REPORT

ON
BENCHMARKING
OF
LOGISTICS INDUSTRIES IN INDIA

BY:

SHASHANK CHAUHAN
TABLE OF CONTENTS

CONTENT PAGE NUMBER

1. Acknowledgements ………………………………………………02
2. Declaration……………………………………………………......03
3. Industry analysis………………………………………………….05
4. Company Profile…………………………………………………08
5. Data Analysis…………………………………………………….15
6. Conclusion………………………………………………………..21

2
INDUSTRY ANALYSIS

3
 The Logistics Industry

Globally, the logistics industry is valued at US$ 3.5 trillion.

The U.S., which contributes to over 25% of the global industry value, spends close to 9% of its
GDP on logistic services.
The Indian Logistics Industry is presently estimated at US$ 90 billion. (CII)
The industry has generated employment for 45 million people in the country in comparison with
the IT and ITeS sector which employs approximately 4.3 million people.
It is forecast to grow at a Compound Annual Growth Rate (CAGR) of approximately 8% over
the next three to five years. (CII)
Third Party Logistics (3PL) Solutions, is slated to grow at a compound annual growth rate
(CAGR) of over 16% from 2007-10. Consequently, 3PL service providers are expected to corner
an increased share of the Indian Logistics pie, from 6% in FY06 to 13% in FY11, at a CAGR of
25% (CII).
The primary growth drivers of this industry are as under: Investments in the infrastructure sector
amounting to US$ 350 billion:
Increased efficiency and productivity of the transport system would result in lower transit times.
Streamlining of the indirect tax structure:
The introduction of Value Added Tax (VAT) and the proposed introduction of a singular Goods
and Services Tax (GST) are expected to significantly reduce the number of warehouses
manufacturers are required to maintain in different states, thereby resulting in a substantial
increase in demand for integrated logistics solutions.
Robust trade growth
Strong economic growth and liberalization have led to considerable increase in domestic and
international trade volumes over the past five years. Consequently, the requirement for
transportation, handling and warehousing is growing at a robust pace and is driving the demand
for integrated logistics solutions.

4
Globalization of manufacturing systems
Globalization of manufacturing systems coupled with advancements in technology are
increasingly compelling companies across verticals to concentrate on their core competencies
and avail the cost saving potential of outsourcing. This is expected to contribute to an increase in
the need for integrated logistics solutions, which is the niche of every Third Party Logistics
Service (“3PL Services”) provider.
The industry has been valued at US$ 125 billion in 2010. (CII)
A snapshot of the FDI regulations governing the industry is as under:
i. 100% FDI under the automatic route is permitted for all logistic services except services
mentioned in points ii and iii below.
ii. FDI up to 100% subject to FIPB approval is permitted for courier services.
iii. FDI up to 49% under the automatic route is permitted for air transport services, including air
cargo services. It is pertinent to mention in this context, that Press Note 1 (2007) that is expected
to be imminently notified by the DIPP proposes to increase the limit of FDI
on air cargo services in 74%.
� The industry has been at the receiving end of increasing interest from the private equity
sector. The year 2007 witnessed just under US$ 1 billion in private equity investments in this
industry, representing approximately 7% of total private equity investments during the year,
against 3% in the previous year.

5
COMPANY PROFILE

6
SICAL:

7
Brief profile
Sical Logistics Ltd.
Website: www.sical.com

Industry Cargo handling Industry P/E 15.97

2431 Incorporation
ROC Reg. No. Year 1955
Ownership Chidambaram M.A. Group
Registered office address
South India House, 73, Armenian Street, Chennai - Tamil Nadu
Tel no. 66157071
Fax no. 25224202

ISIN Code INE075B01012

BSE Demat 520086
Code
BSE Listing T
group
NSE Scrip SICAL
Code
Face value (Rs) 10
Beta 1.336

Listed On Bombay , Calcutta , Madras , National

Company Background

South India Corpn. (Agencies) Limited, was incorporated as a Private Limited Company in the year
1955 and became a public limited company in 1981. The Company was founded by Mr. M.A.
Chidambaram and his son Mr. A.C. Muthiah. The Company is engaged in shipping, stevedoring, ship
chartering, ship repairing, marine engineering, marketing and clearing & forwarding business.

