Chief Advisor to. Principal Advisor

Transcription

1 Chief Advisor to Principal Advisor

2 Globalisation Process Integration. Bilateral trade. Diminishing world, singular demands. Right-Cost Country optimisation. Business friendly Global Banking. Borderless consumer.

3 Growth in initial areas extends parity. Demand outpaces development. Bottlenecks raise costs. Aspirations provide further scope. Parity feeds demand; new consumption. Lack of development creates bottlenecks. High costs restricts; feeds aspirations. Enduring Scope is Unending Opportunity.

4 Chain of business Chain of transactions. Chain of information. Chain of operations. Chain of processes. Chain of policies. Chain of people. Value chain. Demographics, National Priorities, Sustainability, Technology, Information, Affiliation. Enduring Scope is Unending Opportunity.

5 Uneven, non-holistic development of resources! Cold-chain requires integration across total activity chain! Changing priorities, impatient populace short cuts! Fear of missing the bus short term strategy for long term solutions!

6 Integrated infrastructure development. Reverse haulage capacity utilisation. Market capture barriers and tariffs. Training and Skilled deployment. Rapid demo-graphic changes. Changing global strategies. Technology adaption. Investment inertia.

7 Trend is to move from post-facto control mode to first mile preventive mode. FSMA / FSSAI / Others Impacts independent development agendas; changed deployment of resources. Benefits stakeholders from early compliance; lowered rejects, opens strategic options. More inclusion among stakeholders.

8 Prevent Inspect Recall Partner Controls Compliance Response Administer Resource Costs Onus Business Labs Fees Distrust New markets Skills Procurement Sharing New pricing

9 The largest producer of milk (133 million tonnes). Largest producer of mangoes (15 million tonnes). Largest producer of bananas (29 million tonnes). Largest exporter of beef (1.52 million tons), largest buffalo livestock (105 million). Second in fruit (80 mlllion tonnes) and vegetable production (160 million tonnes). Third-largest producer of fish (8.3 million tonnes). Third largest pharmaceutical producer, 8% of global production.

10 Human population of 1.22 billion. with a GDP of USD 1.94 Trillion. Post harvest value loss ~18-40% of farm produce. Foreign Trade USD 795 billion.

11 Coastline is more than 7,500 km long. Interspersed with more than 200 ports. International cargo: 95% by volume and 75% by value is carried by sea. Ports capacity 1,247 million tonnes, doubling by Railways: 87,087 km, across 7,083 stations and operates more than 18,000 trains every day. 4.2 million km Roads : National Highways - 76,818 km, State Highways - 154,522 km, District Roads - 2,577,396 km, Rural Roads - 1,433,577 km.

12 not a single perishables gateway! only ~8000 reefer trucks. limited reefer rail options. Containerisation at 20%.

13 4 th largest electricity consumer, fifth largest installed capacity (246 GW) with 11.5% renewable capacity. 300 clear days, Solar radiation 4 to 7 kwh/m 2 ; area million sqkms. Solar reception 5000 Petawatt-hours per year. Fifth largest in wind power; 18,634MW in Among lowest ecological footprints of 0.9 gha/person. Starkly different, tightly clustered; six major climatic zones.

14 DTR: (T max ) (T min ) of 20 C Shortfall of power, reliance on diesel gensets. Insulation and energy efficiency standards. Portability options min.

15 millions millions Total population million Urban population % Population annual % change Total population million % Growth % of total Indian Economy: growing at more than 8% for last decade, population 1.5% annually for last two decades. Continuous urbanisation of India due to expanding development. Projections: on-going Key socioeconomic changes and four fold growth in the size of middle to rich class Indian households; resulting doubling household consumptions by Young populace, aspirations overreached and to stay stretched.

16 GDP USD 1.94 trill in 2012 from 1.25 trill in 2006 (+56% in 6 years). Spending growth: $991 billion in 2010 to $3.6 trillion by 2020 (5.8% of global consumption, doubling from 2.7%). 1,870,000 Consumer Food outlets (2012). Domestic spend (USD from ) 31-Jan >2 x from 2005 Quality & Hygiene consciousness Easy consumer credit Increase in consumer class pop. Increased Demand for (Cold Chain) Quality Foods Purchasing power, Rise in income Changed consumer mindset FY05 FY07 FY09 FY11 Per Capita Disposable Income Per Capita Disposable Spending 3% 6% 4% 10% 17% India Spends on 60% Food and Grocery Others Clothing and Fashion Electronics Beauty and Welness Furniture and Fixtures Source: Boston Consulting & CII, IRIS, MoSPI- Govt of India.

