Insert Cover Image using Slide Master View Do not distort. Logistics Services Market India

Insert Cover Image using Slide Master View Do not distort Logistics Services Market India February 2015

Executive Summary Market Overview Drivers & Challenges Technology Adoption Logistics services, an amalgamation of Courier, Freight, Third Party Logistics and Fourth Party Logistics, has significant business earning potential in the domestic market Amongst the segments, courier market shows the maximum growth in terms of CAGR whereas freight forwarding has the largest market size value-wise Third Party and Reverse logistics are emerging markets having huge market potential and scope for expansion Drivers Global Trade Boom Rapid Economic Growth and FDI in Logistics Growth in Retail Sector Rise in e-tailing Increased Demand for Consumer Electronics and Durables Expansion of Auto and Auto Components Sector Enterprise Application ERP, ebiznet SC suite, Vin eretail Communication Technology - Global Positioning System (GPS) Tracking Software Solution Providing Companies Challenges Poor Infrastructure Lack of Skilled Manpower Warehouse Space Deficit Identification Technology Barcode, RFID Material Handling Technology - Automated Guided Vehicle System (AGVS), Information directed System Technology Adoption by Leading Players Major Players Competition Player 1 Player 2 Player 3 Player 4 Player 5 Player 6 2

Macroeconomic Indicators Introduction Evolution Market Overview Advantages of Services Segments and Features Distribution Channel Government Initiatives Role of Regulatory Bodies Drivers & Challenges Key Issues Technology Adoption Competitive Landscape Transactions Strategic Recommendations Appendix 3

Macroeconomic Indicators (1/3) GDP at Factor Cost: Quarterly INR tr 16 15 14 13 d1 c1 b1 a1 c2 b2 a2 c3 b3 a3 c4 b4 a4 12 Q1 Q2 Q3 2011-12 2012-13 2013-14 2014-15 Q4 Inflation Rate: Monthly 2 1 % p q r s 0-1 -2 t Jul 2013 - Aug 2013 Aug 2013 - Sep 2013 Sep 2013 - Oct 2013 Oct 2013 - Nov 2013 Nov 2013 - Dec 2013 4

Macroeconomic Indicators Introduction Market Overview Advantages of Services Segments and Features Distribution Channel Government Initiatives Role of Regulatory Bodies Drivers & Challenges Key Issues Technology Adoption Competitive Landscape Transactions Strategic Recommendations Appendix 5

Logistics sector primarily deals in transportation and storage operations and is significantly aided by logistics services LOGISTICS SECTOR TRANSPORTATION STORAGE LOGISTICs SERVICES Container Rail Transport Road Transport Express Logistics Coastal Shipping Air Cargo Project Logistics Warehousing Logistics Park Inland Container Depot Container Freight Station Cold Chain Port Courier Service Freight Forwarding 3PL/ 4PL Reverse Logistics Focus of the study Logistics services also include import/export management, customs 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 and logistics audit amongst others 6

Logistics market in India has witnessed an exponential growth rate over the past decade Logistics Market Overview India Logistics is defined as a business planning framework involving procurement, maintenance, distribution, and replacement of personnel and material In 2014, the global annual logistics spend has been valued at about INR y tn Globally, logistics industry represents a significant part of the economy, as it generally constitute between a-b% of the GDP of a country The annual logistics cost in India, estimated to be around c% of GDP, is valued at INR x tn and it is growing at e-f% annually Transportation, Logistics, Warehousing and Packaging Sector in India is dominated by the unorganized segment, while the organized segment accounts for less than d% of the logistic sector in India India is still on the evolving stages in the logistics industry with much of its focus being on enabling physical distribution rather than progressive integrated logistics management Logistics Performance Indicator Logistics Market Size and Growth LPI score World Rank (proportion to highest ranking nations) m n o p INR tn x1 x2 x3 Y% x4 x5 x6 w x y z 0 2007 2010 2012 2014 2013 2014e 2015e 2016e 2017e 2018e 8