South India Corpn. (Agencies) Ltd. has five distinct divisions like the Logistics division, Marketing
division, Manufacturing division, Agro division and Engineering division.

The Logistics division provides services in chartering, ship agency services, clearing and forwarding,
stevedoring, transportation and warehousing. The Marketing division consists of the sales division for
building materials, cars and heavy vehicles, while the manufacturing division is engaged in
manufacturing and marketing auto components, flexible shafts, drums, refractories, etc. The agro
division produces coffee, palmoil, special chemicals, enzymes and plant growth regulators and the
engineering division focuses on construction, property development and boat building.

The company has its head office in Chennai and has branches in all the ports of the country both in the
east and west coasts. It also has agencies in countries like Greece, U.K., Scandinavia, Japan, Italy, etc.
It is entering into strategic alliance with international companies to provide superior value added
services.
8
The promoters hold about 64 percent of the company's equity while the institutional investors and the
Indian Public hold about 13 percent and 16 percent respectively.
 RELIANCE LOGISTICS:
Brief profile
Reliance Logistics Pvt. Ltd.
Website: www.reliancelogistics.com

Cargo handling, incidental to land

Industry transport Industry P/E 15.97
ROC Reg. 31593 Incorporation
No. Year 1985
Ownership Reliance Group [Mukesh Ambani]
Registered office address
Plot No.17, State Transport Road, Next To Khira Indl. Est., Santacruz( Mumbai - Maharashtra
Tel no. 26466700
Fax no. 26466862

9
ISIN Code
BSE Demat
Code
BSE Listing
group
NSE Scrip
Code
Face value 10
(Rs)
Beta

Company Background

Reliance Logistics Ltd., owned by the Reliance group was incorporated in the year 1985. It is mainly
engaged in transportation, distribution and integrated logistics services.

With its registered office situated in Mumbai, it is operating with 5 regional offices across the country. It
has a wide network of more than 100 branches and 46 warehouses throughout India. It has around 47
distribution centres in 27 locations across India.

The company is in the business of road transportation, distribution, integrated logistics services including
roll on-roll off(RORO) and rail movements, container placements for export-import cargo and vehicle
tracking systems. Its multi user distribution centers provide benefits of shared infrastructure to its
customers to increase efficiencies in their supply chain. It provides third and fourth party logistics services
to its customers by providing logistics functions across multiple links in logistics value chain and also play
the role of an integrator that assembles the resources and technology of its own and other organisations to
provide comprehensive supply chain solutions. It controls the movement of liquid chemical, solid products
and gases like carbon black feed stock, polymer, polyester, liquefied petroleum gas, butene etc for the
Reliance group. It also provides value added services like vehicle tracking solutions, where it provides
services regarding fleet and consignment tracking and monitoring and also transportation system and
technology services through its information technology support systems. It is also developing its own fleet
of trucks through its relogistics network companies.

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ESSAR LOGISTICS:

The Company Essar Shipping Ports & Logistics Limited (ESPLL), is an end-to-end logistics
services provider with investments in ports and terminals, logistics services, sea transportation
and oilfield drilling services. The integrated business model provides opportunites to cater to the
complete supply chain management services to clients in oil & gas, steel and power generation
industries.

ESPLL operates in the following businesses

• The Ports & Terminals business operates a crude oil and petroleum products terminal at
Vadinar and includes the construction of a dry bulk port at Hazira and a Coal jetty at Salaya, all
in the state of Gujarat. The Vadinar terminal, is an all-weather, deep-draft port, which provides
crude oil and petroleum products storage, handling and terminalling services. The port has a

11
Single Point Mooring system capable of handling crude capacity of upto 27 MMTPA and marine
facility for export of petroleum products of upto 6.5 MMTPA. The dry bulk port being
constructed at Hazira involves setting up a 30 MTPA all-weather, deep-draft port and jetty
facility. The port will have a berth of 550 meters length and an alongside depth of 12.5 meters.
The proposed berth will handle the import of iron ore, pellets, coal, limestone and export of
finished steel products. The port facility at Salaya comprises of setting up of a 10 MTPA marine
material handling facilities to cater to the need of imported coal requirement and export of
petroleum coke.

