Celerity, in business through Supply Chain September - October 2017

CELERITY

SUPPLYCHAIN.CELERITYIN.COM

September-October 2017 Volume 1 Issue No. 5 For private circulation only

IN BUSINESS THROUGH SUPPLY CHAIN

LEADERSHIP

Spends of almost US$1 billion to set up Greenfield infrastructure across India, shares Anshul Singhal, CEO, Embassy Industrial Parks

SIZING UP THE FUTURE Rakesh Biyani, Joint Managing Director, Future Retail Limited, talks about continuously challenging and re-inventing to stay ahead of the game

K N OW L E D GE PA RT N E R

PERSPECTIVE

Attributes that 3PLs should have to clear the Litmus Test of the users of their services

Publisher's Note

The limelight is on 3PLs Dear Readers, It’s Ganesh Chaturthi today when I am drafting this, a day of the God one follows for auspicious new beginnings. This magazine started in January this year and this month, our portal, supplychain. celerityin.com, has gone live. This portal is my sincere endeavor towards creating a community of, by and for all of us in supply chain and logistics in India. It’s a place to share your thoughts and ideas through blogs or even share concerns through forums.

It’s been business as usual at the magazine. Whether it was our scramble to get a business leader on the cover or scout around for a game-changing idea. Well, both make interesting reading here. We managed to get Mr Rakesh Biyani at MIHAN, Nagpur, where we not only toured the sprawling highly automated Distribution Centre for Big Bazaar, but also understood what makes Future Retail what it is.

CNH Industrial (India) implemented World Class Manufacturing (WCM) in their Pithampur plant and achieved bronze level designation. Their target is zero waste, zero defects, zero breakdowns and zero inventory.

Post GST, all 3PLs are gearing up for more business. Outsourcing to organized players is likely to increase. Indian 3PL market is expected to grow with CAGR of 6 per cent over the next five years.

There has been news about some leading players looking to go the IPO route. This issue looks at what the users of 3PL services have on their wish list for that perfect 3PL partner and the attributes that a 3PL should have to win their business. On the other side, a few leaders in the 3PL industry talk about what it would take to be the preferred service provider.

The logistics sector is being touted as one of the main beneficiaries of the new GST regime, it remains to be seen how quickly would these benefits start showing.

Happy Reading! We look forward to your comments and suggestions.

Charulata Bansal Publisher Charulata.bansal@celerityin.com www.celerityin.com Published by Charulata Bansal on behalf of Celerity India Marketing Services Tel. No.: +91 9821245526 • e-mail: Charulata.bansal@celerityin.com Edited by: Prerna Lodaya • e-mail: prerna.lodaya@celerityin.com Printed by: Xposures A 210, Byculla Service Industrial Estate, D.K. Cross Road , Byculla, Mumbai 400 027.

Logistics Partner: Blue Dart Express Limited

CELERITY • September 2017 | 03

CONTENTS

Vol. 1 • ISSUE 5 • SEPTEMBER-OCTOBER 2017

COVER STORY

12 DEMOCRATIZING FASHION

In an exclusive conversation, Rakesh Biyani, Joint Managing Director, Future Retail Ltd., talks about company’s investments in the ‘retail experience’ and making fashion accessible to all.

OUTLOOK

FEATURE

Manish Saigal, MD, Alvarez & Marsal (A&M), writes that times are challenging yet exciting for 3PLs who believe in taking innovative approaches.

R Shankar, CEO, TVS Logistics Services Ltd., remarks that securing a competitive edge in the post-GST scenario mandates a high level of transparency.

06 A tale of two cousins

INTERVIEWS

08 Connecting India smartly

Jatinder Panjwani, AVP- Warehouse & Logistics, Micromax informatics Ltd., speaks on investing heavily in building a strong product portfolio backed by an efficient service and supply chain.

36 Sipping success Dhirendra Singh, Chairman & MD, Manpasand Beverages Ltd., on making his enterprise a global, multi-brand retail corporation with roots firmly in India.

PERSPECTIVE

24 Organized 3PL gaining steam post-GST

25 Tech & infra – backbone of SCM Jasjit Sethi, CEO, TCI Supply Chain Solutions, talks about postGST supply chain paradigms.

26 GST to drive consolidation & scalability Dr Arunachalam R, CEO, ProConnect Supply Chain Solutions, believes that 3PL players who have the required network across India will play a major role.

GAMECHANGER

27 WCM – A change of paradigm

Senior supply chain professionals and users of 3PL services share their wish list of attributes in a 3PL.

Deepak Gautam, General Manager (Head – Supply Chain), CNH Industrial (India) Pvt Ltd., talks about how implementation of WCM helped achieve breakthrough in reducing logistics costs.

LEADERSHIP

FOCUS

Anshul Singhal, CEO, Embassy Industrial Parks, enlightens us on the emergence of world-class warehousing infrastructure in the country.

Anshuman Magazine, Chairman, India and South-East Asia, CBRE, writes about the interesting changes being seen in Industrial and Warehousing segment.

16 3PLs surviving the Litmus test

20 Play in the Logistics Parks space

EDITOR: Prerna Lodaya

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30 The changed dynamics of supply chain

OUTLOOK

A TALE OF

TWO COUSINS The third-party logistics services companies are in an extremely dynamic environment today where on one side, there many opportunities waiting to be tapped and on the other, they have to prove their mettle by their unique capabilities & skill sets to grab major market share in the post-GST era. Yes, times are certainly challenging yet exciting for companies who believe in taking the new & innovative approaches to serve their clients better, writes Manish Saigal, MD, Alvarez & Marsal (A&M).

N

ot too long ago, two cousins in the same village decided to start milk distribution business. They used to source milk from 3-4 farmers and carry it to 20-30 households each. Business was the same but the approach was different. The first cousin made sure that his cost was low for every transaction he bargained hard with customers. He bought a second-hand two-wheeler with locally made containers to deliver milk at convenient locations where he could reach with his bike. The second cousin decided to buy a small pickup four-wheeler and hired two villagers to carry milk from designated spots to the doorstep of the customers.

Villagers loved the first cousin because his pricing was low. They ignored his

06 | CELERITY • September 2017

inability to deliver at doorstep and his inability to reach on time. The second cousin planned for growth. He hoped that his vehicle will run full one day and his hired villagers will have enough bags to deliver.

Soon more friends started the same business. They loved the model of the first cousin. The investment was low and possibility of profits were immediate. The number of customers for the two cousins declined as more friends jumped in. The first cousin started to mix water in milk to make money. The second cousin started to find more villages where he could reach in one day. He hired more people in the other villages for doorstep delivery.

Slowly, the economy of the village and nearby villages grew. Villages became

town. Milk companies opened factories and started sourcing milk from farmers and started selling packaged milk. People in the town had more money to spend and less time to bargain & wait. People in the town became more conscious of health and contamination. Government deployed staff to start collecting tax and reduce leakage in the system.

The first cousin couldn’t understand what had changed around him. He started sweating his old bike more only to realize that his reliability to reach on time had reduced. People who had once liked him for his low cost were not discussing cost but were bothered about quality and time required. He tried contaminating more to reduce the cost further. But this only resulted in more fines from government

OUTLOOK officers and loss of customers. Other friends and the first cousin got together and decided to go on strike to make their importance felt. But no one noticed. The second cousin’s vehicles and availability of villagers were enough to service the town. In fact, the second cousin’s second shift for fleet could serve many other towns. The second cousin was servicing hundreds of customers in more than 10 towns now. His cost was lower and reliability was far superior than his cousin and his friends.

Drawing similarities

A similar story in unfolding in 3PL space in India today. The key drivers to this change are as follows: zz Scale of operations has increased to a level where automation and productivity improvement has become more important than cost control of existing cost heads. zz Customers have matured to appreciate total cost of delivery after taking into consideration losses due to transit, pilferage, delays, loss sales. zz Technology is available and affordable to drive performance of teams, vendors and partners. zz Favorable regulations like GST are making it difficult for participants to be more competitive on the back of tax evasion. zz Fresh thinking has been brought into the sector by tech savvy new generation entrepreneurs with very little baggage of legacy issues.

We believe that in the next few years, the size of 3PL industry will double as presented below: Industry

FY 2017* Contract market (Approx. in INR billion)

FY 2022 Contract market (Approx. in INR billion)

FY17-FY22 CAGR

Auto

72

153

16%

FMCG

11

31

23%

Organized retail

8

20

20%

CD

7

14

16%

Telecom

6

12

16%

Apparel

4

8

16%

IT and Mobile

3

6

17%

Total

110

244

17%

zz Innovation and value-engineering: Customers across industries will target to cut logistics cost as proportion of revenue. As the industry shifts towards per part/per unit pricing model, 3PL will be required to innovate their practices, leverage economies of scale and develop higher efficiency in operations. zz Increase in compliance standards: Customers are increasingly becoming more aware and compliant to required standards to avoid contingency costs and protect reputation.

These are very interesting times for logistics professionals to solve for most complicated supply chain problems as talent, capital, technology, regulations and infrastructure are all moving in positive direction.

Demand trends

Significant part of this growth is driven by higher penetration of organized logistics service providers in the industry. Some of the key demand drivers and trends of contract logistics are as follows: zz Increased scale of operations as the end use segments (industries) are witnessing consistent growth due to favorable economic and demographic macro scenario. zz Increased level of outsourcing as end user segments are focusing on core functions such as manufacturing and sales. Hence, they are outsourcing strategic end-to-end logistics solutions rather than in-silo services such as only transportation/ storage. zz GST implementation is expected to be conducive for increased outsourcing to contract LSPs. zz Industry is exploring levers to improve productivity, which is expected to drive margin improvement.

Winning over laggards

It’s almost certain that the next decade is expected to belong to people who resemble the second cousin. The winners

and laggards in the space will be decided based on following factors: zz Availability of anchor clients: Availability of anchor clients will be critical to ensure a minimum utilization and further deployment of resources. zz Agility to customize processes and maintain discipline around them: Critical requirement for customers will be customization of services and consistency of service levels. zz Experience across multiple industries: Every end user industry will have different challenges and LSPs, which service a wide range of industries could bring cross learnings and best practices from other industries. zz Use of technology and automation: Technology will be a key differentiator to enhance service quality and improve efficiency of operations.

Technology will provide scalability of operations and allow for data-driven decisions.

Manish Saigal leads strategy, market entry, commercial and operational diligence, and post-merger integration offerings for A&M in India. He brings more than 17 years of rich experience in strategy, operations, private equity (PE) and M&A consulting. He specializes in market entry strategy, business planning, commercial and operational diligence, integration and separation advisory and bid advisory for PPP projects. Before A&M, he spent 11 years with KPMG India, where he most recently served as Partner in their Transactions and Restructuring group.

CELERITY • September 2017 | 07

INTERVIEW

CONNECTING INDIA

SMARTLY

“India can’t be defined as one market but as many markets rolled into one. Micromax understood this way in advance in its journey and hence since the very beginning, we have got a great distribution and supply chain network across the country. Unlike other brands, we don’t look at offline versus online challenge, instead, we view it as an opportunity,” asserts Jatinder Panjwani, AVP - Logistics & Warehouse, Micromax informatics Ltd. What are the unique traits that make the brand ‘Micromax’?

Micromax has been creating best in class experience for our consumers. We have been building both our focus on the market and our backend as well. The key things which make us a global brand to reckon with are: Our consumer focus: We put consumer first in all our efforts and that has led us to make products that are close to consumer demand and expectation.

Our agility: Even when you are a global player, one has to act nimble and one has to act local. This philosophy has kept the brand relevant in all our operational markets and helped us grow our reach every year.

Moving up the value chain: We are aligning our product roadmap as per the industry trends. All our products will be aesthetically positioned and we clearly see 4 key trends in the next 2 years: a. Camera: We see a clear acceleration towards better image capturing, be it the better software that enhances the camera capabilities, output etc., or simply the quality of cameras on the phones. b. Screens: The next year will see innovation on screens as well, be it the bezel less phones, curved screens, sharper resolutions, etc. As more visual data is consumed on phones, users will

08 | CELERITY • September 2017

demand screens to be improved and brands will follow. c. Battery: More data, more internet, more multi-tasking through phones mean that users would want their phones to be with charge almost all the time.

While the best solution is to pack more milli-amperes into the batteries but the trend will be providing quick charge capabilities to those large batteries as well.

3 additional factories at Telangana, Bhiwadi and the one near completion in Madhya Pradesh. All these investments happened in 2016 and are testimony to our commitment to the business. We are hiring third party contract manufacturers and claiming Make in India. We are totally committed to it and today we have one of the biggest manufacturing infrastructure in the country, making us less dependent on any external factors for our requirements.

Micromax sells around 2.3 million Mobility Devices every month, with a presence in more than 560 districts through 1,25,000 retail outlets in India. d. Security: Two clear trends: security of the user and security of the data.

With the government putting efforts towards integrated panic buttons on phones, user security will be a key trend and a conscious push towards digital payments will further enhance data security on smartphones as well. The ecosystem will have to come together to ensure that there is work towards data security both at hardware and software levels.

Asset Building: From just one factory in Rudrapur, we have built our assets and today we are a large contributor to government’s Make in India initiative. We now have

Therefore, while we continue to see big players entering the Indian market, we believe Micromax is set to take the big leap of being the top player in the country and growing our international dominance as well.

How complex is the supply chain for high-end consumer electronics?

