Avigna Space Modernizing India’s Warehouses

Abhijit Verma, Executive Director & CEO, Avigna Space, gives insights on the importance of having a tech-enabled warehousing system with a world-class infrastructure to cater to important catchment areas in major markets, and his company’s initiatives towards modernizing the age-old warehousing industry of India.

How does India’s Warehousing Industry rank vis a vis other countries?
According to World Bank’s Logistics Performance Index (LPI) 2018, India holds the 44th position in the global ranking of Warehouses and Logistics - still sitting at the bottom tier as compared to other countries. This is largely because the warehousing industry in India still awaits a facelift and technology-driven transformation at a mass level.

Currently, we have only 20-30% of the warehousing sector which is organized, with only 10% of the total warehousing space made up of A-Grade facilities – the rest are B and C Grade, which do not have planned storage, input and output models, well-defined movement of goods, and negligible technology integration. This adversely affects a multitude of things in terms of the cost and time allocation and the consumers and brands experience, which stands heavily compromised.

However, India’s Warehousing Industry is now striving to keep pace with world’s Grade-A facilities, having realized that B and C grade facilities ultimately lead to an increased cost in their maintenance and upkeep in the long-term.

How is the Warehousing Market evolving in India and what are the growth drivers?
India is witnessing a sea change from the era of godowns to well-equipped, well-planned, and technology-backed warehousing facilities. This revolution, which was further propelled due to the ongoing pandemic, is now leading to a complete revamping and remodeling of the Warehousing and Logistics Industry.

According to an industry report by ResearchAndMarkets.com, the warehousing market in India, which was valued at ₹1,501.2 billion in 2019, is expected to reach ₹2,821.1 billion by 2024, expanding at a CAGR of ~13.57% during the 2020-2024 period. Currently, India's total warehousing capacity is estimated to be 160 mn tons.

Several factors, including the country’s changing tax regime, growth across major industries, including automobiles, food, agriculture, pharmaceuticals and FMCG, and the emergence of organized retail have been supporting the growth of the warehousing industry in India. Consequently, while the Indian real estate industry has been facing hardships on account of a challenging residential market, the warehousing property segment has emerged as a promising investment opportunity for institutional investors.

Warehouses are typically the backbone of the supply chain of any business or industry that relies on the distribution of products from factories to retail outlets and subsequently to the end-users. With the booming e-commerce market in the Indian sub-continent, the demand for state-of-the-art A-grade warehouses with a strategic location has increased tremendously.

What are the challenges and how is the industry meeting them?
Factors such as poor infrastructure, lack of safety measures, and poor quality of supply-chain management have traditionally proved to be major impediments in the growth and development of India’s warehouses at the macro-level.

The industry is now awakening to the need for an urgent transformation, which will see technology at its forefront. This will open up a plethora of opportunities not only for the large players but also for the medium and small-sized players. In fact, there is a surge in demand from the unorganized sector as well for fully equipped and technology-backed A-Grade warehouse facilities that provide superior infrastructure, and also ensure the safety and well-being of the workers. So, it’s time for the industry to upgrade and provide the right infrastructure that meets international standards.

According to a Knight Frank India report 2020, the warehousing sector has seen institutional investment volumes growing from USD 125 million in 2016 to USD 2.3 billion in 2017. In 2018 and 2019 it was recorded at USD 2.2 billion and USD 1.8 billion, respectively. In 2020, the investor activity was on account of the disruption caused by the Covid-19 pandemic.

However, as we move towards the new normal, the sector seems to have made a quick recovery. Amidst the current upheavals in the overall market dynamics, which will also see many interim fix-ups and short-lived trends, we reckon that the warehousing sector is a long-term player - whether in terms of lease tenures or investment horizons - as reflected in the Knight Frank report.

Players who have understood the importance of A-grade storage facilities are progressing towards upgradation and modernization of their warehouses. Avigna Space is the torchbearer of this transformation and is committed to providing A-grade facilities that compete with our international counterparts. It is marking its presence in the most strategic locations in South India, while also planning to move towards the northern and western parts of the country.

What are the recent developments at Avigna Space and its future plans?
Avigna Space aims to become India's one-stop solution for world-class Warehousing Solutions and Logistic Parks. It plans to first monetise its existing land bank to fuel expansion in other parts of the country. Our ultimate goal is to come up with a REIT.

We plan to invest ₹2,000 crore for developing about 10 million sq.ft. of warehousing space in southern India, and subsequently in the western and northern parts of the country. We will be developing 95 lakh sq. ft. of warehousing space, which will include 3 million sq. ft. at Karnataka’s Hosur, 4 million sq ft at Hoskote, 1.5 million sq ft at Chennai, and one million sq ft at Andhra Pradesh’s Nellore. We will be investing ₹400 crore for the Hosur project which will be developed in three phases of 10 lakh sq. ft. in each phase; the first phase will be operational by December this year.

Avigna Space recently partnered with Strata to raise ₹140 crore for a consortium of three Grade-A warehouses; and just within 42 days of the launch of Strata Avigna Warehousing I & II in Hosur, we received 100% commitment from investors. We plan to develop industrial and warehousing projects spread over 9 million sq.ft in Bangalore, Chennai, Hyderabad and in four other cities during the next five years.

How has the company progressed from Infrastructure to Real Estate to Warehousing?
Avigna Space, which was launched in 2018, is a vertical of the Avigna Group - a 40+ year old business conglomerate that operates across several industries such as Infrastructure, Real Estate, Textiles, Education, and more. Avigna Space specializes in providing turnkey warehousing solutions from land-acquisition to asset development and management to 3Pl companies, and to medium and large-scale corporates in sectors such as FMCG, FMCD, Agriculture and Automotive, among others.

Through built-to-suit, state-of-the-art, multi-modal logistic parks developed in strategic locations across south India, with Grade-A construction across the board, Avigna Space is enabling efficient and easy to access catchment areas of major markets for a wide range of verticals. The company’s land holdings are in prime hubs with great connectivity to support industries and allow better reach into catchment areas and markets in a cost-effective manner. These include about 8 million sq.ft of land in the Bangalore-Chennai corridor and in the Hoskote-Hosur-Chennai corridor.

Avigna Space offers Grade-A services in the following areas:

• Land Acquisition and Holding: It helps to find appropriate land, along with the associated vetting, assessment, and legalities.
• Construction, Asset Development & Management: In partnership with TATA Consultancy and Engineering Services, the company helps to build warehousing facilities with a commitment to superior quality.
• Industrial and logistic parks: The company offers the option of ready-to-move or built-to-suit facilities at its logistic parks. The parks are fully equipped to offer value-added services such as storage and personnel and are designed to enable optimal operations and sustained growth.

In fact, Avigna Space is helming the transition of India’s unorganised warehousing industry to an A-grade well-planned, well-equipped and hygienic facility with a focus on ‘Proof of Concept’ by managing the end-to-end processes from land acquisition, vetting, and assessment, to construction and the associated legalities. It is offering built-to-suit models and tailor-made Warehousing Solutions and Industrial Parks, and is committed to contributing to the country’s economic growth with its strategic approach and well-defined processes.

The company’s progress over the years is due to its vast experience and deep knowledge of the infrastructure sector. Its long-term vision is to make deep inroads into important catchment areas across India by forming a ‘golden circle’ of world-class warehouses.