17 Agriculture cultivated area: 150 million hectares Area under Horticulture: 23 million hectares (15%) $260 billion to Indian GDP by Agriculture 35% of this is from Horticulture Million Metric Tons Horticulture Production Fruits Vegetables Plantation Crops Others x 2.6 x 2.8 Within Horticulture, perishable commodities trends higher & drives growing demand for perishable handling. Others: includes Spices, Loose Flowers, Nuts, Mushroom, Aromatic/medicinal and Honey. Source: Horticulture Division, Ministry of Agriculture and CrossTree Analysis

18 Inflationary trend (40 years) shows Food as prime driver with perishables contributing highest Trends - Annual Average WPI Inflation (from 1970 to 2012) Despite producers showing robust response by increasing supply, yet inflationary pressure exists. This may indicate that demand for perishable products continues to outstrip supply. Inflation % This also indicates a lack of efficient supply systems which continues to feed inflation in food items. Continual demand for food distribution and cold chain is foreseen over coming decade to to to to All Commodity Primary Food F & V Milk Eggs, Meat, Fish Source: RBI, Office of Economic Adviser, MoCI, Govt of India

19 Exports Total Indian Pharmaceutical USD Billion 15.6 BioPharma Logistics Spending (USD Billion) North America Europe Asia Rest of World Higher-than-average growth in vaccines & specialty pharmaceuticals and heightened regulatory requirements continues to drive cold chain for pharma e 2015e F 2013F 2014F 2015F 36.7 Rest of World Global Cold chain logistics spend from $5.2 billion in 2008 to $6.9 billion in Growth in Asia outstripped all regions. Asia & India continue to grow into a major hub for Bio-Pharma, cold chain demand from the sector continues to rise. Asia Europe North America Cold chain shipment growth by region $0.6 to 0.8 billion (33% Growth) $1.0 to 1.5 billion (50% Growth) $1.5 to 1.9 billion (27% Growth) $2.1to 2.7billion (29% Growth) Cold Logistics Growth USD Billion 2012e Notes : Figures exclude clinical trials which is separate specialised logistics. Sources: Cold-Chain BioPharma Logistics Sourcebook 2011 & UN Comptrade database, Orkash and CrossTree Analysis

20 2,000 1,800 1,600 1,400 1,200 1, Food Service Outlets ( 000) E 2013E 2014E 2015E Standalone (LHS) Leisure (RHS) Retail (RHS) India is 5th largest retail market worldwide. 1,968,000 Consumer Food outlets by Organised Retail Market is growing despite FDI. This feeds demand for cold chain. Simultaneous growth in the food service sector accelerates need for the cold-chain. Note : Total Food Service Outlets is a sum of Standalone, Leisure and Retail outlets Source : Euromonitor, IBEF, IRIS and CrossTree Analysis Others Clothing & Fashion Beauty & Wellness Electronics Furniture & Furnishings Food & Grocery Size of Retail Market (USD Billion) 90% 89% 88% 96% 77% 99% Modern Retail Traditional P Traditional Modern

21 As of last recorded national level data, India has 6488 cold storage with a cumulative installed capacity of approximately 30 million Metric Tons. CC Market U$ Billion Storage Transport % Segments Storage Transport Cold Storage Availability Number Number of Cold Storages 88% ( 000) tons 2000 Installed Capacity in '000 tons (Cumulative) # In the Last Decade Key Trends More than 25% of the cold storage units (~10 mill tons) have been built post Growth (CAGR ) : Numbers of Cold Storage : 3.57%, Capacity : 5.19%. Growth in Transport capacity 22% Current short fall of 4000 reefer trucks, govt states another 30+ million tons capacity needed. The witnessed growth in the Cold Storage sector is accepted to only accelerate in the coming years Notes: 2009 and 2010 numbers only for NHB and NHM assisted cold storages. Numbers as of Dec 2012 Source: NHB, NHM, Directorate of Marketing and Inspection 2009, Orkash & Crosstree Analysis

22 Capacity mostly focused on single product types a long learning curve established Minimal outreach for foods and pharma localised operations, earlier focus was storage. Chain approach to counter Irregular parameters across regions and within days. Fragmented development did not encourage holistic cool logistics for single source service. Refrigerated systems need adaption to India specific needs in design and capacity utilisation.