We are bullish and have invested heavily in building a strong product portfolio, a robust distribution and supply chain network to ensure wide presence and a best-in-class service experience. Supply chain capabilities are key to delivering on the consumer electronics industry’s value

INTERVIEW proposition. Offline and online inventory integration is always a challenge in the new digital era. As more consumers now research for products online and make their purchase decision, the final sale happens in the offline market.

What are the crucial elements that make up for an exceptional supply chain?

India can’t be defined as one market but as many markets rolled into one. Micromax understood this way in advance in its journey and hence since the very beginning we have got a great distribution and supply chain network across the country. Unlike other brands, we don’t look at offline versus online challenge, instead, we view it as an opportunity. This enables us to identify and target the demographics of the consumers who are transacting through these channels. We have certain products that are online only and others that are focused on both offline and online channels. Both our offline and online network is very strong. In the past, we have launched some of Micromax’s products exclusively online like Canvas Spark range and Xpress range, which have done extremely well.

To build our supply chain and distribution offline network, all our dealers are one of the most important aspect to augment business growth. We are in constant touch with the dealers at all levels and take their feedback very constructively. This helps us being closer to the ground reality and consumers. Since our dealers play a pivotal role in our supply chain network, we incentivize them for our success as well accordingly.

From the trend, we have witnessed, both channels have been faring well for us and we are seeing steady sales both online & offline. We have further strengthened our distribution network from 34-35,000 to 60,000 outlets as majority of the users in the sub 5k category are offline users and are looking for compelling products that connect them digitally.

What has been one of the most challenging projects managed by you at Micromax?

Knowing that India is a vast country spread across many territories with logistical bottlenecks of their own tend to impose challenges when it comes to logistics. TAT (turnaround time) v/s infrastructure has really been a big challenge specially when the industry is growing at a faster pace.

Material reach to material availability has major role to play. However, the biggest challenge in front of any logistics expert would be on time delivery without hitting the material quality and substance. One of the biggest challenges for us used to be streamlining our logistics efficiencies from the port of entry. Earlier, it used to be an

ordeal for us to import goods and manage their delivery at four ports of entry and then dispatch them at their respective assembly units. Then came the delivery from these factories to the respective warehouses and from there to the retail touch points before it reaches to the end consumers. Now the entire process has been streamlined, which has not only resulted in rooting out logistical inefficiencies but has also greatly brought down the cost associated with the entire function.

Spare parts availability and quick customer service holds the key to any smartphone company in India? How have you achieved that?

For any growing brand, providing quality service must be the key. In 2016, we had more than 30 million active consumer base and even If a percentage of that faces any product issue, it’s a huge number. Our Service team took the challenge to improve the situation. For 800 front end engineers who were stationed in the service centers, we needed to build their capabilities and skills. Transparent mechanisms were initiated to strengthen and give more power to these engineers. We introduced a Project called ‘Promise’ in October16 to track individual work, create a transparent system and improve service by end of December16. A tracker was made for the engineers and they are rated on four qualities – Process, Speed, Cost and CSAT. This was a tracker that scored them on a daily basis and month end, they were put into 4 categories that were – Golden, Green, Yellow and Red. With the help of such processes in the system, by November16, there were only 13% products that were coming back from the service centers and rest were all serviced at the centers either on the same day or within 7 days.

• Turn Around Time – Customer service done on the same day – 68% • Customer service done in 7 days - 90% • Open Calls - In October’15 there were 34% open calls and In January’17, there were only 7%.

In the last few quarters, we have invested heavily and worked diligently to improve our service experience. We have a large base of feature phone users and for these valued users one of the key proposition for buying their phone is a great after sale service experience. Taking our promise a step ahead, we brought a care free user experience for all the feature phone customers offering them full replacement within 100 days of purchase, if any problem arises. Our service team is working towards improving the overall customer service experience at the service centres, which includes building a more professional environment, getting the service right at first shot and recruiting trained service executives amongst some of the other initiatives.

What attributes do you look for in a 3PL for efficient logistics & supply chain management?

Today’s day & age demands a highly responsive 3PL service provider who could devise strategies based on any situation and can adapt to any unknown or uncalled for complexities arising out of turbulent economic scenarios. I think, this would be one of the biggest performance enhancers

With the introduction of GST, India has become a seamless market without any difference between inter-state or intra-state sales. This has essentially disrupted the existing ineptitude and facilitate structural re-engineering of the logistics and supply network.

Service providers are being incentivized to leverage hub-and-spoke supply chain networks by operating large central warehouses and remodeling transportation routes.

CELERITY • September 2017 | 09

INTERVIEW for any 3PL to gain an edge over others.

This aspect also involves inclusion and deployment of new age technology tools to enhance the entire process and can aid in offering a transparent system. The second and the most important aspect that a 3PL needs to take care of is the timely delivery of goods. No customer these days can wait for even a second to receive products what he desires and with omni-channel retailing, it has become all the more crucial to serve customers as & when the demand arises.

If you fail to do so, you lose that customer for lifetime and chances are because of this one unfortunate incident, you might end up losing brand loyalty.

So, a 3PL who can guarantee you the best possible service is sure to be a favoured among all. The last and one of the crucial deciding factor in the whole scheme of thing is the cost advantage that they can bring to the table. Yes, cost is an important barometer for any organization for selecting a partner. A 3PL needs to position itself in such a competitive way that no user company can think of rejecting their offer by providing a very comprehensive mix of all the aspects that hold immense importance for the success of the entire value chain.

In the post-GST scenario, how do you see things changing for your line of business?

The company welcomes the initiative by the government to balance out equations between the offline and online market taxation and deem it to be an appropriate step. We believe that Micromax products are extremely competitive and available at consumer-friendly pricing. However, due to the mid-year change of taxation policy, we stand committed behind the sales and distribution partners and to ensure that they are not treated unfairly in the changing regime, the company is proposing compensation to the partners, which are effected by the change. We believe that partners need to earn their due incentive for making Micromax products available to the Indian consumers.

How is logistics & supply chain going to be the gamechanger?

With the introduction of GST, India has become a seamless market without any difference between inter-state or intrastate sales. This has essentially disrupted the existing ineptitude and facilitate

10 | CELERITY • September 2017

structural re-engineering of the logistics and supply network. Service providers are being incentivized to leverage hub-andspoke supply chain networks by operating large central warehouses and remodeling transportation routes. On the taxation front, at national level, it has resulted in more competent and efficient crossstate transportation, lesser paperwork for transporters, thereby reducing the logistics costs. Not just costs, it is also helping them save a lot of transportation time. As transporters are resorting to digital space to book trucks, the scope of online truck booking in India is broad.

The revolution in the industry has been brought by truck aggregators who are providing reliable online truck booking services to transporters.

What are your strategies for growth?

In the past one year, we have made a transition from a handset company to a consumer durable company and also from a hardware company to a hardware and software company. Micromax introduced LED televisions in 2013 and today is the 5th largest TV brand in India. With an aim to be a consumer electronics brand, Micromax is now expanding its footprint into newer product categories (LED, tablets, laptops, ACs, accessories) and expects its nonmobility product segment to contribute about 25% to the overall business, offering consumers more innovative products and build a stronger business case in the consumer electronics segment.

By 2019, our vision is to take Micromax

We are bullish on the consumer electronics market and have invested heavily in building a strong product portfolio, a robust distribution and supply chain network to ensure wide presence and a best-in-class service experience. Supply chain capabilities are key to delivering on the consumer electronics industry’s value proposition.

to the #5 handset player in the world from our current #10 position. The last few months not only saw us diversifying in to varied product categories but also building alliances through strategic partnerships or investments into a set of software and services players apart from building our own software solution that we have already launched in the market to bring alive our dream of an interconnected world of smart devices and consumers. We are the only handset player who has been investing on software services. We invested in more than 10 start-ups last year- Indus, Ixigo, Gaana, Scandid which are doing immensely well.

In addition to India, we currently have operations in Russia, Nepal, Bangladesh & Sri Lanka. If I talk about the current scenario, our international business is doing extremely wellcontributing more than 8% to the overall revenue.

We are currently selling close to a million units in the international markets and are amongst the Top 2 brands across geographies. The revenue from the international business has been doubling year on year generating profits for more than three years now. We are reinforcing our commitment to establish ourselves as a clear leader with a larger vision to be among the world’s top 5 handset brands by 2019. We will be entering into markets like Armenia, Kazakhstan and Georgia in the CIS region. We are also exploring Saudi Arabia and Iran in the Middle East and cluster of countries in Africa which can allow us to expand. All this is a testament of our hard work in the past year.

Your message to new age supply chain professionals…

Supply chain and logistics is a very important function and hence there is a need to innovate at all levels. It will be heartening if we see more innovation from the professionals and they should be pushing their limits do something that is out of their comfort zone because, if they don’t disrupt themselves, someone else will.

Jatinder Panjwani has 20 years’ experience in the field of logistics and supply chain wherein more than 10 years have been in senior management and redefining end-to-end supply chain solutions. He holds a Masters degree in SCM. He has expertise in domains like imports, exports, customs procedures, logistics, warehousing, distribution, forecasting, procurement, vendor management, S&OP, compliance, stocks optimization, running operations on cost center approach, training, change management, contingency management, etc.

COVER STORY

DEMOCRATISING

FASHION

Always a firm believer of creating something path-breaking & out-of-the-box and never shunning away from the competition, the ethos of Future Group are well ingrained in each & every member of the board. During this exclusive interaction with Rakesh Biyani, Joint Managing Director, Future Retail Limited, every thought of his resonated with the eternal brand philosophy of Future Group. A firm believer of taking a customercentric approach, the brand only believes in competing with itself. Aptly carrying ahead the thoughts of Sir Richard Branson, the founder of the iconic Virgin Group, ‘Every risk is worth taking as long as it’s for a good cause and contributes to a good life’, Future Group is steering ahead in offering customers a lifestyle that’s affordable for all. With this vision, the company is now set to reap the benefits of scale, experience and power of brands in creating value for all its stakeholders.

12 | CELERITY • September 2017

COVER STORY Retail has become a very competitive sector unlike earlier days. You have been an integral part of this transformation. How do you see the transformation then to now?

The journey that we have covered in the past two decades, since our humble beginning in Kolkata, has been filled with immense learning and an exponential growth in our fashion business. At a time when ‘fashion’ was regarded as an option for selected sections in the society, we ‘democratized’ the very concept and made it a household aspiration. This was a big transformation then, which changed the way people viewed fashion. At present, our fashion category takes a lead in contributing the highest sum to our business’ overall earnings. However, the retail world has become far fiercer than before and this requires us to constantly reinvent ourselves and align ourselves with these changing trends.

Today, India is brimming with the energy of the youth that is pumping in fresh consumption. The country is witnessing a massive increase in buying, and we are excited to be an integral part of this dynamic environment. This current scenario carries immense opportunities for us to grow as a nation and a business house. Our primary focus, in the coming times, will be on carrying our fashion business to the next level. One of our key focuses will be on acing our efficiency levels through our recently-installed state-of-the-art supply chain system and the best use of technology and data, to power our production and distribution.

We are now set to reap the benefits of scale, experience and power of brands in creating value for all our stakeholders.

Future Group is an undisputed leader in the retail sector. Kindly give us the striking figures that prove and reflect the sustenance of Future Group as the leader.

Future Group, which is one of the largest retail groups in India, with 5,200 retail outlets including department stores and specialty stores in more than 240 cities, covering consumer goods including food, fashion and cosmetics reported a turnover of 22,000 crores in 2016. These past achievements that have impacted the retail landscape bear a testimony to our sustenance as a ‘thought leader’ over the years. Also, our tall aspirations that have us working towards a much steeper growth too reflects our business vision and commitment towards sustaining our top position in the business. Currently we have close to 20+ million square feet of retail space in operation in India. And we’re looking to expand our network by 14-15 per cent per annum. This implies,

We aim to reach a turnover of 1 Lac crores in the next five years from the current 22,000 crores. adding about another two to three million square feet of new retail space every year.

We aim to reach a turnover of 1 Lac crores in the next five years from the current 22,000 crores.

You have been involved in so many turn-around propositions at Future Group. How difficult and challenging the journey has been?

As the famous quote by Oscar Wilde goes, ‘An idea that is not dangerous is unworthy of being called an idea at all.’ So, as ‘thought leaders’ in the retail business, we haven’t shied away from pushing the envelope further or redefining the conventional ways of working, in order to pave newer paths that spell efficiency and excellence. At times, these decisions have not worked out the way we hoped it would, while at other times, it has made history; but that’s a part of the game. In the end, we have always learnt something valuable that has empowered us to create the next game-changing idea. With the fast-evolving consumer mindset in today’s global world, it’s imperative that we know our customers and their needs, sometimes even well in advance.

What are the parameters that go into building an iconic brand such

We have always maintained that ‘retail’ is about attending to every ‘detail’. And logistics is what forms the backbone to the entire science of retailing. We have always been frontrunners when ensuring the strength and consistency of our supply chain. We have been the pioneers in adopting barcoding as a key component in keeping our supply chain efficient.

as Future Group? What are your growth plans?

Knowing the pulse of the market by having a thorough understanding of our customers and their needs has been the guiding force behind all our endeavours. The ability and agility to blend the ‘traditional’ with the ‘new’ has lent us the resilience to evolve with the changing retail landscape. This is a critical parameter for building a brand that wants to be associated with excellence.

