THE GREAT INDIAN LOGISTICS OPPORTUNITY

THE GREAT INDIAN LOGISTICS OPPORTUNITY

FTWZs | Rail & Rail Infrastructure | Industrial & Distribution Hubs Forwarding | Supply Chain Technology & Management | Transport & Handling

INDIA’S GROWING CONTRIBUTION TO WORLD TRADE

INDIA’S GROWING MERCHANDISE EXPORTS

11.1

1.31.4

Export – India’s % contribution to world trade

2007 2008 2009 2010

%%

%%

-10

0

10

20

30

40

50

60 51.4

29.6

9.9

-7.3

%

%

%

%

% Growth of exports (2007-10)

INDIA’S GROWING MERCHANDISE IMPORTS

1.5

1.8

22.1

2007 2008 2009 2010

Import – India’s % contribution to world trade

%

%

%%

-10

0

10

20

30

40

50

60 5145.9

-2.5-9.6

%%

%%

% Growth of imports (2007-10)

India’s world ranking in terms of importing globally produced merchandise moved from 18 to 13 during the period 2007 to 2010

India’s world ranking in terms of exporting globally consumed merchandise moved from 26 to 20 during the period 2007 to 2010

INDIA & CHINA – A STUDY IN CONTRASTS

2005 2006 2007 2008 2009 2010 2011 -

10

20

30

40

50

60

70

80

China's Telecom pene-tration in '05 - 30 %

China's Telecom pene-tration in '11 – 72 %

India's Telecom pene-tration in '05 - 4.8%

India's Telecom pene-tration in '11 - 73.3 %

China India

% o

f Pen

etra

tion

Mobile Subscribers per 100 people Containers (TEU) Processed per 100 people

2005 2006 2007 2008 2009 2010 -

2

4

6

8

10

12

14

6.91

12.18

0.46 0.78

China India

THE OPPORTUNITY OF INDIA

*PV: Passenger Vehicles

62%

28%

7%

2%

2005

Low

Middle

Upper Middle

High

49%

35%

13%

4%

2010

Low

Middle

Upper Middle

High

% of households across income brackets

19%

33%

32%

10%

2020E

Low

Middle

Upper Middle

High

Definitions:High: Above $10k Upper Middle: $5k-$10kMiddle: $2.5k-$5k; Low: Up to $2.5k

Low per capita consumption Demographic drivers India Opportunity

Paper (kg)

9

227

PV* (per 1000)

12

451

Toothpaste (gm)

127

500Steel (kg)

55

206

Copper (kg)

0.5

2.7

Aluminum (kg)

2

22

Cement (kg)

176

433

Per capita consumption

THE INDIAN BUSINESS EVOLUTION

1970 ONWARDS

KEEPING IT IN THE FAMILY

1980 ONWARDS

INDIA EMBRACES

TRADE

1990 ONWARDS

IT ENABLES INDIA

2005 ONWARDS

THE ERA OF INFRA

2012 ONWARDS

WHAT’S NEXT?

2000 ONWARDS

A VOICE TO THE PEOPLE

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020$ 0

$ 500

$ 1,000

$ 1,500

$ 2,000

$ 2,500

$ 3,000

$ 3,500

YEAR

INDI

A'S

GDP

(IN B

ILLIO

NS

OF

USD)

GDP growth from 2012 assumed at 6% p.a.

MAJOR SUCCESSES OF FTWZ – ‘game changer for global economies’

6.8%

10.8%

13.1%

14.0%

16.2%

22.2%

46.7%

70.1%

Easy access to labour supply

Infrastructure offered by Jafza

Proximity to suppliers

Proximity to customers

Jafza 'brand name' and reputation

Proximity to Jebel Ali Port

50 year zero tax guarantee

100% Foreign Ownership

0

20000

40000

60000

80000

100000

120000

1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005

Source: PWC report for JAFZA FTZ

ATTRACTIVENESS OF JAFZA

EMPLOYMENT IN JAFZA AND TENANT COMPANIES (2006)

JAFZA contributes over 26% of Dubai’s GDP and generates 160,000 direct jobs by servicing over 6,400 companies from the zone and contributes to 25% of Dubai Port’s container traffic

JAFZA

Singapore FTZ’s has over 7,000 companies operate through these zones. Due to FTZs this island nation has become the gateway to Southeast Asia & a Global Distribution Hub for international companies

SINGAPORE

WAIGAOQIAO

Waigaoqiao FTZ in Shanghai has over 9,300 companies registered in the zone, including 135 of the Fortune 500 companies. From an economically backward country in 1970 to its gigantic success, FTZs have been the single most critical macroeconomic factor for China’s rise

THE BIG THREE REASONS AS TO‘WHY FTWZ’ FOR INDIA

INDIA’S GROWING PPP

2005 2010 2015 2020 20250

200

400

600

800

1000

1200

1400

1600

1800

Year

While Consumption in India will grow in real terms from USD 378 billion presently to USD 1.56 trillion by 2025 a fourfold increase, reality is that :

India ranks 13th in terms of importing world products, consuming just over 2% of globally produced merchandise, but growing @ 35%

4.1X(source: Mckinsey Report)

INDIA TRAILING IN THE MANUFACTURING SPACE

While by 2020, India is projected to have an additional 47 million working population, almost equal to the total world shortfall, with an average Indian age of 29 fuelling our ability to become a manufacturing mecca of the world, reality is that:

