Madhya Pradesh: Means Business Logistics Industry
Overview Overview Madhya Pradesh (MP) – State that means business • MP is the second largest State in the Country stretching over 308,000 sq kms. • The State is blessed with large mineral resources of coal, diamond, limestone, methane etc. • MP is among the top 4 states of the Country for industrial investments. Economic Snapshot Madhya Pradesh is emerging as a key growth center for the Country • Per capita GSDP USD 369** • Manufacturing sector USD 8.5 bn** (Registered & Unregistered) • Gross state domestic product (GSDP) USD 23,983.63 Mn** • Average growth rate 5.5% per annum Advantage MP Madhya Pradesh has one of the upcoming industrial base in India • The State is centrally located • Investor friendly Government policies • Total electricity generation capacity 6,449.25 MW* • India’s first greenfield SEZ Indore SEZ • Industrial Centers 8 Power Electricity generation capacity at present is 6,449.25 MW and estimated to rise to a surplus in 2008-09 • MP is rich in low grade coal suitable for power generation. • Potential of hydro-energy generation. • Installed power capacity (MP’s share) • Hydel Power Generation: 852.7 MW* • Thermal Power Generation: 2,147.5 MW* *Ministry of Power (powermin.nic.in) **Source: Indiastat.com (as on 23 Feb 2006)
Enabling Infrastructure • The State is well connected with the rest of India with almost 425 trains passing through the State on a daily basis. Of these 175 trains pass through the State capital Bhopal alone. MP IS CENTRALLY LOCATED AND WELL CONNECTED WITH ALL MAJOR CITIES IN INDIA RAILWAY NETWORK • 25 airstrips.** • Convenient air links from key Indian cities like Delhi & Mumbai to Bhopal, Jabalpur, Gwalior, Indore and Khajuraho. • 5 operational airports. • Indore airport has the capability of handling international cargo. • An international airport proposed in Bhopal. GWALIOR KHAJURAHO AIRPORTS INDORE BHOPAL JABALPUR • The total length of roads spanning MP is 67,600 kms.** • National highways of 5,200 kms run through the State.* • 18 National highways including trunk routes of Delhi-Mumbai, Delhi-Chennai, Delhi-Bangalore, Delhi- Hyderabad. • The total length of State highways in the State is 9,885 kms.** • Convenient linkages to western ports i.e. Kandla Port, Jawahar Nehru Port Trust. ROAD NETWORK *Source: Department of Road Transport & Shipping (morth.nic.in) **Source: www.destinationmadhyapradesh.com
Madhya Pradesh: A Preferred Investment Destination 31% of the State under forest cover with a largely unexploited species of rare, valuable medicinal- herbal plants Over 2,000 kms of roads being developed with Private Partnership (BOT) Offers diverse tourists destinations catering to various segments of tourism such as religious (Bhojpur), eco/ adventure (Panchmari), heritage (Sanchi, Khajuraho) tourism etc. India’s 1st operational Greenfield SEZ at Indore Third largest producer of cement in India* Over 100 agricultural farms with an area of over 20,000 acres is available on lease to investor Favourable climatic conditions for cotton and over 40,000 power-looms are driving the textile industry Various blocks available for power, cement, iron and steel units Largest producer of pulses and oilseeds in the Country (~75% of soyabean production) Over 18,000 technical graduates and 230,000 graduates add to workforce each year 12 blocks with reserves totalling 2,585 million tons of coal has been identified Over 144 BCM of coal bed methane reserves available Availability of coal and natural gas (G.A.I.L pipeline) along with support from Government to make investment in Thermal Power Plants lucrative *Source: www.mpsidc.org & Brochure: MP Means Business
Delhi (740 Kms) (MPV - 789.5) Ahmedabad (570 Kms) (MPV - 220.63) Kolkata (1350 Kms) (MPV - 613.19) Mumbai (780 Kms) (MPV - 1000) Pune (800 Kms) (MPV - 206.51) Hyderabad (840 Kms) (MPV - 257.9) Key Markets (Distance From Bhopal) MPV – Market Potential Value Chennai (1430 Kms) (MPV - 362.84) Bangalore (1400 Kms) (MPV - 254.52) MP: The Right Place with the Right Environment Savings in Office Space Rates (A comparison of rates in Central Business Districts) DESTINATION MADHYA PRADESH Fastest mover* in overall performance among the big States in the Country. Fastest mover in agriculture Fastest mover in infrastructure development. Bhopal and Indore have substantial cost advantages, even when compared to other Tier III and IV cities. Savings in Land Cost Ranks 2nd in terms of governance. (Estimated Values for Multi-product SEZs) Ranks 3rd in terms of law & order Cost of skilled labour is USD 2.4/day vis-a-vis USD 3.5 – USD 4.0/day in metros The cost of land is one of the lowest in the Country. Even central hubs such as Indore and Bhopal fare well against other cities in terms of low land cost. MP is centrally located. The State is at an easy distance from all the key consumer markets in the Country. * Fastest mover is the State where the rate of improvement between 2003 & 2006 was greater than that between 1991 & 2003 **Source: India Today (September ‘06 Issue) - Distances rounded off Source: (Reference: RK Swamy)