• The Logistics business provides end-to-end logistics services – from ships to ports, lighterage
services, intra-plant logistics and dispatch of finished products. It owns trans-shipment assets to
provide lighterage support services, and onshore & offshore logistics services. It also operates a
fleet of 4,200 trucks (of which 38 are owned) to provide inland transportation of steel and
petroleum products.

• The Sea Transportation business provides transportation management services for crude oil
and petroleum products, and dry bulk cargo to the global energy, steel and power industries.
With an experience of more than 220 ship years, it owns a diverse fleet of 25 vessels, and a
further twelve New Building Vessels on order.

• The Oilfields drilling business offers onshore and offshore contract drilling, and offshore
construction services. The current fleet includes a semi - submersible offshore and twelve land
rigs.

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Data analysis:

ANALYSIS FOR 3 YEARS OF RATIO’s

RELI
SIC SICA ANC ESS
RATIO/ Company AL L E AR
200 200 200 200 200 200 200 200
8 7 6 2008 7 6 8 7 6
998 131 100 110 201 245
.63 2.94 847. 901. 8.96 0.54 8.43 6.75 226
DRMi 2 9 359 234 7 4 3 4 5.78
0.1 9.62 10.2 0.30 0.27 0.31 0.23 2.66 8.99
DWIPi 67 9 5 999 891 323 6 7 7
0.4 10.6 12.8 0.32 0.28 0.30 0.33 4.99 6.88
DFGi 21 6 55 999 777 987 8 5 7
10. 9.65 8.60 13.4 9.87 8.76 14.7 10.8 7.83
§(Rmi) 452 2 4 54 6 9 76 76 6
13. 32.1 44.4 14.5 29.6 40.8 13.8 23.8 40.6
CRMSi 934 99 74 56 67 21 87 34 62
100
589 968. 918. 410. 590. 956. 678. 774. 1.66
CWIPSi .88 43 04 667 665 994 567 884 2

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 0.5 20.5 18.4 0.56 14.7 12.8 12.9 18.7
§FGi 93 52 9 7 74 87 0.59 98 55
590 102
.47 988. 936. 411. 605. 969. 679. 787. 0.41
CFGSi 3 982 53 234 439 881 157 882 7
0.0 0.00
Normalised cost of raw 074 0.00 515 0.00 0.00 0.00 0.00 0.00 0.00
material 2 373 9 456 334 567 225 654 348
Normalised cost at the 0.0 0.03 0.04 0.05 0.06 0.09 0.03 0.06 0.07
end of raw material 236 26 74 56 27 94 36 67 76
Normalised cost at the
end of WIP 1 1 1 1 1 1 1 1 1
Normalised cost at the 10. 35.1 30.8 23.5 45.5 46.7 11.4 37.7 25.6
end of finished goods 464 6 4 4 5 65 3 76 65
10. 35.1 30.8 23.5 45.5 46.7 11.4 37.7 25.6
ISCCi 464 6 4 4 5 65 3 76 65
0.0 0.03 0.03 0.01 0.05 0.07 0.01 0.03 0.06
ISCSi 185 51 17 94 49 64 86 34 67
47. 207. 225. 33.5 336. 45.7 23.4 37.6 55.8
ISWCi 02 15 01 68 764 42 67 64 45
12. 4.83 4.31 17.7 3.88 4.22 14.4 3.66 5.77
ISWCPi 006 2 9 73 5 6 47 7 4