Furthermore, our robust backbone of distribution channels and our solid consistency in supply chain management that banks on the latest technology allows us to envision a double or even triple business growth by 2020-2021. In a nutshell, we aspire to be the ‘clothier of the nation’, in times to come, so that’s the level of growth we are eyeing.

During one of the forums, you had mentioned that competition expands the market as it creates a much wider space to play on. Fashion being such a huge category, what is the journey of a fashion trend from the drawing board to the shelf?

Competition prods us on to trying newer things and pushing our boundaries, in order to stay ahead in the game. For instance, the online retail space that discouraged most brick-and-mortar stores, inspired us to come up with India’s first discount store – Brand Factory – that offered Indian customers great discounts on big brands, all year round! Competition invariably always blurs boundaries and has even had us stepping into international markets and explore a whole new market and space to work in.

What’s your strategy to beat the competitors when it comes to fashion retail?

At present, virtual retailers may have gained more mindshare than actual market share. Their large advertisement spends have helped raise awareness for fashion and brands and that has actually helped us. However, we realize that the one thing that virtual stores cannot give its customers is the ‘retail experience’ and satisfaction of holding the piece of fabric and checking it out. With that learning, we have consistently invested

CELERITY • September 2017 | 13

COVER STORY in upgrading the customer experience and that has yielded results for us. In fact, our fashion business has grown at a rapid pace over the past two years, as more customers are coming to experience and buy brands within retail environments.

Moving forward, we will be carrying our customer-centric approach to a whole new level where every detail of the store, staff and service will be planned bearing in mind the ultimate convenience to the customer.

How do you view the growing expanse of omni-channel retailing?

What is the recipe of creating a memorable consumer experience in online and offline mediums?

The retail world in India is still finding out how successful ‘omni-channel’ as a system will be, in a country like ours.

We are witnessing a rapid evolution in what we earlier knew as a ‘stereotypical customer mindset’. While online retailing has challenged the conventional brickand-mortar stores, shoppers who enjoy the retail experience of holding and evaluating their choices have kept the physical stores alive and thriving in India. Not only are the demographics in our customer profiles changing, their preferences and level of awareness too are evolving. We will have to wait and find out how this dichotomy in the retail channels will fare, in a country like India.

Future Group is doing some remarkable work in the logistics space. More so, when it comes to adopting best in class tech solutions at warehouses. Kindly highlight some of the pathbreaking measures taken by you.

We have always maintained that ‘retail’ is about attending to every ‘detail’. And logistics is what forms the backbone to the entire science of retailing. We have always been frontrunners when ensuring the strength and consistency of our supply chain. We have been the pioneers in adopting barcoding as a key component in keeping our supply chain efficient.

We recently launched a distribution center in Nagpur which is the largest in the whole of Asia Pacific region, barring China. We boast India’s first automated high-speed cross-belt sortation technology, which has an incredible sorting productivity of over 36 crore pieces per annum. This sorting capacity has an accuracy of over 99%.

In fact, our newly-installed sortation system comprises a cross belt tray sorter, enabled with approximately 2.5 km of conveyor system. This sortation system will make the delivery of the stock to the store a faster process, benefiting all the stakeholders involved in the process.

14 | CELERITY • September 2017

We have voiced our support in favour of the Indian textile department’s initiative called ‘Size India’ that plans to take on the Herculean task of collecting data across demographics and compiling a single standard for Indian sizes in garments. This initiative carries immense opportunity to fuel a significant growth in the consumption in India, through the revived ‘trust and confidence’ of a customer in a standardised product. This increased opportunity to sell and consume more garments will significantly help the growth of the market at a more rapid pace.

In order to be ahead of the game, one must keep reinventing tech wheels. What are the latest tech tools implemented by you?

Reinvention starts in the mindset first, for

In the future, we will be bringing in inbound automation to support 60% faster unloading of trucks from production houses, a move that will help us handle increased volumes.

A boom conveyor, in the future, will increase our unloading capacity by three times, that’s unloading around 600 cartons in less than an hour!

a thought leader. We have embraced the latest technology to ensure a much higher level of efficiency for our customers. Our recently-launched distribution centre that houses the latest sortation technology, is going to be a total game-changer that will make us efficient and error-free. But this is just the beginning. In the future, we will also be bringing in inbound automation to support 60% faster unloading of trucks from production houses, a move that will help us handle increased volumes. A boom conveyor, in the future, will increase our unloading capacity by three times, that’s unloading around 600 cartons in less than an hour!

How do you perceive Indian economy? What are the major changes that we would foresee in the retail space in India going ahead?

India is among the fastest growing economies in the world that will see a significant population growth in influential consumers by 2020. This number is estimated to range between 350 million and 400 million by 2020, which is similar to the entire population of the United States. There are lots of people in India

COVER STORY UP, CLOSE & PERSONAL What’s your leadership style?

Whose leadership style do you admire the most?

I believe in a leadership style that relies on a high emotional intelligence.

While a strict eye for what’s happening around the world is just as important for any good leader to take an informed decision or even take risks, being able to understand, respond to and even foresee people’s needs and behaviour is just as important. In fact, being in a fickle retail world, this quality takes precedence over all other qualities today. After all, how else can we serve our customers better or bring out the best in our employees unless we learn to empathise with their needs and aspirations. Among the leaders I greatly admire is Mahatma Gandhi, who could connect and influence a nation full of people with his thought leadership and Indianness. These qualities resonate with what we look for in our thought leaders at Future Group.

What’s your success mantra?

In a dynamic world like today’s, it is unintelligent to rely on a single parameter for defining success, since a lot of things are often not in our control.

However, I can safely say this for myself and Future Group that we rely on our ‘thought leadership’ and ‘reliability’ as our success and also success mantra.

We are constantly working towards strengthening the emotional connect that we share with our customers. After all, to be trusted as a brand by a nation full of customers is our real success.

What message would you like to give next generation to steer the growth in the right direction?

There is so much to learn from the young generation – be it, their high energy levels, confidence in themselves, their agility and risk appetite. This generation today, who are looking for differentiated products. Meanwhile, there’re more than 30 million retail stores in India, which is about one store for every 100 people. All these numbers will nudge a simultaneous growth in the retail business. Not just this, the affluent consumers are shifting from daily necessities to fashion, accessories, beauty and electronic products.

Their higher disposable income now gives them the ability to buy quality products at competitive and affordable prices. All these numbers will nudge a simultaneous growth in the retail business. Our own import margins will rise, largely because it caters to this aspirational consumer base. In fact, the amount of value-added products our

does not shy away from doing things differently and there is much to learn from them. Having said that, a few valuable lessons come from experience alone. One needs to tide through business cycles to even understand the simplest of qualities like patience and resilience; to be able to turn a challenge into a positive opportunity.

What’s your prized possession?

I am not someone who is very ‘possession’ centric. My greatest strength though is my family that had stood by me through every twist and turn of my journey.

One learning that has stayed with you throughout…

Taking inspiration from nature – the way one season effortlessly slips into another or the way a river flows over rocks – I too believe in ‘going with the flow’. One must not resist change or challenge instead much figure out a way to work with it and also make the most of it. Also, I regard ‘introspection’ as a constant exercise for growth. These learnings aren’t mine alone, since they also form the backbone of our organization's value system too. company will import in the next five years will rise by nearly 200 per cent.

What are your views on the implications of GST on retail?

What are your strategies in place to succeed in the post-GST era?

A certain kind of ease in doing business, the removal of cascading in taxation, allowing the free movement of goods across all states, are all that the industry has been asking for several years. The GST allows us each one of these advantages.

What the GST does is that it reduces the effective tax rates. The impact of this eventually allows you to build an efficient supply chain model. And progressively, the efficiency can bring cost saving. And

the merits of this is something we intend to pass on to our consumers. Our objective is to work closely with our supply chain partners, raw material suppliers, our manufacturers, transportation partners and with our stores too, to bring in a more efficient supply chain, which can make us bring in cost savings faster. Ultimately, it will reduce prices and increase consumption across all categories and that is our intention.

I think a lot of opportunities will open up with this GST implementation. Our group and all our retail partners are going to focus to take maximum advantage of the opportunity and ensure that we are able to serve our consumers with superior products, better availability and lower prices.

What is the one change that you wish to bring in the Fashion industry in India?

The fashion industry in India is experiencing constant change, as it continues to adjust and respond to the fast-changing consumer landscape. One of the changes, speaking purely from the customers’ perspective, is to now create our own standard and measurement for Indian sizes, in clothing. Currently, there are no standard sizes in which garments are segregated in India. Almost every manufacturer is following different size markings. Some mark in CMS, some in UK sizes, while others simply use ad hoc benchmarking like: S / M / L / XL. These different markings of sizes make it difficult for customers to understand their correct size. This ‘zero confidence’ on finding their right size, discourages customers from shopping and eventually restricts the growth of the market.

We have voiced our support in favour of the Indian textile department’s initiative called ‘Size India’ that plans to take on the Herculean task of collecting data across demographics and compiling a single standard for Indian sizes in garments. This initiative carries immense opportunity to fuel a significant growth in the consumption in India, through the revived ‘trust and confidence’ of a customer in a standardised product.

This increased opportunity to sell and consume more garments will significantly help the growth of the market at a more rapid pace.

CELERITY • September 2017 | 15

PERSPECTIVE

3 PLs SURVIVING THE

LITMUS TEST

Scalability, financial stability, ownership, and adaptability are some of the key pillars that will help third party logistics companies to stand the test of times. This very intriguing perspective section brings forth the nuances that user companies look upto before deploying the services of 3PL companies. These aspects would aptly enhance the competitiveness quotient of players and would reap immense benefits in the long run if followed in their entirety…

Rohit Batra, Vice President – Supply Chain (India Sub continent), Ferrero India: A highly efficient, cost effective and undisrupted supply chain represents the foundation of every successful company.

Likewise, success of a supply chain network is directly dependent on the efficiency and stability of the 3PL logistics partners. If you are considering addition of a logistics service provider, adequately vetting that 3PL will determine whether your supply chain adds value or becomes a cost drain.

Out of various factors, I feel following 3 attributes stand out as most critical; Scalability: The most crucial capability a 3PL should possess and demonstrate is to scale up their operations and infrastructure faster and bigger than your growth needs. This will have a direct impact on your Supply Chain efficiency. In today’s dynamic and highly competitive market, every company goes through ups and downs. Like we expect the 3PL to be able scale up the operations, it is equally important that the 3PL partner is highly responsible and is able to scale down the operation to minimize costs and overheads when your demand contracts.

Financial stability: Success of a supply chain is highly dependent on the efficiency and stability of 3PL partner.

A sudden demise or disappearance of 3PL will have a direct adverse impact on your operations. It is vital for us to check in detail the financial stability and payment records while finalizing the 3 PL partner. This will mitigate the potential of

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Rohit Batra

Vice President – Supply Chain (India Sub continent), Ferrero India

Raviraj Rodrigues

SCM Head, Wildcraft India

a logistics provider causing you harm due to their mismanagement.

High quality industry reference: The reference of a 3PL partner should be beyond good and satisfactory levels. In today’s era, nothing less than an excellent or an outstanding reference should be acceptable. The reference should not only be on operations and deliverable but also cover areas like, working culture, business ethics and social responsibility. A good 3PL can get the job done and deliver as per expectations, however the best 3PL will add value to your operations in terms of cost savings, speed to market and compliances. We are in a fast track zone, where we want the logistics partner to be delivering beyond expectations from the start and we don’t have time to spend on developing and training them. Therefore, high quality industry references play a vital role while selecting the 3PL partner.

Raviraj Rodrigues, SCM Head, Wildcraft India: According to me, the following 3 imperatives are a must-have for any good 3PL: zz Inherent capability to integrate the latest technology into the work practices to drive efficiencies, for e.g., end-to-end integration order to delivery cycle with near real-time visibility of orders, deployment of IOT in the pick-to-ship process zz To provide customised solutions based on the local requirements, for e.g., night operations and delivery of stocks

PERSPECTIVE A 3PL player is essentially the nerve centre of the entire supply chain. If he functions well, the entire value chain functions well and vice-versa. They are the only people who can enhance our market reach, faster delivery and ensure greater market share, which otherwise is extremely difficult for any industry.

Sandeep Baxla

Head Supply Chain – India Sub-continent, Henkel Adhesives Technologies

in metros or big cities where transport vehicle are restricted during the day zz Continual sharing of industry best practices with the customers in the area of logistics and supply chain management as the 3PLs will have a better understanding in this area.

Sandeep Baxla, Head Supply Chain – India Sub-continent, Henkel Adhesives Technologies: A 3PL player is essentially the nerve centre of the entire supply chain. If he functions well, the entire value chain functions well and vice-versa. They are the only people who can enhance our market reach, faster delivery and ensure greater market share, which otherwise is extremely difficult for any industry. In the light of this, these companies need to have a very strong discipline to ensure safety of its clients’ goods till they reach their desired destination. In doing so, technology plays an enabling role in offering a transparent view of the entire supply chain and be able to take responsibility of any losses in-transit. Having said that, all these can’t be managed when working in silos. It’s the perfect collaboration of vendor, supplier, technology partners that make it a truly strong bond towards reaching the ultimate goal of a unified supply chain. In short, the three pillars that a 3PL must have to win the race are digitization, enhanced safety & sustainability measures in each of its operations and collaborative spirits that will see them through in the long run.