23 Capacity mostly focused on single product types a long learning curve established Minimal outreach for foods and pharma localised operations, earlier focus was storage. Chain approach to counter Irregular parameters across regions and within days. Fragmented development did not encourage holistic cool logistics for single source service. Refrigerated systems need adaption to India specific needs in design and capacity utilisation.

24 Agri/Foods identified as priority sector NCCD takes shape Focus on Market links development Move to uniform VAT/GST PPP, Grants, Negotiable Warehouse Receipts 100% FDI in food sector Encourages Investments Encourages holistic development Liberalises Marketing Norms Rationalises Tax Laws Credits Grants & Subsidies Liberalising FDI Inflow Government as Catalyst Increasing focus to create enabling infrastructure by govt. While this support was earlier focused on static cold storages, recent developments have been to include refrigerated trucks including containers. NCCD to play pivotal role to correlate industry expectations and policies.

25 Capital Investment Subsidy / RIDF Scheme Subsidies Public available for Entrepreneur Integrated Cold constructing 500 Guarantee Chain Scheme Cold Chains by Scheme Govt. of India 40.9 USD Billion NCCD as umbrella agency to address concerns. Outlay Amounts for Infrastructure Development (Five Year Plans) Xth Plan XIth Plan XIIth Plan PPP-IAD NVIUC Initiatives for Infrastructure Development Mega Food Parks Scheme. Integrated Cold Chain Scheme. State level Initiatives. National Horticulture Board. National Horti and FPI Missions.

26 Central Excise Duty Customs Duty 100% exemption for specified equipments for storages or transport, self loading / unloading trailers / semi-trailers. Full exemption from basic customs duty for manufacture of refrigerated vans/trucks; biopolymer/bio-plastics; Concessional duty of 5% for initial installing or expansion of a cold storage, cold room, processing, etc. Service Tax Exemption Erection, Commissioning or Installation of Mechanized Handling Systems; Cold Storage and transport; Cold-chain Service of storage and transporting agriculture produce. Technical Testing; Analysis Service and Technical Inspection and Certification Service. Capital Investment Cold Chain & FDI: 100% FDI through automatic route. Investment linked Tax deduction : 150% of capital investment deductible. Government subsidy on investment: 40 to 55% subsidy on storage and transport

27 Industry, PSUs, Government, Investors, Entrepreneurs, Farming Associations & Knowledge Houses - All Working Together! Training, HRD and R&D Committee. 2 Technical Specification, Standards, Test Laboratory & Product Certification Committee. 1 3 Committee for Application of non-conventional Energy Sources in Cold Chain Infrastructure. Executive Committee Liaison with other NLAs and States 6 4 Committee for Supply Chain & Logistics. NCCD Members, other 5 cold chain sectors

28 Cold Supply Chain (India): Poised for a Quantum Jump Best practises for Sub-continent conditions, market. Skill development & training establishments. Appropriate & integrated Infrastructure development. Adoption of energy efficient technology. Partner with Indian logistics companies. Adapting from mass storage to direct access storage. Manage and develop Multiple markets in region. Anticipate ahead of a developing market.

29 Innovators and solutions biased companies. Technology Provision and implementation. Cold Logistics and Supply Chain services. Specialised Infrastructure designers and planners. Expertise in alternate energy, environmental protection. Scalable, Energy efficient Refrigeration technology. Refrigerated Vehicles and last mile delivery systems. Education, Training & Cold chain management experts. Knowledge Managers and Integration specialists.

30 Food / Pharma Exports Eggs, Beef, Ice Cream QSR Majors Polio Eradicated

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33 The Source and the Destination

34 Nodal Body for Cold-chain Development Ministry of Agriculture