India is poised to be the land of opportunity for logistics service providers all over the world Logistics Services Market Overview Logistics Services Market Size and Growth Services in India are emerging as a prominent sector in terms of contribution to national and states incomes, trade flows, FDI inflows, and employment Logistics services forms an integral part of the overall functioning of the logistics sector Inbound logistics concentrates on purchasing and arranging inbound movements of materials, parts, and finished inventory from suppliers to manufacturing or assembly plants, warehouses or retail stores Outbound logistics involves movement of final product and related information flows from the end of the production line to the end user INR bn 0 Reverse logistics is the process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal, involving remanufacturing or refurbishing An efficient logistics market would demand integration of services at all points and across all segments Growing at a rate of a-b% every year logistics services market in India is expected to grow more than INR x tn approx by 20-- Major segments of the logistics services market include Courier Market, Freight Forwarding Market, 3PL Market and Reverse Logistics Market Within the segments, Courier market displays the maximum growth potential followed by 3PL market, growing at a CAGR of m% and n% respectively Reverse logistics is still at a very nascent stage while Freight Forwarding, occupying the maximum share of the pie, in order to sustain would require substantial diversification of services x1 2013 B4% B1% x2 2014e x3 2015e Y% x4 2016e x5 2017e 2013 Market Segmentation Sector wise B3% B2% Courier Market 3PL Market x6 2018e Freight Forwarding Market Reverse Logistic Market 9

Growing business opportunities in India is driving the need for time bound service Courier Market Overview Courier Market Market Size and Growth INR bn x1 x2 x3 Y% x4 x5 x6 0 2013 2014e 2015e 2016e 2017e 2018e 10

Surface mode of transport rules over air mode for transportation of deliverables Courier Vendors Categories India Revenue Split of Courier Sector 2013 Government Administered Global Integrators Large Indian Companies India Post UPS, TNT and DHL Blue Dart, DTDC, First Flight B2% B1% Organized Unorganized Regional Players Other Small Courier Companies Market Segmentation by Modes of Transport 2013 C1% Air Surface C2% 60.0% Percent stated are approximate 11

Courier companies deal majorly in commercial goods and largest share of operation accrues from domestic market Segmentation By Type of Consignment (Value Wise) Segmentation By Expanse of Operation (Value Wise) 2013 2013 B1% D1% C1% C2% B2% D2% Document Commercial Goods Domestic International Intercity Intra city Note: Percent stated are approximate 12

The freight forwarding market exhibits moderate potential for growth but has tremendous diversification options Freight Forwarding Market Overview (1/2) Freight Forwarding Market Market Size and Growth INR bn x1 x2 x3 Y% x4 x5 x6 0 2013 2014e 2015e 2016e 2017e 2018e Note: Market size does not include inland water transport Gross revenue has been estimated based on sea and air freight revenues, railway revenues and road transport cum value added services 13

The air and sea freight markets are the maximum revenue earners despite carrying the least percentage of total freight Freight Forwarding Market Overview (2/2) Volume-wise Modal Share in Freight Transport (2013) Value-wise Road Rail Water and Air Railway Freight Revenue Share Road Transport, Allied & Value Added Services Sea and Air Freight Revenue Share B2% C1% B3% C3% B1% C2% 14

Third party logistics is fast gaining popularity in the Indian logistics market Third Party Logistics Market Overview (1/2) Third Party Logistics Market Market Size and Growth INR bn x1 x2 x3 Y% x4 x5 x6 0 2013 2014e 2015e 2016e 2017e 2018e 15

3PL Market Insights (1/2) Share of 3PL Service Providers 2012 Customer s Propensity Outsource Activities 2012 B2% B1% C7% C5% C4% C6% C3% C1% B3% C2% Unorganized Logistics Activities Organized 3PL Service Providers Companies with own integrated solutions Transportation Warehousing Production Spare-parts Management Invoicing Order Processing Inventory Management 16

Reverse logistics market is on a gradual growth path with manufacturers realizing its significance Reverse Logistics Market Overview (1/2) Reverse Logistics Market Market Size and Growth INR bn x1 x2 x3 Y% x4 x5 x6 0 2013 2014e 2015e 2016e 2017e 2018e 17

Government Initiatives: Courier Ensuring Competitiveness Infrastructure Development Role of Government ` Foreign Direct Investment India Post Office Amendment Bill Laws 19

The India Post has been providing service at a Distance Local (within Municipal Limits) Upto 200 kms 201 kms 1000 kms 1001 kms 2000 kms Above 2000 kms Distance Weight Upto 50 gms 51 gms 200 gms 201 gms 500 gms Additional 500 gms or part thereof Tariff of Express parcel Distance Weight Upto 500 gms For Every Additional 500 gms - 5 kg For every kg beyond 10 kg Local Within State Neighboring State Other State Between Metro and State Capital National Capital Region Delhi/Ghaziabad/Noida/Greater Noida/ Fardiabad 20

