22 October 2019

Table of Contents for Cover Story





Interacion- Anshul Singhal, CEO, Embassy Industrial Parks

EIP Plans to Invest $1 Billion in Warehousing

 

Latent opportunities in the warehousing space are attracting real estate players to capture growth horizons. In an exclusive interview ANSHUL SINGHAL, CEO, EMBASSY INDUSTRIAL PARKS, highlights the perks of having early mover advantages, challenges faced and how Embassy is poised to change the entire warehousing landscape with CONSTRUCTION OPPORTUNITIES.

 

 

What are the current gaps you have witnessed in the warehousing landscape in India and how do you plan to overcome them?

When you are competing with someone, you are either fighting for the same market share or the same revenue. This is not the case for us currently. Embassy Industrial Parks is an early mover in this business and will enjoy the early movers’ advantage for coming few years. And it is difficult to predict the scenario after period. The most important thing and priority is to secure your land locations, which is what we are doing now. We have been in this business for the last three 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. However, 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 in 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 the capital sits idle as we cannot start construction and generate revenues onto the land.

 

 

What’s your advice to the governing authorities to aid in ease of doing business?

What will support the ease of doing business in India is improvement in logistics and infrastructure. The logistic sector in India is predominantly fragmented and slowly developing. 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 to 11 percent every year. This is because of the strong government support and constant reforms. All the policy change and other government initiatives is resulting in the betterment of the sector and making it investment friendly. The progress is visible, but we now need to work towards proper execution of the proposed policies and implementation for a bright future.

 

 

How is the scenario post-GST?

Implementation of GST is a major tax reform for many sectors including warehousing, one integral tax will help to setup a more organized sector. Post the 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. The documentation will not take very long due to reduction of multiple taxes, the process will be smoother. This tax reform is playing a major role in attracting foreign investment. GST is a great move to boost investment in the country. GST implementation is also a golden chance for the sector to restructure itself when it comes to size, locations and services. It is a beneficiary move for the warehousing industry. Due to GST implementation, the logistics expenses can be put off as input expenses. This will enable in building of warehouses at locations away from urban areas also. With one tax, one regime kind of functioning, building anywhere will be equally attractive. More integrated logistics parks can be developed across locations away from urban areas as land is available in a larger format. This further adds more value to supply chain management.

 

 

What are the salient features of a new age logistics infrastructure space and in specific to Embassy Industrial Parks.

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. These comprehensive supply chain strategies are the ones that aid to an increase in the need for integrated logistics solutions. 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 would require new age warehousing. In short, these are exciting times for a company like us.

 

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 three months alone for permissions and approvals on the acquired land. Proper management is the key. We have a whole process to weaken our risks after assessment.

 

 

What are the promising regions for infrastructural development?

We are looking to cater to the booming needs for logistics and warehouses space from sectors such as e-commerce, pharma, healthcare, FMCG, apparels and telecom, among others. We are acquiring land tracts, which can be used to set up modern and well-planned industrial, light manufacturing and warehousing facilities. 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, the 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, Kolkata and Ahmedabad. There will be more than one park in Delhi and Mumbai over the next 3 to 4 years, which will total to 20 mnsqft of leasable area. We plan to buy land with our equity line of 1,600 crore.

 

 

What are your expansion plans?

Embassy Industrial Parks was formed to address the challenges of companies grappling with the building and management of industrial and warehousing spaces in a large, diverse and geographically distributed market like India.Being a forerunner in this sector, Embassy Industrial Park is also one of the few companies contributing to success of Make in India initiative and has signed three MoUs with state governments.

We have already signed lands, which are at various stages of acquisition in Chennai, Delhi, Pune, Mumbai, NCR& Bengal and we are actively working to acquire lands in major cities.We have a JV with Warburg Pincus with Warburg investing Rs.1,000 crore of equity out of the total Rs.1,600 crore of equity investment. Thich means we can raise another approximately Rs.4,000 crore as debt, and our investment alone will be Rs.6,600 crore in this sector. This totals to $1 billion.




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