Sukanta Das, COO, abof.com – all about fashion:

An efficient logistics and supply chain system is one which operates in the most responsive manner possible with an eye for quick implementation of best practices, receptive to ever changing demands and exhibiting the ability to get the show going within given budget constraints. Following are the three main attributes to be looked at in 3PL: Adaptability: It is the speed at which a company's supply chain adapts and executes new strategies and programs to support changes in the overall company strategies or market place changes.

This key attribute is size neutral and is

Sukanta Das

COO, abof.com – all about fashion

an important aspect for success in any ecommerce logistics and supply chain setup that is run by 3PLs. Flexibility: It is the ability to respond quickly to demand and opportunities.

How fast the 3PL can detect and respond to issues and opportunities in the short term by a collaborative approach is key to note. Issues that could surface here could be delay in trucks, off-load of air cargo, sudden surge in demand, addressing special customer needs in terms of some sort of special packaging or handling, etc. How fast and how effectively can these changes and needs be managed is important.

The reference of a 3PL partner should be beyond good and satisfactory levels. In today’s era, nothing less than an excellent or an outstanding reference should be acceptable. The reference should not only be on operations and deliverable but also cover areas like, working culture, business ethics and social responsibility.

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Customer centric mindset is a necessity where the 3PL should be owning the customers of the brand they serve.

In today’s fashion space, with customers increasingly aware of season specific fashion trends, there has been a continued reduction in product shelflife, thereby demand for a flexible and responsive 3PL is high to capitalize on this otherwise perishable opportunity.

Further, planned and sudden promotions, discounts in festive and lean seasons is norm in e-commerce, leading to a surge in overall industry volume by close to 2x.

Only a flexible 3PL can help in materializing the business opportunity.

Ownership: It is a yardstick to gauge ‘improved supply chain visibility’ & ‘supply chain risk’ and therefore, a shipper frequently exhorts 3PLs for enhanced ownership. This is the most difficult one to implement as this requires organizational level strategic alignments and ongoing emphasis for implementations and control from both ends.

A traditional 3PL service provider, more often than not, in case of any issue with import shipment, will only talk about it and probably will not keep any room for an alternate action. Whereas a 3PL that takes ownership, could send periodical

Soumyakant Dwivedy Head – Supply Chain, Becton Dickinson India

PERSPECTIVE updates on progresses made and foreseeable risks for the shipment. This helps the shipper and 3PL to take a joint decision through consultative approach to handle the issues in best possible manner. This approach is very healthy for both short and long-term horizon.

Soumyakant Dwivedy, Head – Supply Chain, Becton Dickinson India: For me, these 3 three pillars stand out among the rest: Customer centricity: Customer centric mindset is a necessity where the 3PL should be owning the customers of the brand they serve. Today’s customer expects quick delivery, visibility and a great service experience, which means, 3PLs need to design a supply chain that centers around the end-customer, rather than the business/brand.

Cost management: 3PLs do bring a wealth of experience in managing different companies and hence have strong competencies in creating cost efficiencies for the company/customer. The ability to add value by continuous improvement initiatives will help in cost efficiencies.

Often, the focus has been to manage within the budgeted or negotiated rates but now the expectations is to create cost advantage/cost avoidance by analytics, advanced technologies and proactive actions.

Creativity/process innovation: Traditionally companies view 3PL partners as mostly transactional and times are changing where relationships are becoming more collaborative. The need of the hour is to have innovation and creative solutions for customers. Companies expect the 3PL partner to provide inputs for process improvements and ‘out of the box’ thinking.

Ranjan Sharma, Head – IT & Supply Chain, Bestseller India: A 3PL is that crucial link that if not performed well can actually make or mar a business proposition. That’s the reason selecting of the right partner with the

some of the important aspect that we look for before selecting a 3PL. While these parameters are the key, what a 3PL needs to work on is the speed to market because in today’s fast paced business environ, if you want to take an early mover advantage, you have to be on the shelf first and that can only be achieved if your 3PL partner is truly responsive and agile.

Ranjan Sharma

Head- IT & SCM, Bestseller

Only a flexible 3PL can help in materializing the business opportunity. required skillset is of prudent importance in order to gain an edge. For us, relevant category skill sets, operational acumen, infrastructure, technology, automation, financial stability, depth of warehousing and supply chain know-how, etc., are

Manu Verma

Head- Logistics, Liberty Shoes

Manu Verma, Head – Logistics, Liberty Shoes Ltd: Deciding on selecting a 3PL partner depends upon various factors, may differ organization to organization, upon upcoming objectives, operations expansion, increasing service levels & reduction in delivery lead time, costing, allocated budgets, etc. A right 3PL partner should have the following attributes: Infrastructure: The service provider should have the required infrastructure i.e., warehouse space, adequate team support, MHEs, safety & security requirements, etc. They should have the enough infrastructure to cater to all increased and ad hoc requirements in case of any changing business scenarios of clients.

Technology support: The service provider should have the technology support that is required to execute and perform daily tasks. IT integration is also the key factor to decide. As in today’s time, the MIS and data are so lively required that any delay can greatly impact overall operational performance. In that case, real time information & reporting holds critical importance.

Flexibility & key account management: The service provider should be flexible in responding to changes & must have a cultural fit. They should also have key account management team (KAM) who is responsible to maintain close coordination and offers a single point contact for customers for day-to-day improvement of operational processes.

They can also do gap analyses and share periodic performance reports to assess operational performance.

CELERITY • September 2017 | 19

LEADERSHIP

PLAY IN THE

LOGISTICS

PARKS SPACE

“GST ensures that India for the first time will be exposed to consolidate large space central warehousing parks instead of the current scattered poor quality standalone spaces. Modern warehousing facilities that allow for consolidation of distribution hubs will be a vital component in making this a reality. With this ideology, the company plans to build about 20 million sqft of logistics parks over the next five years at a total investment of about US$1 billion,” shares Anshul Singhal, CEO, Embassy Industrial Parks. During an interaction, he enlightens us on the growing emergence of world-class warehousing infrastructure in the country and how are they poised to offer a conducive environ for logistics players.

What is the current status of logistics infrastructure development in the country?

The role of warehouses and logistics has majorly increased in the last few years.

This is due to wider product range, emphasis on shorter lead times and constant changes in customer demand.

The emerging new technologies are

20 | CELERITY • September 2017

creating strategic opportunities for the organizations to build competitive advantages in various functional areas of management including logistics and supply chain management. Over a period of time, warehousing industry in India has evolved from just brick & mortar shelters for the purpose of storing goods to highly sophisticated stockrooms, where, thanks

to advanced tracking mechanism, each consignment can be tracked on a realtime basis at the click of a button.

What gaps do you witness and how are you planning to mend them?

When you are competing with someone, you are either fighting for same market share or same revenue. This is not the case

LEADERSHIP Embassy Industrial Parks is spending almost US$1 billion in setting up Greenfield infrastructure required to run efficient logistics operations across India. We pride ourselves to be the only developer in the country to set up integrated parks that are green and environment friendly. authorities to aid in ease of doing business?

Currently the logistics sector in India is predominantly fragmented and under developed. Logistics costs are relatively high due to poor infrastructure and a layered tax system contributing to significant delays & inefficiencies. With the implementation of GST and resulting uniform taxation across states, it will result in consolidation of supply chain and hence warehousing capacities. The industry will move from unorganized players into larger, modern and technologically advanced warehouses. As per industry veterans, the warehousing business is likely to grow at 9 – 11% every year. This is because of the strong government support and constant reforms.

for us currently. Embassy Industrial Parks is an early mover in this business and will enjoy the early movers’ advantage for the next 3-5 years. And it is a little difficult to predict what will happen after that period. The important thing is to secure your land locations, which is what we are doing now. We have been in this business for the last 2.5 years securing good land positions in key micro markets at the right micro market, price and zone. Land at right location is the biggest entry barrier.

What are the challenges that come your way in developing infrastructure?

Land acquisition is a major challenge for any real estate player. When we are looking at buying 50 acres to 200 acres of land and develop it, we hope for some reforms that make this process for industrial and warehousing purposes a lot easier. Despite this our team has been able to secure good lands in various cities.

Second challenge is approvals. What we have today has definitely improved from what it was 5 years back and it has become friendlier under the Modi Government but I think we have scope for improvement there. The policies can become more user friendly. The important thing to understand here is that the more time approvals take, the more capital sits idle as we cannot start construction and generate revenues.

With the implementation of GST, logistics has gained prominence.

How is the same going to support you in augmenting your business horizons?

Domestic warehousing industry will see consolidation with the roll-out of the GST. Facilities will relocate to consumerdriven and transportation network areas from the current tax-friendly locations.

We even expect sectors like ecommerce, automotives, consumer electronics, pharmaceuticals; FMCG will own/lease larger warehouses at prime locations like Mumbai, Delhi, Ahmedabad, Chennai, Bengaluru and Hyderabad. Post GST, warehousing activity in the region has moved towards a more systematic mode of operation leading to an inflow of more institutional funding and formal sources of capital. A recent survey about leading warehousing occupiers in the

country revealed that consolidation and expansion will be the key theme driving warehousing demand in the region. This will result in increased demand for larger and better-quality warehouses, leading to emergence of new warehousing hubs as well as expansion of the existing hubs.

The survey also revealed that 30% of respondents will further expand their footprint in the warehousing market of Delhi-NCR alone in the post GST scenario.

What’s your strategy in place to carry ahead the growth momentum?

GST ensures that India for the first time will be exposed to consolidate large space central warehousing parks instead of the current scattered poor quality standalone spaces. Modern warehousing facilities that allow for consolidation of distribution hubs will be a vital component in making this a reality. With this ideology, the company plans to build about 20 million sqft of logistics parks over the next five years at a total investment of about US$1 billion. We are currently focusing at the initial and the strongest phase i.e., to ensure that we take good land positions in key markets—close to cities such as Mumbai, Delhi, Bengaluru, Chennai and Pune—that are a mix of consumption centres and have active industrial presence.

How’s the investment scenario in this space?

The future of Industrial real estate in India is very bright. It is already being termed as the future of India real estate.

Warehousing and Industrial logistical requirements are growing and this growth is here to stay. Indian consumers

What’s your advice to the governing

CELERITY • September 2017 | 21

LEADERSHIP UP, CLOSE & PERSONAL Your favorite book and has it helped you make better business decisions…

80-20 principle. I use it almost every day in making decisions. It allows you to focus. It’s the 20% which matters directly. It helps me manage my time better and helps me to schedule my priorities and not prioritize my schedules.

What’s your leadership style?

All leaders in Embassy believe in leading by example. Our leadership style is highly decentralized, empowering, relationship-building and trust-driven.

How do you motivate your team to keep achieving goals?

Empowerment & Encouragement are my most important tools. I always try to empower my team with necessary tools to succeed.

are demanding better quality and smarter spaces which are not just comparable but on par with international standards. The biggest indicator of its future is that the Government plans to build multimodal logistic parks across the country with an investment of Rs33,000 crores in a bid to bring down costs incurred in logistics, it will also lay low the overall freight cost, reduce vehicular pollution & congestion and will enable reduction of warehousing costs of the country.

Private equities are finding increased interest in the space of late. What are the factors that make it the most lucrative space to invest in?

The key growth factors responsible for this are rapid growth in industries such as automobile, pharmaceuticals, FMCG and retail; increase in trade because of integration of India’s economy with the world; government initiatives such as FDI regulations, private sector participation and development of logistics infrastructure and increasing trend of outsourcing logistics to third party service providers. In the coming years, the key trends that are likely to affect the industry positively are entry of global players, increase in number of multi-modal logistics service providers, and greater investments.

How do you view the future of

22 | CELERITY • September 2017

developing logistics infrastructure in the country?

Market will mature and when it comes to leasing or owning a building, leasing will become more popular. If you have only Rs100 crore of capital, 50 per cent of your capital will go in buying land and building and the balance will go towards business. If you can free up that capital, and keep paying rent for L&B, then you have more money for your business.

India’s logistics and warehousing sector is poised for accelerated growth, led

Government plans to build multimodal logistics parks across the country with an investment of Rs 33,000 crores in a bid to bring down costs incurred in logistics, it will also lay low the overall freight cost, reduce vehicular pollution & congestion and will enable reduction of warehousing costs of the country.

by GDP revival, ramp up in transport infrastructure, e-commerce penetration, GST implementation, and other initiatives like ‘Make in India.’ Indian 3PL market is expected to grow with CAGR of 6% over the next five years. The total stock of Grade A and Grade B warehouses in the country grew about 16% in 2016. The global market for warehousing services is on pace to grow to rising demand from the manufacturing, pharmaceutical, and healthcare sectors. As per the JLL report, 2018 forecasted supply for warehouses stock is 157 million sqft in Grade A and Grade B, the incremental demand between 2016 and 2020 is expected to be 218 million sqft. The deficit between projected demand and supply between 2016 and 2020 currently is 129 million sqft.

What are your current projects in pipeline?

We formed Embassy Industrial Parks to address the challenges of companies coping with building and managing industrial and warehousing spaces in a large, diverse and geographically distributed markets like India. Embassy Industrial Parks are committed in bringing quality Grade A industrial, light manufacturing and warehousing spaces in close proximity to leading consumer and industrial centers across the country.

Since our commencement, over the last 2.5 years, we have acquired important

parcels of land across the country.

Embassy Industrial Parks aims to build 15 to 20 million sqft of industrial and warehousing space over the next 5 years across India. We are actively working on land bank. Embassy Industrial Parks has invested a total cost of Rs140 crore in Gurgaon project and has also invested Rs350 crore to build a 1.1-mn sqft industrial park at Chakan, Pune.