Government Initiatives : Transport and Logistics FDI Regime Sectors Pertaining to the Transport and Logistics Industry Development of the Dedicated Freight Corridor Shift to GST Tax Regime Role of Government ` Shipbuilding Subsidy and Investments Government Road Building Programs Infrastructure Initiatives Union Budget 2014 21

FDI in Transport and Infrastructure FDI Regime Sectors Pertaining to the Transport and Logistics Industry (2/2) FDI Equity Inflows over the Years INR mn x1 Y1% x2 Y2% x3 Y3% x4 Y4% x5 0 FY09 FY10 FY11 FY12 FY13 FDI in Transport and Infrastructure, INR mn Railway Related Components Air Transport Air Freight Sea Transport Shipbuilding Construction of Roads and Highways 0 Jan - Sep, 2013 22

provide smooth freight forwarding options to the remotest of locations as per customer demands Government Road Building Programs (2/2) CRF Allocations for Road Transport in India CRF Allocation Break-Down (2012-13) CRF Disbursements (INR bn) Grants for State roads Inter-State Connectivity and Commercial Routes Rural Roads Railways x1 x2 x3 Y% x4 x5 x6 National Highways (incl. Expressways) B3% B4% B5% B2% 0 FY09 FY10 FY11 FY12 FY13 FY14 B1% 100% =INR 194.24 bn 23

Globalization has led to increase in demand for fast and secure transport of documents Global Trade Boom (1/6) Impact India s Total Export India s Total Import INR tn INR tn Y% x5 B% a4 a5 x4 x3 a3 x2 a2 x1 a1 0 2009-10 2010-11 2011-12 2012-13 2013-14 2009-10 2010-11 2011-12 2012-13 2013-14 Government of India plans to double India s export of goods and services by 2014-15 India s import is also expected to grow further, particularly of oil and capital goods 25

Indian gems and jewelry industry is also having a significant impact on the courier market in India Global Trade Boom (5/6) Export of Gems and Jewellery Encouraging Courier Business As According to EXIM Customs Manual Import of gems and jewelry including samples thereof by Export Oriented Units or units in Export Processing Zones is allowed through courier Likewise, export of cut and polished diamond, gems and jewelry under any scheme of EXIM Policy from Export Oriented Units, units in Export Processing Zones or units in the Domestic Tariff Area is allowed through courier subject to the condition that the value of each export consignment under such export does not exceed INR a mn Export of Gems and Jewelry INR tn Y% x2 x1 0 Note: HS Code 71 Used for Estimation of Export Figure Exchange Rate as per 2011= $1= INR 46.74 XIth Plan Period 2007-08 to 2010-11 XIIth Plan Period 2012-13 to 2016-17e 26

3PL providers need to customize their services and charge competitive rates to benefit from retail boom in India Growth in Retail Sector (1/5) Impact Retail Market Market Size and Growth INR tn x1 x2 x3 Y% x4 x5 x6 0 2013 2014e 2015e 2016e 2017e 2018e 27

Forward Logistics Flow in Retail Reverse Logistics Flow in Retail Forward and Reverse Supply Chain in Retail Sector Growth in Retail Sector (5/5) ASN Key Product Flow Information Flow ASN ASN (Advanced Shipping Notice) Detailed shipment information transmitted to customer or consignee in advance of delivery, designating the contents (individual products and quantities of each) and nature of the shipment. May also include carrier and shipment specifics including time of shipment and expected time of arrival Milk Run - Delivery method for mixed loads from different suppliers wherein one vehicle visits each supplier on a daily basis and picks up deliveries for that customer 28

e-tailing has revamped shopping experience by transforming it from a weekend to anytime activity Growth in e-tailing (1/2) Impact e-tailing Market Growth in India Market Reach % - as on 2012 e-commerce Operational Expense 2011 INR bn x1 0 2013 x2 2014e Y% x4 x3 2015e 2016e x5 2017e x6 2018e Junglee Myntra Snapdeal Jabong ebay Flipkart Logistics B1% B2% Others Note: Market Reach refers to the estimated percentage of global Internet users who visited the respective websites during the beginning of the year 2012 29

