Particulars y‐o‐y change (2012‐11)

2012 2011 2010 2009

Profitability RatiosOperating Margin ‐0.19 8.78% 8.97% 7.61% 8.01%

Net Margin 0.06 6.54% 6.48% 5.76% 6.24%

Profit Before Tax Margin ‐0.15 8.44% 8.58% 7.77% 8.13%

Return on Equity 0.48 15.42% 14.94% 13.74% 13.07%

Return on Capital Employed 1.52 14.71% 13.18% 13.53% 13.95%

Return on Working Capital ‐11023.91‐

10973.56%50.35% 46.22% 36.95%

Return on Assets 0.32 8.27% 7.95% 8.07% 8.62%

Return on Fixed Assets 4.55 16.76% 12.20% 19.68% 23.75%

Cost RatiosOperating costs (% of Sales) 0.19 91.11% 90.92% 92.34% 91.90%

Administration costs (% of Sales)

17.24 17.24% 0.00% 6.07% 8.64%

Interest costs (% of Sales) 0.03 1.65% 1.62% 0.68% 1.12%

Liquidity RatiosCurrent Ratio ‐48.94% 1.00 1.95 1.82 2.13

Cash Ratio ‐43.37% 0.26 0.47 0.63 0.83

Leverage RatiosDebt to Equity Ratio ‐1.63% 0.86 0.88 0.70 0.52

Debt to Capital Ratio ‐20.15% 0.27 0.34 0.24 0.17

Interest Coverage Ratio ‐3.90% 5.39 5.61 11.27 7.20

Efficiency RatiosFixed Asset Turnover 35.97% 2.53 1.86 3.39 3.77

Asset Turnover 3.01% 1.25 1.21 1.39 1.37

Current Asset Turnover 36.26% 5.10 3.74 3.59 3.11

Working Capital Turnover ‐21677.73% ‐1655.74 7.67 7.97 5.86

Capital Employed Turnover 2.23% 2.33 2.28 2.37 2.07


24

SAMPLE

Key Business Segments Key Geographic Segments

Business Highlights

Description News

Overview

3PL & Warehousing

Acquisitions

7%7%

0%

50%

100%

%

2010

83%

10%

2009

83%

10%

2008

94%

6%

Multimodal Transport Operations

Project & Engineering Solutions

Container Freight Stations

Public: Domestic Company ‐ Player A (3/3)

28% 27% 29%16%

15%15%4%5%

6% 2%2%2%2%2%

0%

50%

100%

2009

29%

%

19%

31%

18%

20102008

30%

16%

India

Australia & New Zealand Europe

Africa

Far East

America

Mediterranean


25

SAMPLE Recent Transactions

Deals & Investments in 3PL firms

Date Target Acquirer/Investor Amount (INR mn) Stake

Jul‐12 Company 1 Company 13 xx xx

Apr‐12 Company 2 Company 14 xx xx

Feb‐12 Company 3 Company 15 xx xx

Dec‐11 Company 4 Company 16 xx xx

Jul‐11 Company 5 Company 17 xx xx

Apr‐11 Company 6 Company 18 xx xx

Feb‐11 Company 7 Company 19 xx xx

Oct‐10 Company 8 Company 20 xx xx

Oct‐10 Company 9 Company 21 xx xx

Sep‐10 Company 10 Company 22 xx xx

Jun‐10 Company 11 Company 23 xx xx

Mar‐10 Company 12 Company 24 xx xx

Transactions in 3PL Companies in India


Note: This list is not exhaustive

26

SAMPLE

Lack of 3PL operators in X

Issues Recommendations

Less X service logistics providers

Non‐compliance of best practices by Y

ZZ imposed on shipping lines which consumes up their profit

• xx

• xx

• xx

• xx

Strategic Recommendations (1/3)


27

Thank you for the attentionThe Third Party Logistics Market – India 2012 report is a part of Netscribes’ Transportation & Logistics Series.For any queries or customized research requirements, contact us at:

About NetscribesNetscribes is a knowledge‐consulting and solutions firm with clientele across the globe. The company’s expertise spans areas of investment & business research, business & corporate intelligence, content‐management services, and knowledge‐software services. At its core lies a true value proposition that draws upon a vast knowledge base. Netscribes is a one‐stop shop designed to fulfil clients’ profitability and growth objectives.

Disclaimer: This report is published for general information only. Although high standards have been used in the preparation of this report,Netscribes is not responsible for any loss or damage arising from use of this document. This document is the sole property of Netscribes. and prior permission is required for guidelines on reproduction.

Phone: +91 33 4027 6214 / 6215E‐Mail: [email protected]

Follow us on:


http://www.facebook.com/researchonindia

https://twitter.com/ResearchOnIndia

http://www.linkedin.com/groups?gid=3280715&trk=hb_side_g