We have revolutionized the industrial and logistics real estate industry in India.

Our parks have been awarded the esteemed EDGE certification.

- Rajesh Jaggi Vice Chairman, Real Estate, Everstone Group

IndoSpace pioneered modern industrial and logistics real estate in India with new generation parks catering to the supply chain needs of leading players in sectors such as automobiles, ecommerce, FMCG, 3PL and manufacturing among other sectors. With a portfolio of around 36 million square feet across 35 parks, Indospace is one of the leading players and have revolutionized the industrial and logistics real estate industry to meet India's demands around industrialization and the supply chain ecosystem. By creating and operating the finest and largest network of industrial and logistics real estate assets in India, the firm has actively contributed to the establishment of a billion-dollar industry. Rajesh Jaggi, Vice Chairman, Real Estate, Everstone Group elaborates on the changing trends in the logistics and SCM space. Excerpts from the interview…

Could you throw some light on the modern industrial and logistics real estate scenario?

The warehousing, logistics and the industrial real estate sector has shown stupendous progress in the past few years and IndoSpace has contributed significantly to the transformation of the sector. There has been substantial support from the union and the state governments as well in terms of policy reforms and initiatives to boost the infrastructure development across the country thereby streamlining the logistics cost. The introduction of GST and the classification of warehousing sector as 'Infrastructure' has also played an important role in the growth of the sector in India. The warehousing segment is also seeing a conscious shift towards technological advancement, modernization and optimization along with increased affinity to Grade-A facilities and infrastructure. The growth prospects are being seen in the standardization of the logistics parks along with the optimum utilization of robotics and artificial intelligence. Standardization in warehousing across sectors be it in pallet sizes, contracting and documentation standards, will also go a long way in significantly reducing cost of logistics and improve efficiencies.

What is the impact of the pandemic on the logistics sector, especially in terms of new construction and liquidity infusion by global and Indian investors?

The on-site development work is in progress with available material and labour force, however, there have been issues in the early days of lockdown related to the procurement of raw material, at a few locations. The industry as a whole is facing problems which led to some delays in project deliveries in Q2, and the impact will be seen in Q3 of FY 21as well. Our aim is to keep growing in our segment with the backing of our investors and we are always on the lookout of potential land banks in the country around major consumption hubs where the presence of the warehouse helps the country's economy. However, due to Covid-19, we plan to wait and watch before making any new investment.

What is your current asset base in India, including assets under development? Also brief us on your forecast in the post Covid era?

We have 35 operational and under development industrial and logistics parks, spread over 36 million square feet in India. These facilities are in and around major industrial corridors / consumption hubs  - the Delhi NCR, Mumbai, Pune, Bengaluru, Chennai, Ahmedabad, Coimbatore, Anantapur, Rajpura - and well connected through rail, road, air and sea. The advent of the pandemic might have slowed down the growth rate of the sector, however the growth is expected to pick up pace in the last quarter of FY 2021. Certain policy level decisions are expected to be made to cope with the variable demand-supply metric this year, post Covid-19. We anticipate strong growth in medium to long term.

How concepts such as green / smart / sustainability have impacted the design principles while you develop assets?

The time has come for the warehousing sector to integrate sustainability in their standard operating procedures. Designs needs to be adopted which reduce carbon footprint and sustainable technology needs to be incorporated for businesses to operate more efficiently. Our green infrastructure is designed to reduce carbon footprint. From rooftop solar panels to natural ventilation designs to green material selection to water-saving - we are incorporating the latest sustainable technology and design into our facilities to help businesses operate more efficiently. As a testament to our 'green' design thinking, our parks have been awarded the esteemed EDGE certification and we are also the founding member of the Indian Green Building Council and follow the environmental and social governance norms defined by the International Finance Corporation (IFC) Performance Standards.

How do you assess the shift towards A Grade warehouses and move towards II and III tier cities?

In the times of Covid, warehousing players have started to invest in more automation and mechanization for contactless operations. Additionally, stringent standard operating procedures (SOPs) are being adopted in logistics parks for the safety of the workers. We are also witnessing an increased focus on efficient warehousing design for ensuring workers' safety and social distancing. Such requirements, in addition to quick movement of goods, have also necessitated the shift from Grade B to Grade A warehouses.

