TVS ILP elevates warehousing standards

“With the influx of companies venturing into Tier-2 and 3 markets, there's an imperative for the industry to reassess models and strategies so that they can effectively harness the emerging opportunities.”

Manikandan Ramachandran, COO, TVS ILP

Critical considerations
Tier 2 and 3 cities in India have shown a huge potential in the last few years due to significant improvement in regional infrastructure, boosted by government policies and increased demand for goods in these regions. As a result, many industry giants have expressed interest in establishing their bases in these locations to move closer to their end customers. This move has given rise to demand for new age and efficient warehousing solutions that cater to the companies’ growth and expansion targets. FMCG and FMEG firms are currently the most promising businesses in these tiers due to their unique requirement for state-of-art warehouses.

However, there are some critical considerations that loom over the industry, with the availability and quality of infrastructure—spanning transportation networks, power supply, and logistics facilities—standing out as top concerns.

The regulatory framework governing the sector, covering aspects like land acquisition processes, zoning regulations, and the overall ease of doing business, adds another layer of complexity. A conducive regulatory environment not only fosters investor confidence but also stimulates real-estate developers to explore new projects.

Investment potential and opportunities
The investment potential in expanding warehouses in Tier 2 and Tier 3 cities within India is exceptionally promising, representing a lucrative opportunity for investors seeking growth in the dynamic logistics and supply chain landscape. Grade-A facilities are particularly sought after, driven by a need for improved storage capacity, operational efficiency, and cost savings.

Growth of organized retail has heightened the need for warehouses to accommodate goods sold in stores, resulting in rising rental income and long-term lease agreements. The growing consumer demand in Tier 2 and Tier 3 cities further amplifies the necessity for additional warehouses across the country. This trend makes the warehousing sector highly attractive for investors seeking stable returns.

Primarily, the increasing need for organized warehousing space is a significant driver, aligning with changing consumer preferences and the burgeoning growth of e-commerce and online retail. The adoption of advanced technologies and the transformation of supply chain dynamics further contribute to this demand.

Government initiatives
The formidable pace at which the warehousing industry is developing would not have been possible without the government's support. Initiatives like 'Make in India', ‘Gati Shakti’ and 'Atmanirbhar Bharat,' as well as the development of industrial corridors have significantly contributed to the robust growth of the warehousing sector.

In addition to industry-driven factors, government initiatives like the National Logistics Policy, coupled with measures announced in the Union Budget 2023, have the potential to significantly boost the logistics and warehousing sector in India. These initiatives are anticipated to usher in positive changes, create new opportunities, and improve the overall operating environment.

We commend the government's proactive approach in implementing business-friendly reforms, enhancing connectivity through initiatives like the Dedicated Freight Corridor, National Logistics Policy, and providing incentives to encourage the establishment of warehousing and logistics facilities in strategic locations. We firmly believe that ongoing collaboration between the government and industry stakeholders is vital to address challenges related to infrastructure, land availability, and policy frameworks.

Staying ahead of the curve
At TVS, we invest in modern warehousing infrastructure designed to enhance storage capacity, operational efficiency, and cost-effectiveness. Our built-to-suit warehouses ensure that our facilities cater precisely to the unique needs of our customers. Over the years, we have also assisted clients in executing customized floor designs and production setup, and have served as a technical partner to facilitate seamless initiation of their operations.

In this evolving landscape, TVS stands out with a diverse customer portfolio wherein manufacturing holds a prominent share of our business at 38%, auto and auto ancillary follow closely at 27%, e-commerce constitutes 22%, third party logistics (3PL) and Fast-Moving Consumer Goods/Durables (FMCG/D) complete the spectrum at 6, and 5 %, respectively.

TVS ILP has been working closely with clients to stay ahead of the curve and build Grade-A compliant automated facilities that meet their functional needs. We are also helping them upgrade their operations sustainably by offering solar panel installations, rainwater harvesting, and waste management systems. For one of our plants in Hosur, we have done an interesting warehouse automation that has helped in optimizing a key operation for the brand.


TVS network of warehouses
Our upcoming warehouse projects are currently located in cities like Coimbatore, Madurai, Chennai, Vijayawada, Cuttack, Kolkata, Siliguri, and Guwahati. We have plans to expand our network up to 30 cities. We have set a target of achieving a platform of 20 million square feet platform in various cities within the next couple of years. This expansion strategy is not confined to specific regions; rather, it embraces a location-agnostic approach to maximize effectiveness and efficiency. This strategy ensures proximity to client operations, reducing transportation costs, and enhancing overall supply chain performance.

In terms of new projects, we have recently announced our groundbreaking project in Vijayawada, Andhra Pradesh. We are also gearing up to announce further expansion plans in Tier 2 & 3 cities to serve our clients better. We plan to have a facility in every 400 kilometres to form a robust warehousing chain from Vizag to Cuttack, covering Kolkata, Siliguri, and Guwahati, with further plans to expand into the northern hinterland of India. As we look ahead, we envision doubling our warehousing portfolio and quadrupling our presence in Indian cities.