India ranks 20th as per WTO in terms of exporting world products contributing just over 1.4% of globally consumed merchandise, but growing @ 31%

India Dubai Singapore China0

20

40

60

80

100

120

140

160

180

9 1228

163

Cont

aine

r Thr

ough

put (

in

mill

ions

of T

EUs)

India's container throughput in CY10 was around 9 million TEU's, as compared to Dubai (12 million), Singapore (28 million) & China (163 million)

Indicating zero penetration to the Value Addition, Hubbing and Re-Export market leveraging our cost and skill arbitrage

INDIA INCOMPETENT AS A REGIONAL HUB

The extended potential will also generate three times additional indirect revenues due to increased supporting activities and will contribute USD 22 billion (INR 110,000 crores) to India’s GDP

BUSINESS POTENTIAL FOR INDIA

Consolidation / De-consolidation cargo business constitutes approximately USD 12.47 billion to the GDP and 19.2 million TEUs

Thus, if India realizes 30% of Dubai’s & Singapore’s cargo volumes it will translate to an additional USD 7.36 billion (INR 36,000 crores) as a direct contribution to India’s GDP & increase container volumes at Indian ports by 7.56 million TEUs

Consolidation/ De-consolidation constitutes approximately USD 12.08 billion to the GDP and 6 million TEUs

30% of this potential translates to USD 3.62 billion to the GDP and 1.8 million TEUs for INDIA

30% of this potential translates to USD 3.74 billion to the GDP and 5.76 million TEUs for INDIA

To/FromSingapore

To/FromDubai

ABOUT FREE TRADE & WAREHOUSING ZONES (FTWZ)

WHAT IS IT ?

GOI Introduces the Free Trade & Warehousing Zones Policy, as part of Foreign Trade Policy (FTP) 2004-2009 Governed by the SEZ ACT,2005 & SEZ Rules,2006 Warehousing zone designated as foreign territory within India

WHAT IS IT INTENDED FOR?

To make India into a global trading hub like China, Dubai and Singapore

ACTIVITIES ALLOWED WITHIN AN FTWZ

Packing Labeling Strapping CratingBubble wrapping

Tagging Painting Cutting Bagging

Quality Assurance

Repairs & Maintenance

Cartonization RefurbishmentPalletization Consolidation

WashingStorage Handling Transportation Documentation Bottling

BARRIERS TO ENTRY FOR DEVELOPING & OPERATING FTWZs IN INDIA

Min 100 Acres contiguous land with

100,000 SqMbuilt up area at strategic locations

Approvals from State & Central Govt (Informal &

Formal Approval,

Notification)

FTWZ in a sector specific

SEZ cannot cater to any unit outside the sector

specific SEZ

Expertise in developing &

operating FTWZs and in

logistics & supply chain

activities

Integrating hard and soft

logistics infrastructure to be able to

service clients pan-India

Offering ‘one throat to catch’ end-to-end unified logistics & supply chain services to global customers

LAND APPROVALS RULES EXPERTISE SERVICE CAPABILITY

ENTRY BARRIERS BUSINESS SCALABILITY BARRIERS

INDIA’S FIRST – ARSHIYA’S FTWZ NEAR JNPT (OPERATIONAL)

24x7 On-Site Custom Clearance House

State-of-the-Art Infrastructure with World class Safety, Equipment & Maintenance Facilities

Connectivity to our Pan-India Rail Network accelerating distribution through aggregation at strategic locations

State-of-the-art ICD/CFS facility with superior Safety and Hazardous cargo handling capacity of 10,000+ containers including reefers

165 Acre State-of-Art Facility 24km from JNPT Port featuring:

MUMBAIFTWZ MASTER PLAN

FTWZ – BENEFITS TO CUSTOMERS

FOR IMPORTS

Flexibility towards end-

distribution in India

Duty deferment benefits (freeing

up working capital)

Quality control capability prior to

duty- payment

Exemption on SAD, VAT & CST on

imports through FTWZ

Hassle-free re-export regulatory /

duty implications

Reduced buffer stocks

Service Tax exemption on

services availed; including

transportation inside India

Lowered product costs

Foreign exchange transaction

capability

FOR EXPORTS

Products from India entering the FTWZ

are treated as deemed export providing

immediate benefits to suppliers

Local Tax Exemption (eg. CST, Sales Tax,

Excise & VAT) on all activities conducted

inside the FTWZ

Export quotas able to be met for

companies exporting into FTWZ

Increased efficiency through lowered

reverse logistics through quality control

before dispatch from India

Foreign exchange transaction capability

Increasing supply chain efficiencies

(forward & reverse) while enhancing

capital cash flow

Service tax exemption on all activities

conducted inside the FTWZ including rental

& labour

Exemption from custom and stamp duty on

products imported into FTWZ; meant for re-

export out of India

Income tax exemption on profit where

applicable

Hassle-free re-export process

Permission of 100% FDI for the set-up of

units by the unit holder of the FTWZ

Ability to leverage India’s cost, skill &

geographic positioning advantage as a hub

for regional/global distribution post value

optimizing activities

FOR RE-EXPORTS

FTWZ - UNIQUE BENEFITS FOR IMPORTS

Flexibility towards end distribution in India

Duty deferment benefits (freeing up working capital & increasing sales )