Grade A warehouses are infrastructurally better equipped for efficient material handling along with access to latest technology. The facilities have ample clear height, optimized column spacing, flat and super-flat floors designed to support high cube racking, high dock-door ratio and extensive concrete truck courts. These warehouses allow abundant creativity in laying out the plant and equipment and they also provide for easier movement within the buildings resulting in optimized turn-around time and lower logistics cost.

IndoSpace is ahead of the curve in providing Grade A, world-class light industrial and warehousing facilities which makes it the only national network in India. Many industries are now favouring Grade A infrastructure and organised developers over Grade B infrastructure. The need for compliant facilities and reduction in total cost of logistics play a major role in these decisions.

How IndoSpace has been able to leverage the benefits disruptive technologies like IoT, AI and Blockchain etc?

Even before the Covid crisis surfaced, there has been a conscious shift towards technological advancement, modernization and optimization of warehousing operations along with increased focus on developing Grade-A facilities and infrastructure. Only large players are able to afford the transition to evolved automation as technology is a function of capital, and this trend is not expected to shift in the short term.

At IndoSpace, we are working on our smart warehouses parks initiative which includes sharing real time visibility of cargo receipt, inventory holding and cargo dispatch besides enabling efficient and faster handling of cargo through robotics/automation. While today, most of the leading organizations have already started investing in digitizing and automating their warehouses, we will see further acceleration of this trend in the times to come with breakthrough solutions based on IoT and Block chain. Our parks will be enabled with modern Gate Management System, real-time monitoring of water and electricity, green transportation and live video feeds.

What do you think the strategic imperatives for a healthy growth of the Indian logistics ecosystem, including policy and reforms?

The warehousing sector has made tremendous progress in the past few years due to backing of both union as well as state governments. There have been policy reforms and initiatives to boost infrastructure development across the country to streamline the logistics cost. Many state governments also offer incentives such as subsidies on capital interest and infrastructure interest as well as waiver of stamp duty, to set up warehousing and logistics parks in their respective state. Moreover, the warehousing sector comes under 'infrastructure' - the introduction of GST few years back and the push in terms of infrastructural development initiatives such as highway construction or Bharatmala and Sagarmala programmes have contributed to the growth of warehousing industry in India.

What are the major challenges the sector is currently going through?

Certain economic packages can be announced by the government for the sector as well as for the clients. Extension of credit facility can be offered to the sectors which are badly hit such as auto sector, which will help in their faster revival. Infrastructure development can also be fast tracked in the country to maintain the balance between supply and demand, once we are past the Covid crisis.

How do you foresee the future trends in the logistics space?

The outlook for the industry seems to be positive where some industry reports have also forecasted good recovery in Q4 2020. Warehousing industry is considered as an essential service, the industry is expected to pick up pace in the second half of FY 2021. For now, it is a wait and watch game. I also feel that the warehousing providers should have the ability to quickly scale up/down based on the demand and supply fluctuation. Post Covid, the focus will be now to maintain the highest degree of hygiene and safety standards in the warehouses, therefore organized national level players will have an edge over the unorganized sector. Safety measures should be put in the place so that unforeseen situations in future don't impact manufacturing /logistics operations.

Could you also tell us your core strengths and competencies?

What differentiates us is our strategic focus on providing world-class, compliant and environmentally friendly facilities that are designed and built in line with the latest global trends and technology. Through our partnership with GLP, we have benefitted not only through access to their technical expertise but also through their extensive global customer network. To address the challenges related to land acquisition, our investment strategy is to strengthen the regional presence in our investment teams. This has enabled us to focus our efforts towards completing multiple due diligence processes parallelly and in a time bound manner. Further, we have also increased the size of our Business Development (BD) teams to tap in to the increased demand from segments like e-commerce and engineering. We emphasise on sustainability of the environment and due to our 'green' design thinking, our parks have been awarded the esteemed EDGE certification and we are also the founding member of the Indian Green Building Council and follow the environmental and social governance norms defined by the International Finance Corporation (IFC) Performance Standards.

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