Industrial Policy: Catalyst for the Investments • The Government of MP has devised an investor friendly industrial policy, which is aimed at achieving global competitiveness. The policy emphasizes on industrial growth in the state through adopting cluster approach, establishing specialized infrastructure and offering favourable incentives. • The main thrust of this policy is: • Establishment of a Madhya Pradesh Trade and Investment Facilitation Corporation which would take decisions about rationalization of taxes, facilities of mega projects and other related matters. • Enacting an Industrial Facilitation Act and to change the rules of business with a view to make single window system decisive and result oriented. • Developing infrastructure for supporting the identified industrial clusters • Reviving closed down/ sick industrial units by granting special packages. • Attractive incentive schemes. SPECIAL INCENTIVES • Special package for Mega Projects on project basis by apex level investment promotion empowered committee headed by the Chief Minister. • Industrial investment promotion assistance – 50% to 75% of commercial tax for 3-10 years • Concessional registration charges and stamp duty exemption for Term Loans. • Interest subsidy on term loan for 5 – years @ 3% to 5%. • For thrust sector industries, 25% capital subsidy would be provided limiting up to a maximum of USD 56,000 • Land on 75% concessive rate for Mega Projects limited to USD 4.4 million. • Entry tax exemption for 5 years. • 5 years electricity duty exemption on captive power generation • 15% capital subsidy to SSI up to USD 33,000 in backward areas • Infrastructure grant up to USD 0.22 million crore for developing private sector industrial parks • Partial reimbursement for Project report, ISO Certification, Patent and Technology Purchase cost • CLUSTER APPROACH • Indore – Pharmaceutical, Textile, Food Processing, IT, Auto Components • Bhopal– Engineering, Biotechnology, Herbal, IT, Food Processing • Jabalpur– Garment, Mineral, Forest & Herbal, Food Processing • Gwalior– Electronics, IT, FMCG, Engineering, Food Processing • Rewa– Refractories, Lime Stone, Forest Based • Sagar– Mineral Processing SPECIALIZED INFRASTRUCTURE
Doing Business Made Easy Through MPAKVN In a bid to build a competitive environment; industries and their ancillaries would be promoted in clusters based on the availability of raw materials, skilled labour andmarket potential. Under this Industrial Policy through Madhya Pradesh Audyogik Kendra Vikas Nigam Ltd (MPAKVNs) scheme, the State Government, has identified industrial clusters. Many of the industrial giants have their establishments in these areas, however 44% of developed area is still untapped and open for investment. Area Developed: 2,262 Hectares Allotted: 800 Hectares Units established: 326 Major Groups: JK, Surya Roshini, Godrej, Grasim, Cadbury, Hotline, Crompton Greaves Special Infrastructure: ICD, Food Park Area Developed: 790 Hectares Allotted: 125 Hectares Units established: 52 Major Groups: Raymond, Hindustan Petroleum, PBM, Ayur Special Infrastructure: Stone Park, Food Park Area Developed: 273 Hectares Allotted: 115 Hectares Units established: 121 Major Groups: Birla, Jaypee Special Infrastructure: Integrated infrastructure development centres (IIDC) Area Developed: 1,330 Hectares Allotted: 618 Hectares Units established: 286 Major Groups:HEG, Crompton Greaves, P&G, Godrej, Lupin, IFB, Oswal, Nahar Special Infrastructure: ICD, Food Park JABALPUR AKVN REWA AKVN GWALIOR AKVN BHOPAL AKVN Area Developed: 2,492 Hectares Allotted: 1431 Hectares Units established: 575 Major Groups: Tata, Ranbaxy, Eicher, Bridgestone, Hindustan Motors, Kinetic, SRF, S Kumars, Gajra, Nicholas Piramal, Indorama, IPCA, Bhilwara Special Infrastructure: SEZ, Crystal IT Park, Food Park, Apparel Park Malanpur, Malanpur Phase II, Banmore, Chainpura, Siddhgawan, Pratappura Rewa, Waidhan INDORE AKVN Mandideep, Pillukhedi, Mandideep Phase II Borgaon, Maneri, Purena Pithampur, Kheda, Dewas, Maksi, Megh Nagar Source: MPSIDC
Indian Logistics Market Projections 19.54 CAGR 6.38% 14.31 2004 2009 Logistics : Evolving Landscape in India • Indian logistic market from the manufacturing sector alone is estimated to be around US$ 14.3 bn in 2004 and is expected to increase to US$ 19.54 bn by 2009 with a CAGR of nearly 6.4%. The contribution of logistics industry to country’s GDP has increased from 7.4% in 1999-00 to 9.3% in 2004-05. • India spends around 13% of its GDPon logistics, compared to a global average of 10-11 %. Globally better supply chain management has reduced logistics costs by nearly 1% over last 10 years. However Supply Chain Management still remains a very new concept for Indian industries which are increasingly looking to gain competitive edge by adopting logistics and Supply Chain Management concepts and practice. • Key trend in the industry is towards outsourcing logistics requirements to Third Party Logistics (3PL) players. The demand is specially driven by the entry of MNCs and increasing export focus of Indian companies .The estimated market for 3PL players in 2003 was US$ 250 mn and is likely to grow at a CAGR of more than 20% during next five years. • Consistent good performance of the economy (over 8% growth rate), is the key force, driving the growth in the logistics sector. Vibrant economic scenario of the country has ignited the activities in manufacturing/infrastructure sector. US$ Bn Key Contributing Sectors Estimated Cost Saving by Reducing Logistics Cost by 1% Indian companies can save substantial cost by adopting modern supply chain and logistics solutions *(source: Credit Analysis & Research Limited)