Quality control capability prior to duty- payment

Exemption on SAD, VAT & CST on imports through FTWZ

Hassle-free re-export regulatory /duty implications

Reduced buffer stocks

Service Tax exemption on services availed; including transportation inside India

Lowered product costs

Foreign exchange transaction capability

GAME CHANGER BENEFITS OF FTWZ

CASE STUDY BENEFITS OF IMPORTING PRODUCTS

INTO INDIA THROUGH THE FTWZ (DEEMED FOREIGN TERRITORY)

GLOBAL AUTOMOBILE MANUFACTURER’S CURRENT SUPPLY CHAIN

International Suppliers





IndianPorts India

Manufacturing Plant

Dealers in India

Dealers in India

Dealers in India

Dealers in India

Dealers in India

Supply of spares and parts to Dealers in India for after sales and service

Rejection after duty payment

Storage of Spares, Parts and Components for after sales & service post duty payment

Rejection after duty payment

Duty paid storage of spares implicating higher working capital of the supply chain implicating higher cost of product

Limitations in volume of storage increasing lead time for customer delivery

Higher lead time for client delivery creating customers dissatisfaction (unauthorised spares in the market)

Quality control post duty payment increasing hassle for re-export and therefore cost

ARSHIYA’S SOLUTION THROUGH FTWZ






FTWZ

Dealers in India

Dealers in India

Storage of Spares, Parts and Components for after sales & service without duty payment

Rejection without duty payment

Regional distribution of spares and parts enabling the income tax exemption on the re-export of imported spares and parts

Rejection without duty payment

International Dealers



Duty deferred storage reducing working capital and therefore cost of product

Reduction in lead time in supplying the spares for after sales and limitless capability of spares storage

Quality control before duty payment enabling hassle free re-export process and therefore lowering of associated supply chain costs

Regional Distribution capability leveraging cost/skill arbitrage of India in addition to Income tax exemption of profits from this activity

FTWZ - UNIQUE BENEFITS FOR EXPORTS

Products from India entering the FTWZ are treated as deemed export providing immediate benefits to suppliers

Local Tax Exemption (e.g. CST, Sales Tax, Excise & VAT) on all activities conducted inside the FTWZ

Export quotas able to be met for companies exporting into FTWZ

Increased efficiency through lowered reverse logistics through quality control before dispatch from India

Foreign exchange transactions capability

Increasing supply chain efficiencies (forward & reverse) while enhancing capital cash flow


CASE STUDY BENEFITS OF EXPORTING PRODUCTS

INTO INDIA THROUGH THE FTWZ (DEEMED FOREIGN TERRITORY)

GLOBAL FMCG MAJOR’S CURRENT SUPPLY CHAIN

93 suppliers from India , Karachi(18) Bangladesh(15), & Sri Lanka (4)

All the SKUs are sent by the suppliers directly to DC in Europe by suppliers

Breaking and re-invoicing of units as per different store demands is conducted before dispatches to the stores.

Reverse logistics of rejected materials

Supplier 93

Supplier 2

Supplier 1

DC in Europe

For value addition

Various Ports

across India

Store 1

Store 2

Store

173

Distribution Center (DC) in Europe maintained only due to invoicing regulatory limitations where consolidations of products sourced from India is done

Increased supply chain cycle lead time and associated costs

Company’s India trading arm responsible for any under/over invoicing or customs issues with respect to shipments of suppliers without having any control over process

Quality control currently in European DC causing higher product returns

European DC doing labeling for products made in India/Asian sub-continent


Supplier in Bangladesh & Sri Lanka

Supplierin Pakistan

Supplier 93

Supplier 2

Supplier 1

FTWZ

DC in FTWZ forValue addition

Store 1

Store 2

Store

173

FTWZ removes regulatory limitations of consolidating product from suppliers in India, Sri Lanka, Bangladesh & Pakistan in Asia

Significant reduction in DC operations costs of India Vs. Europe

Value addition for end-distribution to world-wide stores done in FTWZ in India lowering costs.

Reduction in suppliers working capital due to faster payment cycle

Lowered reverse logistics cost

Enhanced control and efficiency in inventory management - closer to the suppliers

FTWZ - UNIQUE BENEFITS FOR RE-EXPORTS

Service tax exemption on all activities conducted inside the FTWZ including rental & labour

Exemption from custom and stamp duty on products imported into FTWZ; meant for re-export out of India

Income tax exemption on profit where applicable

Hassle-free re-export process

Permission of 100% FDI for the set-up of units by the unit holder of the FTWZ

Ability to leverage India’s cost, skill & geographic positioning advantage as a hub for regional/global distribution post Value Addition activities


CASE STUDYBENEFITS OF HUBBING & VALUE

ADDITION OF PRODUCTS IN INDIA

THROUGH THE FTWZ (DEEMED FOREIGN TERRITORY)

GLOBAL MOBILE MANUFACTURER’S CURRENT SUPPLY CHAIN

CHINA

GERMANY

USARegional Value

Addition, Hubbing &

Distribution Centre in

Singapore/Dubai

Indian Subcontinent

Middle East

Far East Asia

South East Asia

Africa/Eastern Europe

Supply of Charger, Earphone and packaging material

Supply of completely packaged mobile phones

Supply of battery

Supply of handset

VOS like Labelling, packaging, assembly and consolidation based on the country of export

Higher cost of operations in Singapore i.e. Labour, Water, Electricity, Materials etc.