Growing dependence on 3PL services from automobiles and auto components sector to facilitate market growth Growth in Auto and Auto Components Sector (1/3) Impact 0 x1 2012-13 Growth in Automobile Market by production (000 units) Y% x2 2013-14 B1% B4% B3% B2% Two Wheelers Passenger Vehivles Commercial Vehicles Three Wheelers mn units 0.6 0.4 0.2 0.0 Growth in Passenger Car Exported from India Y% x1 2009 x2 2013 30

Reverse logistics aids automobile sector in dealing with damaged and defective automobiles Growth in Auto and Auto Components Sector (3/3) Auto Ancillary Market Market Size and Growth Growth in Revenue Auto Component Sector INR bn x1 x2 x3 Y% x4 x5 x6 INR bn x1 x2 Y% x3 x4 0 2013 2014e 2015e 2016e 2017e 2018e 0 2009-10 2010-11 2011-12 2012-13 Note: Auto components includes Engine Parts, Drive Transmission and Steering Parts, Body and Chassis, Suspension and Braking Parts Equipments, Electrical Parts, Others 31

Indian pharmaceutical sector is growing at a phenomenal rate due to growing popularity of generics segment Growth in Pharmaceutical Sector (1/4) Impact Market Size and Growth Market Segmentation INR bn x1 x2 x3 Y% x4 x5 x6 % Organized Unorganized 0 2013 2014e 2015e 2016e 2017e 2018e 2013 2014e 2015e 2016e 2017e 2018e 32

Logistics service depends on a strong, smooth and well integrated transport infrastructure that is lacking in India Poor Infrastructure (1/6) Impact Sector Mega Projects Stalled projects Estimated (INR mn) New Projections (INR mn) Cost Overruns (%) Railways Roads and Highways Shipping and Ports Civil Aviation Overall 33

Indian transport sector is facing substantial drawback with respect to global standards Poor Infrastructure (3/6) Road Infrastructure Drawbacks (2013) National Highways Four-lane Others Two-lane C3% Single-lane B1% B2% C1% World Bank's International Logistics Performance Index (LPI) Global Ranking, 2014 (Port Sector Performance) USA India China C2% Customs Infrastructure International shipments Logistics quality and competence Tracking and tracing Timeliness 34

Lack in warehousing facilities is discouraging courier service providers in undertaking larger consignments Warehouse Space Deficit Impact Projected Growth In Warehousing Requirement million sq. ft. Y% x2 x1 2013 2019e Indian is already struggling to meet warehousing demand and with gradual prospering of 3PL and reverse logistics, warehouse space demand will be a critical factor of success for logistics services 35

Issue #3: Increased internet accessibility has a direct negative impact on courier of confidential documents Telecom Players Taking Initiatives for Raising e-bills Popularity Growing Internet Subscribers in India mn Narrowband Broadband Total 0 2009 2010 2011 2012 2013 37

Unfavorable weather and safety issues also result in downfall of freight forwarding business Weather Conditions Safety No. of road accidents x1 x2 x3 x4 0 FY09 FY10 FY11 FY12 38

40 Major Players in Logistics Services in India (1/4) Company Courier Freight Forwarding 3PL Reverse Logistics

Porter s Five Forces Analysis Impact Low to Medium Threat of New Entrants Impact Medium Impact High Impact High Bargaining Power of Suppliers Competitive Rivalry Bargaining Power of Buyers Impact Low Threat of Substitutes 41

Competitive Benchmarking (2/5) Key Ratios of Top 3 Companies Operational Basis (FY 2013) (1/3) 8 6 % Operating Margin Net Margin a3 4 2 0 a1 Player 1 b1 a2 Player 2 b2 Player 3 b3 Player 3 recorded operating margin of -%, higher than that of Player 1 which recorded operating margin of -% and also that of Player 3 which recorded operating margin of -% Net margin for Player 1, Player 2 and Player 3 are -%, -% and -% respectively, wherein Player 3 has the highest net margin among these three companies 42

Public: Domestic Company Player 1(1/5) Company Information Offices and Centres India Corporate Address Tel No. Fax No. Website Year of Incorporation Ticker Symbol Stock Exchange Products and Services Category Products/Services Key People Name Head Office Designation Sectors (EPC) 43

