How Indospace looks at expansion
IndoSpace president Aditya Sikri has worked out the math. Offer state-of-the-art facilities in prominent locations, while continuing investments across multiple cities
Supply chains are associated with constant movement and much activity. Inertia here would hardly qualify to make it a vibrant supply chain. The growing Indian consumption story is also creating much hustle in supply chains and there’s novelty in the way goods reach consumers. IndoSpace is facilitating that move faster.
Supply chains are not created out of thin air. In order to stay efficient, it needs good solid land and vast tracts of it. And considering the investments, there are several aspects that need to be considered. Aditya Sikri, president, IndoSpace, says, “Warehousing is no more just a shed. Today, logistics parks are more tech-based solutions and come equipped with drones, robots, automated guided vehicles, on-demand warehousing, etc. We offer Grade A facilities and our clients know that their supply chains end up being more productive because of the extreme efficiencies that come with it.”
For some time now, IndoSpace has been in the business of offering sophisticated warehousing facilities through its well-planned logistics parks in apt locations. It worked out well for the company because it chose to listen to its customers “who had done their homework to understand the consumption and utilisation markets in the country. Our part was to identify cities and markets that had scale and depth that would allow us to ramp up and build multiple parks within the area”, says Sikri.
Sikri likens the business to real estate and says that the rules that apply there would also stick well with the logistics and warehousing industry. “Cities like NCR, Mumbai, Pune, Chennai, Bengaluru, Hyderabad, Kolkata, Ahmedabad, are attractive and we have parks in almost all of them. Whether it’s retail, e-commerce, auto-ancillary clients or the three PL companies who are our clients, they tell us about the locations that will make waves and that is how we explore.”
It is such strong relationships that encouraged IndoSpace to go to Rajpura in Punjab where it is constructing a 1.2 million sq-ft park. Similarly, construction of a park is underway in Coimbatore too. The company has also taken up space in Sri City. While these may not be large metropolitan Tier 1 cities, they are witnessing rising consumer demand and aiding the growth of industrial and warehousing hubs. IndoSpace believes in having a prominent presence in the primary markets, without ignoring the smaller cities.
Currently, the company has 31 parks spread across 31 million sq-ft across nine markets and 18 sub-markets.
Few infrastructure building companies have received backing from private equity funds like IndoSpace. Already supported by Everstone Group, the company closed its third fund in December. Sikri says that the fund, IndoSpace Logistics Park III, drew commitments worth $580 million. The company plans to use the investment to develop and acquire industrial and logistics-related real estate in the country.
A noteworthy move was the tie up with GLP in September. This collaboration, the first of its kind in India, expects to invest approximately $500 million in strategies and technologies to enhance logistics efficiency, while connecting customers with innovative solutions that drive value and competitiveness. The fact that GLP has almost 800 million sq-ft in its portfolio and are savvy in terms of developing parks, and the nuances of the business, only offers benefits to IndoSpace. On its part, the company plans to build 120 million sq-ft of modern logistics infrastructure.
Interestingly, the company is a pioneer of sustainable industrial and logistics parks, with buildings that feature sustainable technology and environmentally friendly materials. IndoSpace buildings have the esteemed EDGE rating, from GBCI (Green Business Certification Inc.). This rating means that its buildings possess several green amenities for reduced carbon footprint.
Sikri is aware that the boom in e-commerce in India comes with a strong presence of international companies. It is only right that the company expands to newer locations in Tier II cities considering the assurance of business prospects. It is for this reason the company has chosen the organic growth path. It is open to the idea of acquiring existing properties in locations where land purchase may not be feasible or available.
Though the company has made strides in such a short time, they are not resting on their laurels. They are doing what they do best – scouting for real estate.
Indospace is the founding member at IGBC.