Higher charges for Value Optimising Services (VOS) like labeling, packaging, assembly etc. Increasing cost of product

Technically skilled manpower expensive and not abundant

Cost of economies of scale


CHINA

GERMANY

USA

Indian Subcontinent

Middle East

Far East Asia

South East Asia

Africa/Eastern Europe

Supply of Charger, Earphone and packaging material

Supply of completely packaged mobile phones

Supply of battery

Supply of handset

VOS like Labelling, packaging, assembly and consolidation based on the country of export

FTWZ

Lower cost of operations in India i.e. Labour, Water, Electricity, Material etc.

Minimum charges for Value Optimising Services (VOS) like kitting, labeling, packaging, assembly etc. decreasing cost of product

Local tax exemptions (Excise, VAT etc.) on all the value added service inside FTWZ

Abundance of technically skilled manpower

ARSHIYA’S MUMBAI FTWZ

Main Gate Custom office Entry Customs Office

Warehouse External View Container Yard Stuffing at Container Yard

Docking Area Docking AreaCargo storage inside

Warehouse

ARSHIYA’S MUMBAI FTWZ - Over Dimensional Cargo (ODC) Yard

ARSHIYA MUMBAI FTWZ : SNAPSHOTS

Warehouse Internal View Temp. Controlled Area VOS Area

Marshalling Area Server Room Electrical Sub-Station

CCTV CamerasGenerators for Power Backup Security System at Warehouse

FTWZ WORLD CLASS INFRASTRUCTURE: WAREHOUSES AND YARDS

World-class Warehouses of 13 M height with G+6 palletized racking system, super-flat flooring & state-of-the-art Material Handling Equipments (MHEs)

Dedicated & customized Office space & area for Value Optimizing Services (VOS) within the Warehouse

Mezzanine storage area with temperature controlled HVAC system & optional humidity control

Container Yard (CY) with Pavement Quality Concrete (PQC) flooring for stacking containers in a G+5 stacking system using state-of-the-art Rubber Tyre Gantry Cranes (RTGCs) & Reach Stackers

Maintenance & Repair (M&R) Yard, Scrap Yard & an Empty Container Yard, Food court, Medical dispensary with Ambulance at site

Open & covered Over Dimensional Cargo (ODC) Yard with Paver-Block flooring for storage of cargo that cannot be stored in the Warehouse

FTWZ WORLD CLASS INFRASTRUCTURE

Business Ancillary Services: On-site Office spaces, Banks, Insurance, Currency Exchanges & CHAs that reduce operating costs for companies operating in the Foreign Territory

Fire & Safety Amenities: Primary & Secondary fire fighting systems along with Tertiary Fire Engine at FTWZ site with trained Fire Fighting Professionals. Personnel having expertise & certification in handling DG Cargo

Secure IT Connectivity: Comprehensive IT system with network infrastructure such as server room within each warehouse & a centralized data center with uninterrupted data, voice & video connectivity & 100% back up

Supporting Infrastructure: Weigh bridge, road network with up to 6 lanes to avoid congestion, Fuel Station in the processing zone, uninterrupted water & power supply systems & 100% power back-up using DG Sets

Earthquake Resistant & Storm Water Drainage System: Warehouses designed as per Seismic Zone 4 requirements. In addition the FTWZ has a capacity to handle rainfall with peak intensity of 156 mm/ hour or 10 cubic m per sec, i.e. 3 times the highest recorded level of rainfall in Mumbai.

Corporate Social Responsibility: Ambulance and Fire Tender to service not only Arshiya’s FTWZ but also the residents of the neighboring area

FTWZ – THERE’S A WAY TO SUSTAINABILITY

STP: By way of a sewage treatment plant, recycled water is used for irrigation purposes

Reutilization of excavated rocks: Excavated rocks are used for project construction thereby conserving resources

Green Zone: At Arshiya we ensure that more than 10% of the project area is covered under green zone along with specific selection of plant species

Natural Lighting & Insulation: Optimum, natural sunlight presence along with provision for ambient temperature at the FTWZ Site via articulate architecture planning/construction ensures optimal electricity consumption and ensures harmony at workplace

Rain Water Harvesting: Bore wells, recharge pits and natural ponds provide for maintenance of ground water level

Environmental Consciousness: At Arshiya it is our constant effort to emit no Industrial effluents and contribute towards maintaining sanctity of the environment through Waste Disposal Units

At Arshiya, we believe there is a way to contribute to the environment, play a pertinent sustainable role through varied eco friendly and environment effective measures. Here’s a look at few :

FACILITIES & VALUE OPTIMISING SERVICES (VOS) IN FTWZ

FACILITIES IN THE FTWZ

STANDARD WAREHOUSE

ODC YARD (OPEN & COVERED)

CONTAINER YARD (CFS)

CHILLER/FREEZER

HAZARDOUS STORAGE

TEMPERATURE CONTROLLED STORAGE

STRONG ROOM

OFFICE INFRASTRUCTURE

VALUE OPTIMISING SERVICES (VOS) IN FTWZ

VOS ON CONTAINER

Customs Documentation

Incoming & Outgoing Transportation

(Port to FTWZ & return)

Gate Coordination (incoming &

outgoing)

Survey of Cargo/Containers

(incoming & outgoing)

Handling / Loading & Unloading

(inbound & outbound)

Weighment of Containers

Fumigation of Containers

Scanning of Containers

Lashing / Unlashing Services etc.