Roads Rail Air Sea Roads Railways Air Water • Road transport accounts for 85% of passenger traffic and 70% of freight traffic • Currently Indian roads handles over 1,176 bn tonnes Km of freight per annum • Total number of goods vehicle has increased from 82,000 in 1951 to 4.04m in 2005 • 15% of passenger traffic and 30% of freight transport • Freight contributes over 65% of its revenue • In 2004-05 it handled 602 mn tonnes of freight • 95% of revenue comes from the bulk commodities such as Coal, iron ore, cement, fertilizers and food grain. Coal alone constitutes nearly 50% of all bulk freight • Cargo handled at airports has gone up at a CAGR of 7.8% from 0.65 mn tonnes in 1995-96 to 1.3 mn tonnes in 2004-05 • International cargo handled has increased at 6.8%per annum, while domestic has increased at 9.9 % per annum • 5 major airports have accounted for 90% of total cargo handled in the country • Major ports handle 90% of seaborne trade • In 2005-06 major ports together have handled 423.41 mn tonnes of cargo traffic out of the total 604.58 mn tonnes of cargo from all ports in the country • Container traffic has gone up by 14.2% during 2000-2005 Logistics : Evolving Landscape in India India’s Infrastructure Snapshot Overview of Logistics Industry Channels of Logistics Components of Freight Logistics Freight Snapshot of Logistics Operations via Major Channels *(source: Business Standard)
Madhya Pradesh has a well developed transport infrastructure of roads, rails and airports. 5200 km of National Highway runs across the state with total length of the roads in the state estimated around 67,600 km. The state also has 5000 km of rail networks with 425 trains passing through the state daily. MP has 5 operational domestic airports. The Indore airport has the capability to handle international flights. The mammoth transport infrastructure of the state provides connectivity with all the key cities and major ports. Under the National Highway Development Programme of NHAI, 1254 km of the existing roads are being converted into four lane highway. MP’s Infrastructural Backbone of Logistics Industry State Wise Length of National Highways Km 3rd largest network of National Highways among states Madhya Pradesh Maharashtra Bihar Gujarat Karnataka Tamil Nadu orissa Rajasthan AP UP Road Map of MP Equidistance Connectivity - Key Strength Distances of key Cities from Bhopal Madhya Pradesh is striving to create state-of-the art infrastructure essential to sustain modern supply chain and logistics industry with a vision to transform the state into a key logistics hub of the country.
Warehousing – A Value Proposition • The state requires an immediate addition in capacity at strategic locations to ensure quality services to the target market. • The partition of the state has affected its warehousing capacity. The Government is taking several initiatives to promote investments in this area to rebuild its warehousing and logistics might. • The state offers a lucrative utilisation rates of 80-85%, which can be as high as 90-95% at strategic locations. • The Governments also invites private developers through lucrative business value propositions. • The economic growth of the country is further facilitating the growth of the industry in the State. Item-wise Break-up of Warehousing Capacity 2005-06 Changing Utilisation Trend of Storage Capacity Partition of State Capacity Usage & Utilization Rate 2005-06 2003-04
Warehousing - Building Capacity The Proposed Hubs For Logistics & Warehousing • Along with the logistical hub for the Country, MP also has a substantial internal demand for warehousing. • Post partition, around 32% of states capacity was given to Chhattisgarh. This has created a significant shortage in warehousing capacity. • Government is taking several initiatives to upgrade the existing capacities and building capacities in the State. • Madhya Pradesh Warehousing & Logistics Corporation is the nodal agency of the GoMP with 1.2 million MT of capacity and presence in 232 locations. • Government also invites private players to take part in its drive to position MP as the logistical hub of the Country. • The Government has identified 11 locations as the hubs requiring immediate attention and have the capacity to become the major distribution centers for logistical activities and management. Further, 23 other locations require capacity building to meet requirements. Most Suitable Locations - Identified hubs for capacity building on the basis of expected demand, urgency of demand, road-rail connectivity and availability of land. Based on estimated demand an additional capacity of 2.16 Million MT was to be generated between 2002-06. However, only ~ 1 million MT was created during the same period. Hence, there is a shortfall of 1.6 million MTs in capacity. Other Potential Locations - Identified on the basis of expected demand, road-rail connectivity and availability of land.