How do you perceive Indian economy dynamics in times to come?

In India, there are three to four classes of real estate – residential, commercial, hospitality and retail – which are the main focus areas of private developers.

Globally, there is another class called industrial real estate. In fact, in Europe, US, Japan and China, industrial real estate is one of the largest classes of real estate. In India, it is still at a premature stage. However, people have realized that the implementation of GST, Make in India and policy-level changes in government, industrial real estate is now opening up to be a profitable sector and a lot of foreign investment is coming in.

Take our joint venture for example. We have a 70:30 JV with Warburg Pincus with Warburg investing Rs1,000 crore of equity out of the total Rs1,600 crore of equity investment. This essentially means that we can raise another approximately Rs4,000 crore as debt. Our investment alone will be Rs6,600 crore in this sector.

This totals to US$1 billion.

What are the salient features of a new age logistics infrastructure space?

The key driver for warehousing and logistics services is the growth of MNCs, emergence and growth of 3PL & 4PL, FDI, e-commerce, policy changes at government level, ‘Make in India’, internet penetration into villages, robust trade growth, globalization of manufacturing systems and streamlining of the indirect tax structure. The demand drivers considered for the warehousing market are the manufacturing and consumption sectors. The manufacturing sector-led demand comprises the requirements arising from the need for the storage of raw materials and finished products from industries such as automobiles, cement and food processing, among others. In terms of consumption-led demand, all product categories, ranging from apparel and footwear to home and lifestyle, are key growth enablers.

What consumers should look into consideration while taking such service on lease or buy?

When you plan a warehouse, the most

As per the JLL report, 2018 forecasted supply for warehouses stock is 157 million sqft in Grade A and Grade B, the incremental demand between 2016 and 2020 is expected to be 218 million sqft. The deficit between projected demand and supply between 2016 and 2020 currently is 129 million sqft. important decision is the location and the attached facilities. Before we buy any land parcel, we talk to clients and choose the right parcel in the right location.

We also use our own research and knowledge to understand the corridors that are suitable. We look for good access roads sitting close to the highway.

We do enough R&D to ensure the plot is completely clear of encumbrances, mortgage, liens, with no issues on the title. It should be in the right zone where warehousing activities are permitted, and most importantly the land should be where clients will like to be housed & find it easy to grow. Embassy Industrial Parks is spending almost US$1 billion in setting up Greenfield infrastructure required to run efficient logistics operations across India. Most importantly, we pride ourselves to be the only developer in the country to set up integrated parks that are green and environment friendly.

All upcoming parks are IGBC compliant Silver to Gold ratings. An initiative like ours fosters startups. If you are a wellfunded startup and you want to take your

The implementation of GST and resulting uniform taxation across states will result in consolidation of supply chain and hence warehousing capacities.

The industry will move from unorganized players into larger, modern and technologically advanced warehouses. Domestic warehousing industry will see consolidation with the roll-out of the GST and is likely to grow at 9 – 11% every year. This is because of the strong government support and constant reforms.

business off the ground quickly where you don’t want to take unnecessary risks like land buying approval which is not your core area, we are offering good solutions and so are other upcoming players in the market. When you want to move into an office, you don’t go and buy an office, you rent an office. Same way, why would you want to buy a factory/warehouse when leasing is faster. That is the message that is evolving and will foster the growth of corporate India.

How can we eradicate supply chain or logistical bottlenecks to aid in overall business enhancement?

At Embassy Industrial Parks, we have an expert approach to these modalities, as per the situation of each industrial park, its geography, laws, climate etc., all are taken into consideration in advance to only start work once all elements have been identified and secured. Quality of planning & design can have long-term damage on costs & timelines. Appropriate engineering needs to support the design. Current plans are to be used while planning item costs so the right contractor is a very pivotal partner to have on board. In a construction phase, land acquisition delays are one of the highest factors of project delays in our country. The only thing to do is to keep enough time. At Embassy Industrial Parks, we keep 3 months alone for permissions and approvals on the acquired land.

Proper management is key. We have a whole process to weaken our risks after assessment.

What are the promising regions for infrastructural development?

We are looking at cities that are major consumption centres where there is a large demand for grade A warehouse. Most of the warehousing today is non-compliant and are not properly constructed. There are maintenance issues with leaking roofs and chipped floor; and hence, there is a growing demand for grade A warehouses.

We are very clear about our five-year plan.

We are planning to set up about 8 to 10 parks in seven cities that include Mumbai, Delhi, Bengaluru, Pune, Chennai, Kolkatta and Ahmedabad. There will be more than one park in Delhi and Mumbai; 9 parks, over the next 3 to 4 years which will total to 20 mn sqft. of leasable area. We plan to buy land with our equity line of 1,600 crore.

CELERITY • September 2017 | 23

FEATURE

ORGANIZED 3PL GAINING

STEAM

POST-GST “Securing a competitive edge in the post-GST scenario mandates a high level of transparency, discipline to timelines, adherence to compliances and investment in technology platforms,” avers R Shankar, CEO, TVS Logistics Services Ltd.

Changing supply chain dynamics post-GST Pre-GST most companies had their logistics networks planned around tax structures and compliances; this is now expected to shift in favour of optimization of warehousing space and network capabilities. Driven by the need for greater efficiency, logistics networks will be designed more from a market perspective or centre of production perspective, leading to reduction in logistics cost, which is at present very high at 13% of GDP. Businesses will demand faster ways to reach raw materials to manufacturing units and from the manufacturing units to the market place. Therefore, organized 3PL players will play a key role in being able to significantly re-design the supply chain and provide solutions to their customers that will make the entire supply chain lean, responsive and agile.

Strategies to ride the growth

TVS Logistics is an entrepreneurial company, and looks at opportunities as they pan out. Our growth has always been influenced by how we add value to our customers’ operations, and how we provide differentiated services. Our whole approach is to understand our customers’ supply chain challenges and take a consulting approach for addressing these bottlenecks. That is, not just providing advisory services but actually executing the solutions on ground and delivering on the claims made in our consultations to the customer. The

24 | CELERITY • September 2017

strategy that has worked for TVS Logistics centres on discovery of customer problem and bringing in the right solution through a combination of in-house capabilities that we already have; mindful application of technology in which we have actively invested; and adoption of practices learned from our overseas entities who are sector/capability experts in their geographies.

Challenges faced towards GST compliance

We have skirted major challenges so far by staying proactive and responsive to developments in GST. As and when the Government notified the industry regarding progress in GST law, rules and regulations, TVS Logistics took timely steps to make certain that our IT and accounting systems are modified and made capable to handle the migration into the new environment. We also realigned certain processes in the anticipation of post-GST changes and successfully transitioned in this period with seamless customer operations as our top priority. However, these are early stages and there are still processes that all companies would need to do (including filing the returns), which we are confident we will be able to complete without any major challenges to our business.

Expansion plans technology and development

in terms of infrastructure

We have always provided technological

advantage and cutting edge solutions to our customers. TVS Logistics manages over 10 mn sqft of warehousing space across the country spread across 29 states. Our Asset-light operations give us tremendous flexibility and agility in responding to customer requirements.

It’s a sustainable model which allows us to scale quickly and add quality infrastructure as needed. The roadmap is to continue to invest in these solutions to provide meaningful differentiation and add value to our customers’ operations.

Shifting gears towards organized 3PL services

Securing a competitive edge in the postGST scenario mandates a high level of transparency, discipline to timelines, adherence to compliances and investment in technology platforms. This tilts the scales in favour of employing organised logistics players, which will be the expected trend in how clients will choose their logistics partners. Businesses that have been using unorganized transporters and just warehouse service providers may consider migrating to formal 3PLs who can bring in knowledge services, understand, and use technology and operate logistics and supply chain more efficiently. While transportation services have not fully come under the purview of GST yet, a 3PL’s wide network footprint and proximity to consumption and manufacturing locations will be one of the deciding factors during empanelling.

FEATURE

TECH & INFRA –

BACKBONE OF SCM “With the elimination of multiple state taxes, post GST, the decisions on location of warehouse & distribution will be purely based on operational efficiency rather than tax consideration,” highlights Jasjit Sethi, CEO, TCI Supply Chain Solutions, during an interaction on post-GST supply chain paradigms…

Supply chain dynamics post-GST

GST implementation challenges

Implementation of GST has been a game From a single return of Service Tax pan India, changing event for businesses in general we are now at 23 state wise registrations & organized logistics players. With the and 23 x 3 = 69 returns per month. Thus introduction of GST, the earlier vertical from 12 per year, we will end up at 69 x 12 structure of VAT on Goods and Service months + 3 Annual = 831 returns! Adding to Tax on Services has merged into one this the onus of compliances for suppliers, consolidated GST. However, there is a especially the small road side enterprises horizontal split between central and state has been a task, which is still ongoing. for purposes of Input tax credit.

Our inhouse ERP coupled with sage advice The logistics sector is expected to helped us in being ready from 1st July and we did ensure the wheels of economy kept get a much needed boost with GST due moving. As we go further, we are keeping to tax compliances & also as logistics our oft repeated strategy of going beyond companies are moving from traditional setup towards IT integration, which is expected to reduce the typical labor Supply Chain intensive activities & thus cost. It will Cost enable the creation of a common market & permit free & unimpeded Mode of movement of goods & services Supply Chain Taxation Transport Strategy (VAT/GST) across the country. The anticipated benefits for LSPs being consolidation of its network, larger warehouses, Supplier Responsiveness to and larger tonnage trucks will boost Base Customer overall efficiencies. ©TCI - SCS Supply Chain 5 Forces Model In terms of the Network design, the 5 main factors affecting supply the rule to enabling technology to move up chain as depicted in the 'TCI-SCS Supply the value chain and support our customers Chain 5 Forces Model' would remain, as in their growth plans.

‘Taxation’, which would take the hue of Input tax that is available and availed.

The crucial role of technology & Contrary to many schools of thought, infrastructure while the network would be more In TCI, we are GST ready. The upgradation Logistically-Right than taxation friendly, of our IT infrastructure is almost over the number of warehouses would not & well set to operate under the GST really come down in many regions because regulations. Our ERP is home grown and closeness to customer is a key factor. The very robust, we have spanning Mobile major impact is seen in areas like NCR Apps and Web based applications, thus (Delhi- Haryana- UP- Rajasthan); Bangalore we are looking at GST readiness as an (KTK, AP, TN) and Kolkata (WB- OR- JH- NE). additional opportunity to differentiate The transition of GST will need our the TCI offerings from rest of the industry efforts in adapting to the Accounting and in terms of support to customers and IT systems in the short run. While July has suppliers. We see a big value in technology been a slow month for trade, it has picked and most of our services have deep rooted up well towards the end. It may require technological integration, which ensure some time for the supply chain to settle a glass pipeline for our customers. This down into a rhythm, we hope the incoming may sound outlandish, but we actually festival season will catalyze the policy and were on our own private cloud way back in implementation framework.

May 2007 where the speeds over a dial-up modem were 56kbps!

Be it the production logistics where schedules arrive by EDI and the dashboard is live on our Control Tower as well as android apps in the palm of our key account manager to a rudimentary thing as a vehicle loading, we are very much on global standards in technology. Likewise, in warehousing, where we manage perhaps the largest warehouse in the country to most complex operations of B to C fulfilment center, technology in WMS to goods to man technology to rudimentary things like productivity management tools, we are in sync with tomorrow.

Going forward, there are quite a few new requirements like INS 01 in operations to uploading and matching the invoices on the GST network, we are ready to keep the ball rolling.

Growth strategies

With the introduction of GST, trade boundaries between states will cease to exist & this will also increase the ease of doing business. With the elimination of multiple state taxes, the decisions on location of warehouse & distribution will be purely based on operational efficiency rather than tax consideration. This will benefit large 3PLs like TCI SCS as we also have an own backbone of services. Furthermore, there is no impact of cascading taxes and hence choosing an organized player like us who is fully compliant to all laws would be relatively cheaper in doing business than the unorganized players.

Our network of 1000+ offices and 11mn sqft linked with a transport network of 15,000 trucks besides trains and ships at any given point of time is already waiting for One Nation, One Market. Being a listed entity, the compliances benefit us directly and we stand to gain as an organized player. We are further expanding our portfolio, bit by design and re-engineering to the implementation of the model.

CELERITY • September 2017 | 25

FEATURE

GST TO DRIVE

CONSOLIDATION &

SCALABILITY

“With GST, time has come for businesses to align their design logic based on market requirements, installed base and geographies through network optimization models,” asserts Dr Arunachalam R, CEO, ProConnect Supply Chain Solutions, during an interaction with Celerity. With transport efficiencies set to increase with bigger payload vehicles being introduced, 3PL players who have the required network across India will play a major role, believes Dr Arunachalam.

With GST, organized logistics is slated to grow exponentially. How do you see the dynamics changing?

India predominantly has been an unorganized logistics market with just about 10% plus business falling in the organized sector, leaving a lot of opportunities for the organized sector to work on. With the advent of GST, logistics market that was driven by strategies based on statutory requirements than on geographies and reach will now shift towards the rationale of positioning their warehouses and distribution centers based on market requirements and strategic locations. This change in thought will drive the customers to look for logistics service providers who have state-of-theart facilities with required IT backbone to achieve the required benefits. Many businesses have been operating standalone facilities for their requirements and with GST, 3PL operators would be preferred for the scale at which they operate and the various automations and cost benefits that they bring through shared facilities driving the market to move towards 3PL and we are scaled up to reap the benefit.