VOS ON PALLETS / BREAK-BULK OF PALLETS

Carting & Shifting of the Pallets

Palletization

Carbonization

Strapping

Shrink Wrapping

Packaging / Re-packaging

(into smaller parcels/cases /cartons)

Labeling / Re-Labeling

Bar-Coding

Strapping, refurbishment

Tagging, shrink / stretch / bubble

wrapping etc.

Quality Control (QC)

Sorting / Assorting

Kitting / De-kitting

Bottling/ Blending

Assembling

Cutting & Threading

Consolidation

Agglomeration

Repairs & Maintenance

CKD/ SKD assembly

Cutting/ Polishing

Painting/ Coating

Filming/ Re-sizing

Splitting

Threading

Coupling, etc.

HIGH END VOS

HOW DO WE CHARGE OUR CUSTOMERS

Understanding of client’s business model and Pain areas

Creating consolidated business proposal specific to client’s business model with one price inclusive of all elements like Transportation to and from FTWZ, Storage, VOS etc..

Pricing strategy based on client’s VOS scope and throughput

Also based on client’s industry standard pricing practices e.g.,For Steel Industry: Per ton basisFor Wine Industry: Per case/piece basisFor Large Importers and Exporters: Per Container Basis (Movement from Port to FTWZ and back including

storage and all other services)

MAJOR CUSTOMERS

All above logos are property of respective owners

REVENUE MODEL OF AN FTWZ CLIENT

Sector Trading (Import & Re-Export)Product Type FMCG Products such as Perfumes, Sports Items, Deodrant, Shoes etc.

REVENUE MODEL

Rental Per Pallet Per TEU

Racked Warehouse Rent INR 800/pallet 800 16,000 Avg. 20 Pallets/Container

Value Optimizing Services (VOS) Comments

Activity Rate Per Pallet Per TEU

Gate Charge (Inbound) INR 150/TEU 7.5 150

Survey Charges (Inbound) INR 150/TEU 7.5 150

Handling (Inbound) INR 100/Pallet 100 2,000

Handling (Outbound) INR 100/Pallet 100 2,000

Gate Charge (Outbound) INR 150/TEU 7.5 150

Survey Charges (Outbound) INR 150/TEU 7.5 150

Total Compulsory VOS 230 4,600

Packaging INR 20/Carton 200 4,000 A. 1 Pallet = 10 CartonsB. 50 pieces per carton

C. Total Cartons/Container = 200 D. Total Pieces/Container = 10,000

Labeling INR 2/Piece 1,000 20,000Bar coding INR 0.50/Piece 250 5,000

Transportation (Inbound) Rs. 4400/TEU 220 4,400

Transportation (Outbond) Rs. 4400/TEU 220 4,400 In this case all the incoming cargo will be palletized again for re-exportPalletization INR 500/Pallet 500 10,000

Total Discretionary VOS 2,390 47,800

Total VOS 2,620 52,400Ratio (VOS Revenue / Rental Revenue) 3.28

No. of Cycle in a month 3Actual VOS/Rental ratio 9.83

Per Piece Rate – INR 6.9934% reduction on current cost for

customer

THE FTWZ REVOLUTIONIZING THE INDIAN LOGISTICS LANDSCAPE

SOURCES OF REVENUE THROUGH THE FTWZ

RENTAL

VOS ON CONTAINER

FORWARDING

HIGHER END VOS

VOS ON PALLETS

RAIL & RAIL INFRASTRUCTURE

TRANSPORT & HANDLING

SUPPLY CHAIN TECHNOLOGY & MANAGEMENT

INDUSTRIAL & DISTRIBUTION

HUBS

THROUGHPUT

REVENUE FROM RENTALS OF WAREHOUSE, CHILLER/FREEZER, CONTAINER &ODC YARD, OFFICE

SPACE

REVENUE FROM VALUE OPTIMISING SERVICES (VOS) ON

CONTAINERS AND PALLETS

REVENUE FROM UNIFIED SUPPLY CHAIN INFRASTRUCTURE

SOLUTIONS

INDIAN LOGISTICS IN-EFFICIENCIES

LOGISTICS SPEND AS A % OF GDP INEFFICIENCIES IN LOGISTICS IN INDIA

Absolute Value inefficiency & market potential of USD 80 Billion on USD 1.6 Trillion GDP owing to excess spending on Logistics

India burns nearly USD 2.5 Billion of fuel due to trucks idling on interstate check-posts

Avg time to clear cargo at ports in Singapore is 3-4 days vs 19 days at ports in India

% OF CONTAINERIZATION OF TRADE SHARE OF ROAD VS RAIL TRANSPORT

India14%

Developed Countries9 – 10%

India World0

10

20

30

40

50

60

70

80

90

100

% o

f Con

tain

eriz

ation

of

Trad

e

25 %

60 - 70%

Rail: 30%Road: 65%

Others: 5%

An Economies of Scale problem requires an Economies of Scale solution

CAPITALIZING ON INDIA’S LOGISTICS & SUPPLY CHAIN OPPORTUNITY - WHAT DOES IT TAKE?