Public: Domestic Company Player 1 (2/5) Financial Snapshot INR mn Financial Summary The company earned a net profit of INR - mn in FY 2014, as compared to net profit of INR - mn in FY 2013 The company reported total income of INR - mn in FY 2014, registering an increase of -% over FY 2013 The company earned an operating margin of -% in FY 2014, a decrease of m percentage points over FY 2013 The company reported debt to equity ratio of - in FY 2014, registering an increase of -% over FY 2013 Key Financial Performance Indicators Indicators Value (08/27/2014) Market Capitalization (INR mn) Total Enterprise Value (INR mn) EPS (INR) p1 r1 2011 PE Ratio (Absolute) Total Income p2 r2 2012 Net Profit/Loss p3 r3 2013 Note : This company has had a fiscal year change on Dec-31, 2011 p4 r4 2014 INR mn Key Ratios Particulars Profitability Ratios Operating Margin Net Margin Profit Before Tax Margin Return on Equity Return on Capital Employed Return on Working Capital Return on Assets Return on Fixed Assets Cost Ratios Operating costs (% of Sales) Administration costs (% of Sales) Interest costs (% of Sales) Liquidity Ratios Current Ratio Cash Ratio Leverage Ratios Debt to Equity Ratio Debt to Capital Ratio Interest Coverage Ratio Efficiency Ratios Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover y-o-y change (2014-13) 2014 2013 2012 2011 Improved Decline 44

Public: Domestic Company Player 1 (3/5) Key Business Segments Key Geographic Segments Container Freight Stations Project & Engineering Solutions % Multimodal Transport Operations Others Australia & New Zealand Africa % Mediterranean America Far East India Europe C1% A1% B1% C2% A2% 8% B2% C3% A3% B3% C4% A4% B4% F1% E1% D1% C1% A1% B1% F2% E2% D2% C2% G2% B2% A2% F3% E3% D3% C3% G3% B3% A3% F4% E4% D4% C4% G4% B4% A4% 2010 2012 2013 2014 2010 2012 2013 2014 Business Highlights(1/2) Description News Overview 45

Public: Domestic Company Player 1 (4/5) Business Highlights(2/2) Description News Extensive Product Portfolio Awards & Recognitions Acquisitions 46

Public: Domestic Company Player 1 SWOT Analysis (5/5) S O W T 47

Private: Foreign Company Player 2 (1/5) Company Information Offices and Centres India Corporate Headquarter Tel No. Fax No. Website Year of Incorporation Products and Services Head Office Category Products/Services Key People Sectors (EPC) Name Designation 48

Private: Foreign Company Player 2 (2/5) Shareholders of the Company Ownership Structure Name No. of Shares held Foreign Holdings Total 100% B1% Ownership structure corresponds to Date of AGM: 31/03/2013 49

Private: Foreign Company Player 2 (3/5) Financial Snapshot INR mn 0 r1 2010 p1 Total Income Financial Summary p2 r2 2011 Net Profit/Loss INR mn The company incurred a net profit of INR - mn in FY 2013, as compared to net profit of of INR - mn in FY 2012 The company reported total income of INR - mn in FY 2013, registering an increase of -% over FY 2012 The company earned an operating margin of -% in FY 2013, a decrease of - percentage points over FY 2012 The company reported debt to equity ratio of - in FY 2013, a decrease of -% over FY 2012 p3 r3 2012 p4 r4 2013 Key Ratios Particulars Profitability Ratios Operating Margin Net Margin Profit Before Tax Margin Return on Equity Return on Capital Employed Return on Working Capital Return on Assets Return on Fixed Assets Cost Ratios Operating costs (% of Sales) Administration costs (% of Sales) Interest costs (% of Sales) Liquidity Ratios Current Ratio Cash Ratio Leverage Ratios Debt to Equity Ratio Debt to Capital Ratio Interest Coverage Ratio Efficiency Ratios Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover y-o-y change (2013-12) 2013 2012 2011 2010 Improved Decline 50

Private: Foreign Company Player 2 (4/5) Business Highlights Description News Overview Awards and Recognitions Industries Served 51

Private: Foreign Company Player 2 SWOT Analysis (5/5) S O W T 52

Strategic Recommendations Summary Courier Market Freight Forwarding 3PL Reverse Logistics 54

Thank you for the attention Logistics Services Market India 2015 report is part of Netscribes Automotive and Logistics Series. For any queries or customized research requirements please contact: Phone: +91 33 4064 6214 E-Mail: sales@netscribes.com About Netscribes, Inc. Netscribes 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, 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. 55