What are your strategies to ride the growth? Organic, Inorganic, launching new services, expansion, etc.

Growth plan of ProConnect is well laid out and we have been on track with both organic and inorganic growth. Our first step towards that has been a big news in the market with us taking a majority stake in Rajprotim Supply Chain (RCS).

RCS has a deep routed presence in the Eastern and North-eastern part of India with operations spanning warehousing and transportation through dedicated

26 | CELERITY • September 2017

fleet of 1000+ vehicles. ProConnect’s business division Mission Critical Services is one of its kind business model that offers critical and time-sensitive deliveries to its customers through well laid out processes and practices. We have major plans in the days to come to venture into medical and FMCG businesses and with GST, there will be a big boost to the transportation requirements and we are geared up to make the most of the opportunity. We are also working on the App based aggregation model for transportation to start with.

customers to have a better technologically enabled facility for shared use. We have single platform solution that cuts across all functions of ours and works seamlessly enabling higher efficiencies. We have taken trials with robotics to enable high efficiency automated warehouses and RFID enabled technology will be the next enabler. Our automation design and engineering team constantly work on latest trends in the market and keeps adopting newer technologies like IOT, e-POD, etc., for better efficiencies and productivity.

What have been the challenges you faced as a 3PL for GST compliance?

How are you aligning with those issues?

What changes do you foresee in the way clients would now choose 3PL services?

Registration in multiple states, getting the bills of service providers in those states, making our offers to clients very differently, management of closing stocks of June 30, treatment for stocks more than 1 year old, getting GST compliant invoices ready & those getting acceptances from clients etc, are some of the issues that we faced towards the transition. Having said that, we have a very able team for GST migration and hence we have been able to tackle these proactively.

Technology and infra will play a big role in logistics services. What are your plans on the same?

Technology has been ProConnect’s strength ever since our foray into 3PL and Transportation. Our ADC located in Chennai and Kolkata are testaments to this with best of breed WMS and high-end material handling equipment deployed for better efficiencies and throughput.

We have plans of operationalizing more such ADCs in key strategic locations for

India logistics / network design has been driven by statutory related requirements all this while as stated earlier and now with GST, time has come for businesses to align their design logic based on market requirements, installed base and geographies through network optimization models. ProConnect specializes in this area and has been doing this study for its customers. We foresee customers shifting from own setup operations and unorganized sector towards more organized players who offer better value to their operational requirements.

Consolidation of multiple warehouses operated to an optimized minimal number of warehouses catering to their needs at a better TAT will also be a major driver in the days to come. With this consolidation happening, transportation requirements will increase and clients will look at the 3PL service providers for handling the same as part load requirements are set to increase.

WCM

GAMECHANGER

A CHANGE OF PARADIGM

“It is not the strongest of the species that survives, not the most intelligent, but the one most responsive to change.” Taking a cue from this thought, CNH Industrial (India) Pvt Ltd implemented World-class Manufacturing (WCM) in logistics. Deepak Gautam, General Manager (Head – Supply Chain), CNH Industrial (India) Pvt Ltd, highlights that after deploying WCM in logistics, CNH has achieved a breakthrough in reducing logistics costs as well as enhanced the entire production process by substantial margins. The target of WCM is zero waste, zero defects, zero breakdowns and zero inventory and that’s the same target CNH intends to achieve in the long run.

C

NH Industrial, in striving to consolidate and maintain high standards of excellence in its manufacturing systems, applied the principles of WCM, an innovative program for continuous improvement originating from Japan. WCM is a Change Program intended to reach world class performances in operations through 3 major activities, viz., reduce and eliminate losses & waste; establish standards and methods; and continuous improvement through all employee involvement. It is implemented in 7 steps in 4 phases to achieve controlled flow as major target, and reduce losses in logistics.

These are: 1. Create a Flow; 2. Make Flow Smooth; 3. Flow should be Accurate; and 4.

Controlled Flow.

Four change agents

First of all, WCM focuses on people who are part of the operation. Together with them losses are traced and made visible.

Subsequently, WCM forms teams to find and eliminate the cause of a certain loss, for only by removing the cause of a problem the problem will stay away forever. Solutions not removing the cause only cure the symptoms of a problem and are no real solutions.

The third main feature of WCM is product organization. Instead of dividing the work over as many specialized departments as possible, the so-called functional division, WCM organized in process stream oriented manner. Ideally, every product-marketcombination of company knows its own team, to which activities adding to the total value are assigned, as well as the support

solutions: the standardization. A WCMcycle is only really complete if we made sure that the solution we found cannot ebb away. In addition, the ‘process owners’ in such a way should take this step that we can verify that the step is guaranteed. Thus, the four main characteristics of WCM are successively: ● Make losses visible ● Improving in team format ● Organizing process-oriented ● Standardize working methods.

People who are directly involved in carrying out the processes of additional value are here the internal customers. All others should be supportive and derive their existence from their positive influence on the production process.

Logistics in WCM

services directly and exclusively related to them.

The fourth and last main feature is the permanent guarantee of the found

Logistics is one of the most important pillars in World Class Manufacturing systems. Logistics is a pillar in which both Adopt pre-established sequence-time planning

Phase 4

Integrate sales, distribution, production and purchasing

Phase 3

Fine-tune internal & external logistics

Phase 2 Level production Redefine external logistics

Phase 1

Redefine internal logistics Organize line side/ Reengineer assembly to satisfy customers

STEP 2

STEP 4

STEP 5

STEP 6

STEP 7

Controlled flow Accurate flow Smooth flow

STEP 3 Flow

STEP 1

CELERITY • September 2017 | 27

GAMECHANGER internal and external logistic networks become integrated through management of logistics activities. Implementation of the logistics pillar aims most often at: more effective management of supply chains, reducing material storage and ongoing production, reducing logistics costs, integrating logistics networks (suppliers, co-operators, producers), better usage of means of transport, better usage of warehouse (storage areas and intermediate storage areas), etc.

The trigger

At Noida plant, we are manufacturing tractors under the Brand Name of ‘New Holland’ and ‘CASE’. With almost 65% domestic market and 35% export market business volume and tractor industry is very volatile mainly as Indian agriculture industry is mainly dependent on rain and monsoon, so it is highly unpredictable market. Before adopting WCM Methodology 4-5 years back, Plant Logistics Management was very traditional with multiple losses and High Inventory at various level – FG (Finished Goods) / RM (Raw Material)/ WIP (Work in Progress)/ Supplier Inventory, leading to heavy financial charges, obsolescence, long term inventory ageing, scrap & losses, frequent rescheduling of production plan due to shortage of material, which resulted in major loss of sales order in export and domestic market.

The implementation

As the concept itself says about waste reduction and improve efficiency, in New Holland, our major challenge in terms of SCM was high raw material inventory / line feeding loss obsolescence was high, so we thought of implementing World Class Manufacturing methodology to improve supply chain and logistics.

Stocks of material at the plant are high with heavy financial charges & hidden problems. There is a considerable risk of damage and obsolescence also due to the condition of the containers and the need for sequencing. In that case, production has to be rescheduled frequently due to

The idea of considering logistics as the main change agent was simply because if the logistics pillar is able to achieve its main goal (deliver the right material, at the right time, in the required quantity/quality, nearest to the point of use in consideration of ergonomics requirements, with a minimum of material handling), the overall plant performance will benefit. shortage of materials. In order to address these concerns, there was a need to establish PULL logic inside the plant and with suppliers. We needed to reduce stock levels significantly as well as level volumes and production mix and improve line saturation. Additionally, we aimed to minimize internal handling, also with direct deliveries by suppliers to the assembly lines and integrate the sales networks, manufacturing and purchasing.

The idea of considering logistics as the main change agent was simply because if the logistics pillar is able to achieve its main goal (deliver the right material, at the right time, in the required quantity/quality, nearest to the point of use in consideration of ergonomics requirements, with a minimum of material handling), the overall

plant performance will benefit.

In order to achieve the goals, wastes have to be identified and eliminated. To do so, it’s crucial that the plant organization learns to see waste. In phase 1, we established the concept of overall logistics and designed the logistics network (Customers and suppliers inclusive). We also designed external logistics and established routes for scheduled transportation (min. 1/day).

The entire layout was changed for internal logistics. Then followed organization of products & parts storage and packaging (Tray, packaging shape, size, number of items stored in a tray, easiness to identify items). We used Kanban and water strider method for the same.

When it came to workplace organization, we improved or rather simplified the assembly line layout. We made the assembly line short and levelled daily production. We thereafter, connected the subassemblies to the assembly lines.

We then put the sub-assembly lines into lines as much as possible by following PULL principle.

Initial hurdles

Pithampur plant that manufactures CASE Construction Equipment achieves Bronze Level designation in World Class Manufacturing

28 | CELERITY • September 2017

Major challenge for any organization in Change Management is how to drive change management throughout organization since people involvement and understanding real benefit of change is key task for any Management. Of course, strong top drive in order to implement

GAMECHANGER INNOVATION AND PRODUCT DEVELOPMENT

MEETING CUSTOMER EXPECTATIONS

2016 HIGHLIGHTS

> More than 1.6 million contacts managed

>8,463 active patents owned

>95% of procurement spending on local suppliers

>180 National Markets

>49 R&D centers

> more than 5,300 direct material suppliers

in

SIZE

MATERIAL TOPICS

SUPPLY CHAIN

>Innovation-to-zero >Value chain management

17 countries

> Circular product life cycle > CO2 and other air emissions > Innovation-to-zero > Autonomous vehicles and connectivity

> CO2 and other air emissions > Value chain management

Source: CNH Industrial Sustainability Report 2016

process and system for new change is key to success.

Tangible benefits

Some of the benefits of WCM implementation include greater competitiveness, the development of new and improved technology and innovation, increased flexibility, increased communication between management and production personnel, enhanced quality of work, and increased workforce empowerment. Major benefits achieved included: ● Raw material inventory reduction almost 30% compared to the duration of 3 years ● Control on obsolete and long-term inventory from 50%. ● Space saving on account of inventory reduction.

The ultimate gain

Key characteristic of WCM is that real improvement is on the shop floor. It is systematic and methodological approach to solve problem and if followed religiously as per process even at shop floor blue collar can drive it. The widespread use of WCM principles at all CNH Industrial plants allows the entire company to share a common culture based on efficient processes and on a language universally recognized across all plants and countries in which CNH Industrial operates. WCM leverages knowledge development through employee participation, through which implicit knowledge becomes explicit and

The WCM system is also implemented outside CNH Industrial: on one hand, it enables the company to meet its customers’ needs with maximum flexibility and effectiveness; on the other, by sharing it with suppliers, it allows the company to ensure high product quality and process efficiency.

The aim of continuous improvement is to increase customer satisfaction and loyalty, while also ensuring long-term profitability, by developing processes and adding value to products & services. codified, and subsequently incorporated into new products, new services, and new ways of working.

The WCM system is also implemented outside CNH Industrial: on the one hand, it enables the company to meet its customers’ needs with maximum flexibility and effectiveness; on the other, by sharing it with suppliers, it allows the company to ensure high product quality and process efficiency. WCM seeks to instill and reinforce the idea that everyone who is part of an organization must know their

customers and strive to satisfy their needs, as well as those of all other stakeholders, in terms of products, order processing, delivery, quick response services, and after-sales assistance. After all, the aim of continuous improvement is to increase customer satisfaction and loyalty, while also ensuring long-term profitability, by developing processes and adding value to products and services.

Deepak Gautam has more than 20 years of experience in Consumer Durable and Automobile industry. He has done PGDBM in Operations & Supply Chain from IMT Ghaziabad and has done B.Tech – Mechanical from NIT Kurukshetra. He is also a Certified Professional of Inventory Management (CPIM) from APICS and a 6s Black Belt.

CELERITY • September 2017 | 29

FOCUS

THE CHANGED

DYNAMICS OF SUPPLY CHAIN

In the post-GST era, for a warehousing operator, investment decision will no longer be dictated by the comparative tax advantages of various states, thereby enabling them to make decisions based on supply chain dynamics, writes Anshuman Magazine, Chairman, India and South-East Asia, CBRE.

T

he Goods and Services Tax (GST) has finally become a reality, close to one and a half decades after it was first proposed. The journey of moving towards a single-tax system has not been particularly smooth as the GST has faced innumerable challenges ranging from its structure, tax bracket to subventions for states that may face revenue losses. However, despite the challenges and resistance, the determination of the government to implement a single-tax system across India has been consistent with the tax coming into effect on July 1, 2017. While a landmark tax like this is expected to have far-reaching implications for all sectors in the economy including real estate, there is a significant impact expected on the Industrial and Warehousing segment in the long term.

According to recent research conducted by CBRE in the global industrial and logistics space, over the next decade, nearly 20 markets worldwide are set to emerge as global logistics hubs. While the current global hubs will remain dominant in 2030, several emerging hubs are set to rise in significance, regionally as well as locally. These emerging Asian hubs include India’s Delhi NCR and Mumbai; China’s Chengdu, Fuzhou, and Hangzhou; South Korea’s Busan; and Vietnam’s Ho Chi Minh City, among others. These hubs are increasingly growing in importance due to the shift in low-end manufacturing, rising consumption power, infrastructure and policy developments.