Free Trade & Warehousing Zones (FTWZs) :To enable EXIM cargo Consolidation, Value Addition and allow India to become a Regional Trading Hub

Industrial and Distribution Hubs:For Domestic distribution, cargo value addition and consolidation for Rail transportation to remove dependency on road

Rail and Rail Infrastructure : Comprises innovative Customized Containers for specific product types, Service Level agreements on timeline

and deliver with Key Performance Indicators State-Of-The-Art Rail Terminals, at strategic locations across India with modern equipment to increase speed

of loading/unloading and churn

Unified Logistics & Supply Chain Infrastructure with Supply Chain Technology & Management, Transport & Handling and Forwarding :Global ocean & air logistics, domestic forward and reverse supply chain management with ownership on reduction of working capital and product visibility & control, through technology

ARSHIYA INTERNATIONAL LTD.

FTWZs with integrated ICD/CFS

Rail and Rail Infrastructure

Industrial & Distribution Hubs

Supply Chain Technology & Management

Capitalizing on India’s mammoth logistics opportunity through Unified Supply Chain Infrastructure & Solutions

Partnering towards

Transport & Handling

Forwarding

FTWZ SAI - JULY 2009

SAME VIEW – AUGUST 2010

CONTAINER YARD - AUGUST 2009

CONTAINER YARD - SEPTEMBER 2009

CONTAINER YARD - JULY 2010

CONTAINER YARD - FEBRUARY 2012

SUCCESS OF FTWZ - GAME CHANGER FOR GLOBAL ECONOMIES

Established in 1985, Jebel Ali Free Trade Zone (JAFZA) is spread across an area of 48 sq kms, with

over 6,400 companies operating in the zone, including 120 of the Fortune Global 500

enterprises

Accounts for 25% of all container throughput at Jebel Ali port & 12% of all air freight at Dubai

International Airport.

Over the years it has created over 1,60,000 direct jobs in the UAE through its companies

Increased its revenue at an average of 34% year-on-year

Contributed to Dubai’s GDP at 25% on a year-to-year basis

Accounted for more than 50% of Dubai’s total exports

Accounted for 20% of all FDI inflow into the UAE

Grown its customer base by over 60% in the last four years

Even with an economy which is purely a transhipment hub, with comparatively low level of domestic consumption, FTWZ has been a game changer for Dubai

DUBAI DUBAI

SUCCESS OF FTWZ - GAME CHANGER FOR GLOBAL ECONOMIES

CHINA

FTZs are operational since 1980

Waigaoqiao FTZ in Shanghai is spread across an area of 10 sq kms & over 9,300 companies

registered in the zone, including 135 of the Fortune 500 companies

Other zones being - Zhuhai (3 sq kms), Ningbo (2.3 sq kms), Xiamen (5 sq kms),

Futian (1.35 sq kms), Shatoujiao (0.27 sq kms) & Yantian Port (0.85 sq kms)

From an economically backward country in 1970 to its gigantic success, FTZs have been the single most critical macroeconomic factor for China’s rise

FTZs were first established in the island nation in 1969, today the entire country is a Free

Trade Zone

Notable FTZs being – Keppel (2.59 sq kms), Pasir Panjang (0.65 sq kms), Jurong (0.61 sq

kms),

Sembawang (0.19 sq kms) & Air Logistics Park of Singapore at Changi Airport

Over 7,000 multinational companies operate through these zonesDue to FTZs this island nation has become the gateway to Southeast Asia & a Global Distribution Hub for international companies

SINGAPORE

SINGAPORE

CHINA

Dubai

Mumbai

Singapore

At present, majority of product hubbing & value addition is done in Dubai & Singapore

70% to 80% of these value additions, is done for products meant for Indian market

Compared to Dubai or Singapore, India is much larger market for product consumption and is an emerging manufacturing hub

India has tremendous advantages in terms of cost & skill arbitrage vis-à-vis Dubai & Singapore

Due to its strategic positioning, India is much better suited for being a Transhipment , Value Addition & Global Distribution hub than other economies

INDIA’S STRATEGIC POSITIONING

FTWZ : A GAME CHANGER FOR INDIA

India is world’s 2nd largest developing & fastest growing economy just behind China

With a population of approx 1.1 billion, our domestic consumption comprises 58% of our GDP

Strategically located between South East Asia & Middle East, we have 7,000 kms of coastline & unlike China our population is evenly spread across hinterland

Unlike Dubai, India has a strong manufacturing base where global companies are producing products for domestic as well as export opportunities

Logistics infrastructure is the single largest challenge as well as the biggest opportunity for sustaining India’s fast paced GDP growth

In-efficiencies due to lack of logistics infrastructure & organized logistics, costs India an additional USD 65 billion per year

In a growing economy if logistics infrastructure doesn’t grow at faster pace than the GDP, it would cost India very dearly

Indian economy is losing around 1.5% in GDP growth, due to lack of logistics infrastructure

India loses approximately INR 55,000 crores per year of food produce due to lack of logistics infrastructure

LOGISTICS INFRASTRUCTURE A MAJOR HINDRANCE TO INDIA’S GROWTH

ARSHIYA’S PAN-INDIA INFRASTRUCTURE FOOTPRINT

Planned 150 Train Pan-India Rail Operations with Rail Terminals at strategic locations

RAIL & SUB HUBS

Planned Pan-India, Complimenting the FTWZ Network

INDUSTRIAL & DISTRIBUTION HUBS

FTWZ

Rail Connected, Planned Pan-India

North

West

East

South

Central

ARSHIYA’S KHURJA FTWZ : LOCATION ADVANTAGE

18 km from the new Yamuna Expressway connecting Noida to

Agra 12 km from proposed international airport at Jewar in UP Sikandarabad – the neighbouring Developed Industrial City is < 30 km from the FTWZ Tughlakabad – 80 km Dadri – 60 km Bulandshahr – 20 km About 70 km away from the National Capital Region (NCR)