MP Offers a Strong Value Proposition Key Ingredients of a Logistic Hub • Central location of MP facilitates equidistance connectivity with major Indian cities. The strategic location is the key incentive for various industries to establish their logistics hub in the state. • MP is the connecting link between the northern & southern states and eastern & western states of the Country. All major highways and rail routes passes through the state. • On completion, the North-South and East-West corridor passing through the state will provide further impetus to the logistics sector due to improved connectivity with key metro cities. • Companies can save a maximum of 25% of the transportation cost by locating their warehouse in MP via locating it in North. Similarly saving of 17%, 23% and 16% can be made in MP via locating it in southern, eastern and western part of the country. • Since 90% of the operational cost of a logistics company lies in transportation, substantial savings can be made by locating the company in the central region. • The peaceful labour environment in the state makes MP a favorable business destination. • Well developed infrastructure of roads and airports facilitates timely and expedite movement of goods across the country. MP has Advantage Across All Matrix of Distance From Central vis-à-vis Others parts of country MP’s inherent strength coupled with advantage of connectivity and cost makes it an ideal investment destination
MP provides an ideal combination of location, cost and infrastructure, factors critical for the efficient operations of the logistics industry. The State offers opportunities for logistic service providers specially the 3PL players as more and more companies are outsourcing their logistics requirements to specialized companies. The Container Corporation of India has three operational inland ports in the state, at Mandideep Bhopal, Pithampur Indoor and Malanpur Gwalior. Companies in the FMCG, manufacturing and textiles, sectors are increasingly looking at MP for establishing their storage and distribution networks. MP : A Preferred Investment Destination Container Corporation of India has 3 operational dry ports in Madhya Pradesh For entire FMCG products P&G have located their central warehouse in Bhopal Malanpur, Gwalior Mandideep, Bhopal Proctor & Gamble, the international FMCG giant choose Bhopal to located their central warehouse for all FMCG products. The cost saving due to critical location has helped the company in slashing the price of their products, thus gaining a vital competitive edge in the price sensitive market. Pithampur, Indore Government Proactive Initiatives Proposed MP’s Sectoral Hub MP 3C’s Cost Advantage Cost Infrastructure is the key Logistics Dependent Sectors Connectivity Conveyance Creative Conducive and Competitive business environment to support your business
Madhya Pradesh offers multiple opportunities in the logistics sector specially for companies engaged in manufacturing and distribution activities. A central warehousing facility would facilitate uninterrupted supply of raw materials and speedy distribution of finished goods across the country. Decrease in lead time will further result in substantial cost saving for the company. Cold chain facilities have the potential to cater to the needs of pharmaceutical, biotechnology and food processing companies. A central unit will facilitate distribution in the wider area without locking investment in creating such expensive facilities in multiple places. Madhya Pradesh State Industrial Development Corporation (MPSIDC) is planning to construct a state-of-the-art Integrated Transport Terminal, which will provide one stop-shop solution for all the logistics requirements of a company. The State Government is willing to partner with private players, foreign investors and other domestic and international companies in its endeavour. The investment opportunities are ideal specially for 3rd Party Logistics and 4th Party Logistics services provider to make MP as the key hub for their various services component operations. Trading House Parking Space Repair and Maintenance Office & Social infrastructure Way Forward Integrated Ware-housing Hub Proposed MPSIDC project Key Investment Opportunities The untapped opportunities of the sector has the potential to render key competitive and strategic advantage for companies establishing their logistics operations in Madhya Pradesh.
Connecting Further Madhya Pradesh Warehousing & Logistics Corporation www.mpwarehousing.com M.P. State Industrial Development Corporation http://mpsidc.org,com http://www.mprdc.nic.in Madhya Pradesh Road Development Corporation Ltd. http://www.mp.nic.in/ Madhya Pradesh Portal Government of Madhya Pradesh http://www.mpgovt.nic.in