Strong economic indicators

Strong and sustained economic growth over the past few years has led to a healthy demand for warehousing and industrial space in India. The government’s ‘Make in India’ campaign has provided necessary impetus and induced large scale investments, resulting in strong demand

30 | CELERITY • September 2017

in recent months was governed by the expected implementation of the GST. With the recent implementation of the tax, the Indian warehousing sector is poised for structural changes in its operation dynamics. The focus of players will now be on supply chain efficiencies which will result in consolidation of warehouses.

In the long-term, this will result in increased demand for larger, better quality warehouses, thereby providing an ideal platform for the emergence of large scale nationwide players.

Gauging the impact

from the manufacturing sector. Additionally, the country’s favorable population composition, increasing disposable income coupled with an increasing focus on operational efficiency and growth of new business sectors such as e-commerce, has led to an increase in leasing of modern warehousing space. Demand for warehousing space across the country grew from an average of 4.5 million sqft per annum during 2010–12 to around 7.7 million sqft per annum in 2013–15. During the first half of 2017 alone, approximately 7.3 million sqft of warehousing space take up was witnessed across key cities in India.

As India witnesses the entry of global players across segments, there is a need for better quality of warehousing spaces which align with global benchmarks. The government’s initiatives to streamline India’s logistics ecosystem, particularly custom clearances and overall infrastructure has resulted in India ranking 35 out of 160 countries on the 2016 World Bank’s Logistics Performance Index (up from 54 in 2014).

Warehousing activity in the country

To gauge the impact that the Goods and Services Tax would have on India’s warehousing industry, CBRE recently conducted a survey among the leading warehousing space occupiers in the country.

Survey respondents included leading corporates across sectors including third party logistics companies (3PLs), e-commerce, engineering & manufacturing, fast moving consumer durables and nondurables, pharmaceuticals and retail.

Approximately 63% of respondents were domestic corporates, while the rest were headquartered abroad.

The survey threw up some interesting results. More than 63% of the respondents felt that the implementation of the GST would be positive for their overall business operations in India. The hope is that operating costs will decrease in the post-GST era which will enable them to consolidate their smaller facilities into larger ones and expand their footprint around major consumption centres.

Approximately 45% said that their cost of warehousing operations is likely to decline once the GST comes into play, while around 25% were cautious and felt that it is too early to assess the actual impact. However, the majority of respondents said that they

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City Highlights FOCUS NCR

MUMBAI

Leasing activity almost doubled when compared to H2, 2016 due to strong demand.

Bhiwandi continued to remain the hub of warehousing activity.

Demand primarily driven by 3PL (31%) and FMCG (28%) companies.

Demand was driven by 3PL operators accounting for close to 72% of the total space take-up during the review period.

Total demand from these two segments increased from 22% during H2 2016 to 67% during H1 2017.

Limited occupier interest and negligible supply addition resulted in activity remaining slow in Panvel during the period.

Rentals witnessed appreciation across key micro-markets during the review period.

Despite sustained demand levels, limited regulatory approvals and alternate use of land (for IT/ITeS activities) is resulting in limited transaction activity across the Trans Thane Creek (TTC) industrial area.

BENGALURU

CHENNAI

Leasing activity rises 180% as compared to H2, 2016.

Highest leasing activity witnessed by Eastern Corridor, followed by Western Corridor and then Southern Corridor.

Engineering and manufacturing, 3PL, Retail, E-commerce, FMCG and pharmaceutical firms drove demand during the review period.

On the supply side, Bengaluru witnessed a healthy growth of over 30% in new supply when compared to H2 2016.

Leasing activity increased by about 45% during the first half of 2017, as compared to H2 2016.

Activity was largely driven by engineering and manufacturing, 3PL, FMCG and auto ancillary segment corporates looking at expanding their operations in North and West Chennai micro markets.

The Western Industrial Belt, Northern Chennai micro-market and Southern Industrial belt led the demand for warehousing space.

City witnessed fresh supply addition to the tune of 1.7 million sq. ft., encompassing several medium to large scale warehousing developments. Majority of this supply addition was witnessed in North Chennai (60%), followed by West Chennai and South Chennai micro-markets.

HYDERABAD

KOLKATA

Majority of the leasing activity was concentrated in the Northern and Eastern zones.

Demand was led by engineering and manufacturing, FMCG, pharmaceuticals and e-commerce players.

At a micro-market level, the Northern Corridor witnessed highest leasing activity, with approximately 85% of the total transactions during the review period; followed by the Eastern corridor at about 10% of the total demand.

Leasing activity declined marginally during H1 2017, as compared to H2,2016.

Close to 75% of all transactions during the review period were concentrated across the micro-markets of Dhulagarh, Sankrail and Uluberia along NH-6.

Occupiers from the engineering and manufacturing, telecommunication and 3PL sectors were the major occupiers of space.

During H1 2017, the city witnessed new supply addition of about 2,78,000 sq. ft. of space in the micro markets of NH6, NH2 and Taratala.

AHMEDABAD Demand picked up in the city with approximately 4,25,000 sq. ft. of space leased across locations such as Changodar and Aslali.

Domestic FMCG and electronic retailer companies were the major occupiers of space.

Aslali, which falls outside the city’s octroi limit and is in close proximity (about 15 km) to the Central Business District (CBD) witnessed a majority of the leasing activity.

In terms of supply, close to 1.5 million sq. ft. of Grade A supply has been launched, as a part of the three developments at Kheda, Naviyani and Vithalpur.

PUNE Pune witnessed limited demand for warehousing space during H1 2017.

Close to 3,00,000 sq. ft. of Grade A warehousing and industrial space leased by engineering and manufacturing sector companies and 3PL operators.

Investment activity by High Net-worth Individuals (HNIs) and domestic companies for industrially zoned land parcels also witnessed a positive growth, across locations such as Chakan, Sanaswadi and Hinjewadi.

WAREHOUSE LEASING ACTIVITY DURING H1, 2017 During H1, 2017, demand for logistics & warehousing space was majorly concentrated in Bengaluru (23%), Delhi NCR (22%), and Chennai (20%); Mumbai with a share of 13% was the only other city to witness sizeable transaction activity. Smaller cities such as Kolkata, Ahmedabad, Hyderabad, and Pune collectively constituted 23% of the demand during H1 2017. On a half yearly comparison, all cities observed an increase in absorption activity, barring Kolkata and Pune, wherein the transaction activity witnessed a drop.

Similarly, leasing activity was driven by strong growth in demand from all sectors, except pharmaceutical companies, which leased 20% less space when compared to H2 2016.

In H1, 2017, 75% of warehousing space was leased by 3PL companies, engineering and manufacturing & FMCG companies. The | CELERITY 32 size September 2017 average of space •take-up increased from approximately 50,000 sqft during H2 2016 to close to 65,000 sqft during H1 2017.

The number of large sized transactions (above 2,00,000 sqft) also more than doubled, when compared to H2 2016.

FOCUS are already prepared for the introduction of the GST and would be able to align their business to the new regulations. According to the survey, the most likely strategy for warehousing portfolios in the post GST era is that of consolidation followed by expansion. Close to 28% of respondents said they would consolidate, while 23% stated that they would further expand their operations across the country.

Close to 52% of survey respondents currently have multiple warehousing facilities in one state / city. When questioned, 28% of respondents said this is the most effective way to operate given the multiple local taxes involved.

Close to 38% of companies surveyed also feel that this is the most suitable mode of operation based on their current business model. However, in the post-GST scenario, the concept of a mother warehousing hub for a region supplemented by spokes is expected to become more popular.

Around 11% of companies surveyed said they would prefer to adopt the hub and spoke approach in the post-GST regime, compared to only 6% now.

While understanding respondents’ preference across various states, approximately 38% of respondents said they will continue to expand their footprint across states such as Tamil Nadu, Karnataka, Haryana and Maharashtra. Approximately 27% will consolidate their operations, while 26% are likely to retain their existing footprint; however, approximately 8% would downsize existing footprint in states such as West Bengal, Uttar Pradesh and Andhra Pradesh.

Key themes governing logistics

Going forward some of the key themes that will govern India’s logistics and warehousing segment in the post GST regime are:

Demand to move beyond the obvious epicenters Until recently, bulk of the warehousing demand was concentrated across the top three urban centers of the Delhi National Capital Region (NCR) in the North, Mumbai Metropolitan Region (MMR) in the West and Bengaluru in the South. As a significant development, 2016 was a landmark year for the warehousing segment as the share of relatively smaller cities such as Hyderabad, Chennai, Kolkata and Pune increased in the overall space take-up. Collectively, these cities leased 49% of the total space leased in 2016, as compared to only 25% during 2015. Going forward, it is likely to result in proliferation of demand and a resultant increased supply in such cities.

‘Manufacturing’ - a global & local connect As per the Commerce Ministry of India, India will aim to reach 3.5% of the total global

Over the next decade, nearly 20 markets worldwide are set to emerge as global logistics hubs. While the current global hubs will remain dominant in 2030, several emerging hubs are set to rise in significance, regionally as well as locally. These emerging Asian hubs include India’s Delhi NCR and Mumbai; China’s Chengdu, Fuzhou, and Hangzhou; South Korea’s Busan; and Vietnam’s Ho Chi Minh City, among others. trade by 2020 from its current share of 2%.

Also, exports, which currently contribute 7.5% of the GDP, need to be pushed further as India signs Foreign Trade Agreements with economies such as Japan, Korea, ASEAN and Singapore. As the significance of foreign trade in India’s economy increases, manufacturers/exporters are likely to benefit from the potential demand from neighboring markets such as Nepal, Sri Lanka and South East Asia. These regional opportunities could also be instrumental in driving the warehousing footprint of occupiers. Also, manufacturing, which contributed to almost 22% of the demand from the warehousing sector in 2016, is likely to receive a significant boost via the ‘Make in India’ programme. The government is aiming for increasing the share of the manufacturing sector to 25% of the GDP from the existing 17%, to bring it at par with countries such as China, where the manufacturing sector contributes to 36% of GDP and Thailand (35%). The convergence

India’s industrial and warehousing segment has been witnessing increased activity over the past few years on the back of our growing economy. The sustained growth of the segment, coupled with the implementation of the landmark Goods and Services Tax, will result in efficient supply chains and lower compliance costs; the benefits of which will eventually trickle down to make the reform a much needed incentive for businesses in India. It will also help in making India’s markets more organized in the long term.

of these factors is likely to result in more robust demand for warehousing spaces.

More organised operations; inflow of formal sources of capital

As the warehousing sector moves towards a more systematic mode of operation, the sector is likely to witness the inflow of institutional funding and formal sources of capital. With the emergence of national players having larger warehouses, deployment of capital in these fewer, better quality assets is likely to become easier. However, given the fragmented and unorganised nature of the sector and limited local market expertise/instances of best practices, in majority of the cases, private equity funds have tied-up with regional developers.

Infrastructure development to allow supply chain efficiencies

As supply chains need to have a larger scale and become more agile, infrastructure development will have to respond to this need by becoming more forward-looking. The government has recognized investments in infrastructure as one of the key drivers of economic development. To fast track growth, the government has set-up the National Investment and Infrastructure Fund (NIIF), as a quasi-sovereign wealth fund with a corpus of INR 0.4 trillion. The Union Budget 2017 emphasized the importance of a multi-modal transport network to allow the complete benefits of the GST and the ‘Make in India’ programme to percolate. The government will develop 35 Multimodal Logistics Parks (MMLPs) in the country, which are expected to serve 50% of the freight movements, enabling 10% reduction in transportation costs and 12% cut in C02 emissions.

The government is also working on the formulation of a formal uniform policy for the development of MMLPs.

Disruptive innovations will drive efficiency & cost savings

While government policies and shifting demand patterns will be potent in shaping future trends, increasing technological applications will redefine the sector’s status-quo. There is already an increase in instances of e-commerce companies, 3PL players and online grocery chains utilizing information technology to manage their

CELERITY • September 2017 | 33

FOCUS CBRE India Market Monitor H1 2017 for Logistics

SUSTAINED GROWTH IN TRANSACTION ACTIVITY; OVER

KEY DEMAND DRIVERS

7.3mn sq. ft. leased

33% 21%

in H1 2017

21%

Most e-commerce players turned passive, as they leased only 5% of the total demand during the review period, growing by only 4%, as compared to H2 2016

TRANSACTION GROWTH

3PL Engineering and Manufacturing FMCG

DEMAND MOVES TO SOUTHERN CITIES

250%

Retail

100%

3PL

42%

FMCG

BANGALORE

24%

CHENNAI

HYDERABAD

20%

5%

witnessed majority of the transaction activity

Highest Rental Growth (y-o-y) ENTAL TOP R RS LEADE

13%

Kundli / Murthal NH - 1, Haryana

11%

Bhiwandi, Mumbai

12%

Ghaziabad (NH-24), Delhi NCR

6%

Delhi

12%

Western Corridor, Hyderabad

inventory better. The number of startups aimed at bridging the technology gap is also on the rise. Software that enables improved fleet management though live tracking of goods, RFID system for inventory identification, automated pallet storage, amongst others are being increasingly used. As clients become more demanding and the scale of operations grow, the use of technology will only increase.

Increased adoption technologies

of

new

The impact of new technologies on global supply chain can hardly be overstated.