State-of-the-art ICD/CFS facility with superior Safety and Hazardous cargo handling capacity of 10,000+ containers including reefers

Operations live as of H2FY’12 to be joined by similar models in Central, South & East

315 Acre Comprehensive Facility 90 km from Delhi

Arshiya Rail Infrastructure (50 Acres), including on-site Rail Siding

Side-by-Side FTWZ (135 Acres - launched in Jan 2012) and Industrial & Distribution Hub (130 Acres)

ARSHIYA’S KHURJA FTWZ

Khurja Integrated Infrastructure

Masterplan

ARSHIYA’S KHURJA FTWZ

RAIL INFRASTRUCTURE: SETTING THE PACE OF GROWTH

CURRENT FREIGHT TRANSPORT DISTRIBUTION IN INDIA VIS-À-VIS USA & CHINA

5,275 billion ton-km100% = 5,930

billion ton-km1,325

billion ton-km

Mode Share (percent of Ton-Km)Share estimated for 2007 excluding pipelines

Freight Transport in India is dominated

by road

%

%

%

%

%

%

%

%

%

…. shows India’s high dependency on roads as compared to US/China who have developed rail infrastructure ….

China US India0

10

20

30

40

50

60

70

80

90

100

2237

57

47

48

3630

146

1 1 1

WaterwaysRailRaod

Road

% % %

%

%

%

%

%

%

%

%

%

China’s ratio of Wagons to Locomotives is worse than India (33 against 25), still it had better wagon utilization efficiency.

As far as wagon efficiency is concerned (Tonnage carried X Distance carried), China is 67 % more efficient than India and USA is 150 % more efficient than India.

The real parameter is NTKM or Tonne –Km (Tonnes multiplied by Km travelled). In utilizing the network, China was 5 times more efficient and Russia was 4 times more efficient. (Ton-Km divided by Network Length)

ASSESSMENT OF INDIA’S RAILWAY EFFICIENCY

Country Network length

Freight Tonne carried

Tonne -Kms

No. of Locos

No. of Wagons

Freight Lead

NTKM/ Employee

NTKM/ Route Length

NTKM/ Wagon/ Day

(Km) (Millions) (Millions) (Km) (Millions) (Millions) (Millions)

USA 226,706 1,775 2,820,061 23,990 475,416 1,589 15.08 12.44 16,251

India 63,327 728 480,993 8,110 207,719 661 0.34 7.60 6,344

China 63,637 2,624 2,211,246 17,222 571,078 843 1.07 34.75 10,608

Russia 84,158 1,344 2,090,337 12,063 566,802 1,555 1.85 24.84 10,104

…. showed India’s railway network was not as efficiently utilised as China and therefore prompted policy changes.

With almost same network length as India, China was carrying more than 4 times India’s Tonnage.

China 63,637 2,624

OVERVIEW OF ARIL

BACKGROUND AND OPERATIONS

SELECTED CLIENTS AND AWARDS

Acquired Category I pan-India rail license in 2008, permitting it to transport containerized cargo throughout India

Provides pan-India customized container rail freight movement, and rail terminal services and facilities for transporting domestic and EXIM cargo

Currently has 20 rakes, 4,500 containers and a rail terminal siding at Khurja (New Delhi)

#1 Company in the domestic container segment; #2 PCTO in terms of number of operational rakes

SCOPE OF OPERATIONS

Handling atClient

Premises

Transportationby Road

Handling at Source

Terminal /Siding

Rail Movement

Handling atReceiverPremises

Handling atDestinationTerminal /

Siding

Transportationby Road

Mumbai

Sanand

Morbi KolkataJogbani

Mundra

Pipavav

Guwahati

Chennai

Durai

Jamshedpur

Khurja

Cochin

Ahmedgarh

Malanpur

Vizag

Nagpur

Bilaspur RoadFaridabad

Lapanga Haldia

Bangalore

Vizag

Bangalore

MumbaiChalthan

KolkataSanandHaldia

Rourkela

Jharsuguda

Milavittan

Morbi

Lonand

LoniPatli

Ahmedgarh

ACTL-Faridabad

Batala

Nawa City

Sahnewal

Guwahati

PROPOSED ROUTESEXISTING ROUTES

2012: Private Train Operator of the Year - 2nd Indian Supply Chain & Logistics Excellence Awards 2012

2011: Private Rail Operator of the Year – Gateway Excellence Awards: Supply Chain Management & LogisticsPrivate Rail Operator of the Year, Domestic Cargo – Maritime and Logistics AwardsPCTO of the Year – 5th Express Supply Chain and Logistics AwardRail Operator of the Year – Gateway Media

CUSTOMIZED CONTAINERS

Enhanced Security Arrangement Customized Solutions (Auto Shipments)

Customized Containers for Steel Cargo

Multi-purpose containers for dry-cargo increasing return utilization

Enhanced cargo locking facility inside the containers

Customized containers for carrying various types of cargo

Open top containers increasing speed of loading heavy cargo

ARSHIYA’S INTEGRATED SERVICE ADVANTAGE

Provides end-to-end supply & demand chain solutions

SUPPLY CHAIN TECHNOLOGY & MANAGEMENT

Logistics solutions including end-to-end freight management & transportation services in over 150 countries world-wide

