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Supply Chain - India Allogistx International Inc. Allogistx International Inc. 2130 Huntington Drive suit 205 South Pasadena, CA 91030 [email protected] Office: 323.254.9550 Fax: 323.315.9311 F-54, 1st Floor Sej Plaza Marve Road, Malad (west) Mumbai, India 400 064 [email protected] Agenda -Evolving Indian Economy -Logistics Outlook - Changing Supply Chain Dynamics - New Growth Drivers - Supply Chain Challenge - Emerging Solutions & New Platforms 2 India is Growing! • India will be the third largest economy by 2040 Source: Economist 3 Urban Population Increasing • Urban population projected to cross 500 million by 2025 - Cities are expanding Agro Enterprise Without Borders, Singapore, 2009 4 Food Consumption Increasing • Food demand increasing - Quality preference increasing 5 Retail Sales Growing • Retail sales will cross US$ 900 billion by 2014 Agro Enterprise Without Borders, Singapore, 2009 6 Growth Drivers Demographic advantage: Young population Credit availability Increasing discretionary incomes Increasing retail space 7 Logistics Outlook • Indian Economy is growing at over 8% and Logistics industry is booming India is poised for a major growth in the coming years and Indian Freight Forwarding is poised to become the next exciting growth sector. • According to World Bank LPI (Logistics Performance Index) survey conducted among 155 countries India ranked 47th and continues to be the top performer in South Asia. The survey also concluded that excluding high-income countries, India is also among the 10 most significant over performers. Size of the Industry… • Logistics Industry size $ 200 billion by 2020 • The Indian logistics market recorded revenues of about $ 82.10 billion in 2010, witnessing a growth of about 9.2 percent over the previous year. • Indian logistics market is likely to cross the $ 200 billion figure by 2020. Strong growth of key manufacturing industry sectors such as automotive, engineering, pharmaceuticals, food processing and textiles among others shall contribute significantly to this growth Challenges Inefficient Supply Chain Infrastructure Low Technology Penetration Food Safety Unorganized sector Bureaucracy Lack of scalability Sanjeev Asthana Agro Enterprise Without Borders, Singapore, 2009 8 Disjointed Food Supply Chain Farmer Farmer Village Commission Agent Mandi / Local agents Transportation Village Commission Agent District Commission Agent Wholesaler • Low yield / non-standard quality • Price de-linked from market Processor Sub Retailer Consumer • No control on quantity / quality of raw material • Unscientific and unhygienic handling • Poor market access Distributor • Loss in trade passed onto farmer • No infrastructure for handling/grading Retailer • Lack of infrastructure leading to loss of quality • Lack of infrastructure leading •Price quality correlation not assured • Unscientific method leading to loss of quality /damages Consumer • High prices • Limited choice • Inadequate infrastructure Wholesale •Rampant wastage •Opportunistic profiteering Non value adding players Sanjeev Asthana Agro Enterprise Without Borders, Singapore, 2009 9 Poor Supply chain Infrastructure • Poor infrastructure facilities for Storage Transportation Processing Packaging Distribution • About 3,500 cold storages/warehouses Only 13m tons of storage capacity for production or 140 mn tons of Fruits/Vegetables Sanjeev Asthana Agro Enterprise Without Borders, Singapore, 2009 10 Supply Chain - High Costs • Inefficiencies in Distribution • Lack of cold chain and warehouse structure • Logistics costs in India are among the highest • Fragmented retail structure • Supply Led Growth • World: 72% • India: < 1% • More than 5 million retail outlets selling food products • Limited focus on food safety and hygiene • Limited choice to the consumer • Low investment in quality control, product innovation, private labeling and market intelligence Agro Enterprise Without Borders, Singapore, 2009 11 Underdeveloped Processing Industry Country Malaysia South Africa Phillipines Thailand Brazil USA India % Processed 83% 80% 78% 72% 70% 65% 2-3 % • Fruits and vegetables 2-3% of produce is processed 8%-37% lost in storage and transportation - Inadequate storage and cold chain - Inadequate processing and marketing infrastructure • Grains 3% is lost in storage Opportunity Significant growth potential & a challenge Agro Enterprise Without Borders, Singapore, 2009 13 Way Forward Private-Public-People Partnership can be growth engines for Supply Chain *Have someone who is Local as well as Global help you realize these opportunities… Agro Enterprise Without Borders, Singapore, 2009 18 Thank You! Thank You! Allogistx International Inc. 2130 Huntington Drive suit 205 South Pasadena, CA 91030 [email protected] Office: 323.254.9550 Fax: 323.315.9311 Allogistx International Inc. India F-54, 1st Floor Sej Plaza Marve Road Malad (west) Mumbai, India 400 064 [email protected]