The possibilities of mobile devices and apps seem endless and have made old business models obsolete. Increasing competitive pressures and the need to deliver first-class customer service, to both retain and win business, is leading to an acute need for innovation among manufacturers, retailers and 3PL providers. The resulting change in supply chain will have a strong impact on warehousing real estate. With customer service and a greater speed to market as the main driving forces behind supply chains behind supply chain innovation, warehousing occupiers will be keen to

34 | CELERITY • September 2017

implement new technologies for the enhancement of their operations for the next few quarters.

further expand their operations across the country.

Strong demand for large sized warehouses

Going forward, as operational efficiency (amidst cost reduction) becomes an overarching theme, it may have a positive impact on cost effective locations with established infrastructure facilities. The organized warehousing sector in India is still in a nascent stage of development and the GST could be the fillip that the sector needs. On the whole, the reform will be in the larger good of the sector resulting in the emergence of better quality, investment worthy assets.

Instances of large sized warehouses (500,000 sqft or more) space take-up is still very limited in India. however, with the implication of the GST, it is anticipated that the demand for large modern warehouses will only increase in the next few years. Along with the above mentioned disruption caused by technologies, the concept of ‘hub & spoke model’ is likely to gain prominence driven by operational efficiency and cost reduction. According to a recent CBRE India report on warehousing occupier strategy post-GST, the concept of multiple warehousing facilities in one state/city is expected to lose its lustre in the post-GST era, with only 30% of respondents preferring this model compared to 52% at present. These findings indicate a move towards a more mature and efficient market. Another interesting finding from the survey was that in the post-GST era, most warehousing space requirements would be driven by consolidation and expansion activity of occupiers. Close to 28% of respondents stated that they would

Outlook

With over 22 years at CBRE, Anshuman pioneered the entry of professional real estate consulting services in India. As an Industry veteran, he is sought after to address various industry related events in India and abroad.

Based on his rich & unparalleled experience in the industry he has been and continues to be actively involved in various industry bodies including RICS, AMCHAM and APREA. He is also part of Confederation of Indian Industry’s (CII) National Council. He has done Masters in Business Administration from UK and has Graduate degree in Commerce from Delhi University.

INTERVIEW

SIPPING SUCCESS It requires immense hard work, patience, and determination to establish the brand in a market where similar products are already available and have been claiming decades of undisputed leadership and more so it stands true in the food & beverages sector. Today, despite its own dominant position, Manpasand has not stopped striving. Proudly informs Dhirendra Singh, Chairman & MD, Manpasand Beverages Ltd, “The Rs700 crore plus turnover Manpasand Beverage has the unique distinction of being the only pure play company in this sector in the Indian capital markets”. Speaking about his vision, he says that he wants to make his enterprise a global, multi-brand retail corporation with roots firmly in India. Excerpts of an exclusive interaction…

Gujarat is truly an entrepreneurs’ paradise and I am sure you would also vouch for this fact. What are the factors that really go well with the state?

The genesis of Manpasand certainly started when I was working in Vadodara.

The ‘business spirit’ of Gujarat definitely caught my attention and after that there has been no looking back. I had a strong belief that any business related to food and beverages will never be out of season. For the first few years, we were outsourcing our manufacturing process and trying to get a sense of the business operations.

After gaining some foothold in North and Western Indian markets, we set up our own manufacturing unit in Vadodara in 2005.

The air of Gujarat is entrepreneurial in itself. One cannot get away with it because that’s what you inhale all the time. Besides, Gujarat is power surplus state, so we do not have to worry about frequent power cuts. If we have production capacity, we can keep our plants running day and night.

In addition, road connectivity is also very accessible throughout the state and also

36 | CELERITY • September 2017

inter-state. If we talk about the cost of operations and manpower, then Gujarat has cost effective labor, that too in abundance.

Gujarat also has the longest coast line in the country with the highest number of ports.

We have also observed that products with the ‘Made in Gujarat’ label were very highly regarded in Uttar Pradesh. So, our company was registered in Gujarat.

How did you plan to venture into fruit beverage business which is a very crowded category and dominated by big players?

We hail from Varanasi and no one in our family had ventured into business earlier (most of family is into farming in UP). I was a government employee of ONGC

in early 1980s. I bagged the job through sports quota as I was an excellent Volleyball player. A few years later, I ventured into real estate business but soon realized food and beverages sector will never be out of season. When I started the business, there were no mentor or capital reserves available for me. Unlike today, where there wasn’t a conducive environment for entrepreneurs; I had to arrange everything from scratch to form my ‘start-up,’ so to say. Personal savings and help from friends/ relatives formed the basis for initial capital.

We started outsourcing manufacturing for our mango based fruit juice from a unit in Mumbai and launched the mango drink brand ‘Mango Sip’, which is our first product.

Focusing on strengthening distribution network and realignment of supply chains are the key to making businesses GST ready. With GST in effect, companies will have to focus on logistics and relook at the procurement process subsequently. Moreover, there might be a need to train vendors and distributors with what to expect from GST roll-out.

INTERVIEW Swimming against the tide, we chose to launch Mango Sip in rural and semiurban markets, like in tier II and III cities.

We realized these markets were underpenetrated by leading beverage brands and wanted to fill the gap. Our company also made its products available in Indian Railways, the lifeline of India.

While steadily marking our presence across rural markets, amid growing demand, our company launched its first manufacturing unit in Vadodara in 2005, along with setting up an additional line to produce tetra pack fruit packs in 2007. Henceforth, it launched one more manufacturing unit in Vadodara and one each in Varanasi in Uttar Pradesh, Dehradun in Uttaranchal and Ambala in Haryana over the years. A coincidence was, our brand ‘Fruits Sip’ entered the market just a day after Prime Minister Narendra Modi talked about increasing the soft drink content in aerated beverages.

What were the initial challenges faced and how did you overcome them?

In the initial days, we focused on staying local and targeted the markets in and around Varanasi only. Thus, apart from initial hiccups that any business faces, our main challenge was to establish our brand ‘Mango Sip’ in a market, which was already dominated by major mango drink players.

We slowly expanded our reach while staying close to rural markets. We did not have any advertising budget and it was through good relations with distributors that we survived in a brand driven competitive market.

How do you perceive this category and how are the growth dynamics?

Owing to changing lifestyles and disposable incomes, the fruit juices have created a place for themselves in household consumption, social gatherings, and snacking. Due to their accessibility and convenience, and anytime-consumption, out of home consumption of fruit juices are becoming increasingly popular. Studies have also shown that small size individual Tetra packs are mostly preferred over PET bottles.

Among flavors, mango is the popular one with an 80 percent market share by volume. In rural areas, consumers are generally price sensitive and mostly prefer conventional, homemade beverages, soft drinks, etc. However, in the recent times, consumers in rural markets are also starting to move towards innovating products with a healthy tag, which is expected give boost to fruit juice market.

You have recently ventured into packaged fruit drinks. How’s that segment shaping up in India?

Manpasand Beverages is one of India’s fastest growing fruit juices manufacturing

company. We are also India’s only listed pure-play company in the beverage sector.

Our flagship brand ‘Mango Sip’ is extensively spread out in rural and semi-rural regions and now it is being brought into urban markets through modern retail and tie ups with various food and ice cream retail majors. With a view to expand its product portfolio and target the urban markets, in 2014 we launched its ‘Fruits Up’ range of products which offers premium fruit juices and carbonated fruit drinks in different flavours. Without any synthetic base, 'Fruits Up' is made up of natural ingredients. With ‘Fruits Up’, the company plans to capture part of the huge carbonated drinks market, which is estimated to be worth around 25,000 crores.

The market size of beverage industry in India, which consists of juices, carbonated drinks and bottled water, is estimated to be worth around Rs65,000 crores and this market is estimated to grow at CAGR of more than 20%. The Indian packaged juice industry size is about Rs8,000 crores and it has been growing at more than 30% per annum in the last few years and will maintain that pace in future as well.

How do you plan to work on your retail presence and on-the-shelf strategy?

urban market. Firstly, we have tied-up with major QSR players to develop stronger brand recognition for our products among the consumers. Some of the major ones have been Barista, Goli Vada Pav, Heritage Group, etc. To increase our products availability across all retail formats, we have been forming key alliances with various domestic and global companies to further such as SPAR, Reliance, Metro Cash and Carry, etc. Our flagship product, ‘Mango Sip,’ emerged as one of the fastest selling fruit drinks at SPAR’s retail outlets last year. We have also tied up with IRCTC e-catering.

You are majorly targeting rural and semi-rural markets. Tapping those markets is a logistical nightmare.

How are you planning to manage that?

Currently we have built a strong network of more than 4,00,000 retailers, over 2,500 distributors, and over 250 super stockists covering 24 states. Also, with our 4 new plants coming up across India, we plan to address the logistics issue with our manufacturing facilities being closer to the target markets.

Since our listing in 2015, we have adopted an aggressive expansion strategy wherein our main focus is on the penetration in the

What are the USPs of your company that set you apart from the rest and specifically the giants who are ruling the market share for quite a long time?

With ‘Fruits Up’, the company plans to capture part of the huge carbonated drinks market, which is estimated to be worth around 25,000 crores.

How are you streamlining supply chain networks for your organization?

The Rs700 crore plus turnover Manpasand Beverage Limited has the unique distinction of being the only pure play company in this sector in the Indian capital markets. Our strong distribution network pan India & our strong presence in rural and semi-urban markets give us an edge. Also, company has adopted the winning formula of focusing on categories and price bands where there is no competition virtually.

To keep our supply chain streamlined, we

CELERITY • September 2017 | 37

INTERVIEW are planning to expand our production capacity in four different locations of the country. Manpasand has formalized plans to set-up four new manufacturing units, out of which construction work has already begun for new plants in Sri City, Vadodara & Varanasi. This decision is taken keeping in mind a lot of factors.

Primarily it’s decided to keep our supply intact that might have affected because of logistics time and also cost.

Another reason is the strategic benefit to company and also the consumers.

Selling our products from Gujarat to Tamil Nadu will increase both, time and costing, which will be ultimately on customer’s shoulders. We don’t want to do that.

In addition, just increasing production capacity at one place is no more feasible.

India is developing from all corners, and to match that pace, we too have to expand in all corners of the country.

How is GST slated to impact your business growth momentum?

Placing fruit juices under the 12 per cent tax category is a good move and provides incentive for juice manufactures to increase their capacity to cater to the rising demand from consumers. Wholesalers and retailers will now be online and it will be easier to track them and service them.

Hence the system will become more transparent. In terms of aerated drinks being taxed at 28 per cent, there might be some short-term pinch, but in the longrun will benefit all the organized players of the beverage industry.

Moreover, focusing on strengthening distribution network and realignment of supply chains are the key to making businesses GST ready. With GST in effect, companies will have to focus on logistics and relook at the procurement process

UP, CLOSE & PERSONAL Dhirendra Hans Raj Singh, a pioneer of the Indian beverage industry, grew up around a humble beverage – water drawn from the village well near which he played as the child of a farmer. He was born in 1962 in Varanasi. In his early days, he used to go around farms & fields, orchards & riversides with his grandfather. He observed that during free time, his grandfather used to offer fresh drinking water drawn from the well to friends & even unknown travellers on the village road. And today, he is revitalizing refreshment to countless gratified customers across India.

From nothing, he has singlehandedly created one of India’s largest pure play beverages company in under two decades in spite of stiff competition from many organized and unorganized players. Now he has set his sights firm on crossing the Rs1,000 crore sales mark in the coming years. subsequently. Moreover, there might be a need to train vendors and distributors with what to expect from GST roll-out.

What are the missing links that you feel entrepreneurs in India face while starting business and how can those be eradicated?

Major challenges that entrepreneurs in India face while starting business include lack of alternate funding options, mentorship, government policies surrounding regulatory entry and supportive exit policy. We would say these challenges are weak links and not missing links as there is an improvement in all of above factors, though there are scopes

of major improvement if the government wants to raise India’s ranking in Ease of Doing Business. Government’s schemes of Startup India, Skill India, Digital India and Make in India are intended to lessen these challenges for entrepreneurs.

What do you feel about the government’s recent initiatives to offer a conducive business environ?

Government is aware about role of entrepreneurs in improving employment scenario in India and offering conducive business environment. Above mentioned Government schemes have been designed to improve India’s overall ranking in ‘Ease of Doing Business’ and generate awareness about opportunities in manufacturing sector in India. Necessary reforms are required in two criteria where India is facing challenges and is ranked low – enforcing contracts and registering property. We believe over the course of next few years, India’s rank will definitely improve.

What are your future plans?

While we continue to increase our significant presence in rural and semi-rural markets, we have also started aggressively tapping into the urban markets where our presence was minimal until recently. With the set up for new plants, we are looking at doubling our current production capacity. We will also come up with more new plants in the coming days to meet the rising demands of the consumers.

What’s your advice for the new age entrepreneurs to cautiously tread this journey?

With the advent of technology and globalization, the world is changing fast and new age entrepreneurs have to bring in adaptability, innovation and passion to cautiously tread this journey. Unless the entrepreneur is missing any of above three, his/her journey would be mired in ever-changing world of business.

Dhirendra Singh is graduated from Varanasi and has subsequently been trained at Sports College Lucknow. He has represented his home state in various state-level sports events across the country. Indeed, the demonstration of excellence in sports led to an offer from ONGC, India’s largest oil & gas player, which he accepted. Apart from orchestrating year-on-year increase in achievements in all departments of the manufacturing and marketing cycle, Singh has inspired Manpasand's record market exploration and expansion at almost all manufacturing and processing facilities.

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