FORWARDING

Implementation and operations of Free Trade & Warehousing Zones (FTWZs)

FREE TRADE & WAREHOUSING ZONES

First and last mile domestic transportation services

TRANSPORT & HANDLING

Strategically located warehousing hubs and rail consolidation across India

INDUSTRIAL AND DISTRIBUTION HUBS

Customized and Chartered Pan India Rail Freight services and state-of-the-art Rail terminal facilities

RAIL AND RAIL INFRASTRUCTURE

GROUP FINANCIAL HIGHLIGHTS

AIL – FINANCIAL PERFORMANCE

428%

EBITDA

FY08 FY09 FY10 FY11 FY12FY08FY09FY10FY11FY12

164%

Revenue

FY08FY09FY10FY11FY12

166%

PAT

12.8%

14.6%

16.4%

19.4%

25.7 %

FY 08FY 09FY 10FY11FY12

EBITDA Margins

Consolidated Highlights FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 H1FY13

Operating Income— ₹ Cr. 401.2 503.0 525.9* 821.5 1057.3 714.4

EBITDA — ₹ Cr. 51.4 73.5 86.1* 159.2 271.6 201.6

EBITDA MARGIN % 12.8% 14.6% 16.4% 19.4% 25.7% 28.2%

PAT — ₹ Cr. 45.4 65.6 98.3 82.0 120.8 70.1

PAT MARGIN % 11.3% 13.0% 18.7% 10.0% 11.4% 9.8%

EPS — ₹ per share 9.7 11.3 16.7 13.9 20.5 11.9

Financial Year ending 31 Mar * Excluding income from sale of software marketing rights at ₹ 38.89 cr

SEGMENTAL REVENUES

51%

25%

24%

Chart Title

Forwarding

` 195.05 Cr. ` 247.96 Cr. ` 372.57 Cr.

Rail

FTWZ

66

60%24%

16%Chart TitleFTWZ

Rail

ForwardingOthers

79%

21%Chart Title

Others

Rail

Forwarding

H1 2011 H1 2012 H1 2013

53%

25%

23%

Chart Title

Forwarding

`372.00 Cr. ` 470. 56 Cr. ` 714.41 Cr.

Rail

FTWZ

62%23%

15%Chart Title

Rail

ForwardingOthers

80%

19%Chart Title

Others

Rail

Forwarding

FTWZ

Q2 FY 2011 Q2 FY 2012 Q2 FY 2013

PROJECT SUMMARY (in INR Cr.)

Project (` in crore) Debt Equity Total O/s debt

Panvel FTWZ – Phase I & II 850 329 1179 850

Khurja FTWZ – Phase I 259 270 529 259

Rail Infrastructure 400 341 741 360

Khurja Industrial & Distribution Hub 399 249 648 399

Total 1908 1189 3097 1868

Notes (Not included in table above):1. Total Debt including non-project loans and working capital loans is Rs. 2430 crore.2. Company has invested 93 crore as equity in Arshiya Central FTWZ (Nagpur) for land acquisition ₹

purpose.3. Company has also invested equity of 112 crore in Khurja FTWZ Phase II₹

INDUSTRY RECOGNITIONS

2012

Private Train Operator of theYear 2012

Institute of Public Enterprise (IPE) HR Leadership Awards 2012

2nd Shine Awards 2012CFO 100 Roll of Honour 2012

Best Managed Company in India 2012Best ELSC Logistics Infrastructure

Company of the Year 2012Supply Chain Visionary of the Year

2012

INDUSTRY RECOGNITIONS

Best Rail Operatorof the Year 2011

Private Rail Operatorof the Year 2011

Achievement Award for Best Project-Urban Infrastructure (2011)

SAP ACE 2011 – SAP Implementation Award

Leading Business Woman of the Year 2011

Private Container Rail Operator of the Year-Domestic Cargo 2011

2011

THE ARSHIYA TEAM

EXECUTIVE DIRECTORS

Sandesh Chonkar Executive Director

Ajay S MittalGroup Chairman and Managing Director

Archana Mittal Joint Managing

Director

EVERYTHING YOU HEAR ABOUT INDIA . . .

11th JANUARY, 2O12 6TH JANUARY, 2O12

Delivered with ready state-of-the-art hubbing and rail infrastructure

The FTWZ claiming business from other regional hubs like Dubai and Singapore

Ten year services legacy leveraged with infrastructure offering a ‘one stop shop’ logistics solution for customers

Fully unified logistics and supply chain delivery capability

Rightly positioned to enable and capitalize on India’s growth

THE OPPORTUNITY OF ARSHIYA

Corporate HQ: 301 Ceejay House, Level 3, Shiv Sagar Estate, F-Block, Dr. Annie Besant Road, Worli, Mumbai - 400 018. Maharashtra, India.Ph: +91 22 4230 5500 /1 /2 Fax: +91 22 4230 5555

Registered Office: Arshiya House, 3rd Floor, Plot No.61, Road No.13, M.I.D.C., Andheri (East), Mumbai - 400093,Maharashtra, India.Ph: +91 22 4048 5300

For more info please write to us at: [email protected]

Copyrights © , All Rights Reserved. Arshiya International Ltd www.arshiyainternational.com

THE GREAT INDIAN LOGISTICS OPPORTUNITY

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