Table -1

2006 DRM DWIP DFG TOTAL LENGTH

SICAL 847.359 10.25 12.855 870.464
RELIANCE 1100.544 0.31323 0.30987 1101.166

ESSAR 2265.78 8.997 6.887 2281.664

The cumulative lengths are

Table-2

LENTH AT THE LENTH AT THE LENGTH AT THE TOTAL LENGTH

END OF RAW END OF WIP END OF FINISHED

14
 MATERIAL STAGE GOODS STAGE
STAGE
SICAL 847.359 10.25 12.855 870.464
RELIANCE 1100.544 0.31323 0.30987 1101.166

ESSAR 2265.78 8.997 6.887 2281.664

Table-3

LENTH AT THE LENGTH AT THE LENGTH AT THE

START DAY END OF RAW END OF WIP END OF
MATERIAL STAGE FINISHED
STAGE GOODS STAGE
SICAL 1411.2 2258.56 2268.81 2281.664
RELIANCE 1177.680 2278.224 2281.35 2281.664
ESSAR 0 2265.78 2274.78 2281.664

Table-4

SICAL RELIANCE ESSAR

COST OF RAW 350.29 228.54 311.33
MATERIAL
COST ADDITION IN 8.604 8.769 7.836
THE RAW MATERIAL
STAGE
COST AT THE END OF 358.894 237.31 319.17
RAW MATERIAL
STAGE
COST AT THE END OF 434.474 234.821 433.662
WIP STAGE
COST ADDITION AT 12.887 18.76
THE FINISHED GOODS 18.49
STAGE
COST AT THE END OF 445.964 244.56 452.43
FINISHED GOOD
STAGE

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Table-5

SICAL RELIANCE ESSAR

NORMALIZED COST .32 .19 .49
OF RAW MATERIALS
NORMALIZED COST .33 .19 1.03
AT THE END OF RAW
MATERIAL STAGE
NORMALIZED COST .99 .99 .99
AT THE END OF WIP
STAGE
NORMALIZED COST 1 1 1
AT THE END OF
FINISHED GOOD
STAGE

INTERNAL INTERNAL
SUPPLY CHAIN SUPPLY CHAIN
COST OF
MANAGEMENT INEFFICIENCY
HOLDING
COST FOR TIME RATIO FOR TIME
INVENTORY FOR
PERIOD I PERIOD I
TIME PERIOD I

SICAL 13.31 246.34 .20

RELIANCE 14.46 269.58 .15

ESSAR 59.08 339.29 .12

INTERNAL INTERNAL
SUPPLY SUPPLY CHAIN
CHAIN WORKING

16
 WORKING CAPITAL
CAPITAL PRODUCTIVITY
FOR TIME FOR TIME
PERIOD I PERIOD I

SICAL -154.89 -3.1

RELIA -108.07 -5.7

NCE

ESSAR -394.52 -3.4

SUPPLY CHAIN INEFFICIENCY RATIO

2006 2007 2008

SICAL

RELIANCE

ESSAR

17
 HOLDING PERIOD FOR THE FIRMS

HOLDING SICAL RELIAN ESSAR

PERIOD CE
(NO.OF
DAYS)

2006 2007 2008 2006 2007 2008 2006 2007 2008

RAW 54 30 44 56 58 46 26 27 35
MATERIAL

WIP 5 6 4 1 1 1 4 1 5

FG 22 17 19 22 22 27 18 27 27

Cost Profile

18
CONCLUSION:

The following conclusion can be drawn from tables:

1. Essar has the least days of raw material inventory. Also, this company has the lowest
aggregate length, i.e. the composite figure including days of raw material, WIP, and
finished goods.

2. Sical has the least days of finished goods inventory. However the product stays as raw
material for the longest time in Cadbury.

3. Reliance has the longest days of finished goods inventory but the least days as WIP.

4. The aggregate industry profile shows that for the industry as a whole, the product stays in
finished goods inventory for a long time and the companies bear significant cost in
keeping the product as raw material.

The result suggests that the companies strive to bring down the level of raw material and finished
goods since there is no value added in these stages and the company has to bear the inventory
carrying cost. Nestle seems to be successful in this objective. However, the product stays in WIP
stage for the medium time for this company. This suggests that the company attempts to delay
the product differentiation to the last stage of the production process.

The above data analysis results point to the fact that looking only at internal supply chain working capital
productivity parse would be myopic and would not capture the total performance of the firm .Total
performance needs to take into account the partnering approaches of the firm, which is possible by
examining the components of the internal supply chain working capital.

Reference:

1. Janet shah, supply chain management, 2009

2. PROWESS DATA BASE (CMIE).

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