Economic Times: September, 2015
Chennai: In an interesting contrast, activity to build industrial parks with warehouses is taking off on the Chennai-Bengaluru highway, just about a year after large phone manufacturers Nokia and Foxconn shuttered their factories off Sriperumbudur and silenced the industrial hum.
Property developers are building infrastructure with power, water, and even supply of low skill labour for a brimming auto mobile scene and demand for warehouses from fast moving consumer goods firms and ecommerce suppliers.
The Embassy Group signed a . 900-crore deal with the state government at the Global Investors Meet for a 198-acre industrial and logistics park in Sriperumbudur. Kochi-based Shri Kailash Logistics is expanding its Logicity at Oragadam, an automobile hub not far from Sriperumbudur. Residential and commercial constructions company ASV Constructions is looking at setting up a 100-acre logistics park in the area. Everstone Capitalbacked Indospace is developing a 140-acre park, while Casa Grande is branching off core focus of residential real estate with its 100-acre set-up.
"I found a renewed interest from manufacturers to set up factories as they see a pick-up in demand. The business opportunity for us here is to create the necessary infrastructure so that they can just bring their assembly lines, and we set up the rest," said Arun Kumar M, founder and MD of Casa Grande. Kumar's park is half warehouse and the rest is dedicated plots with facilities of power and water for factories to be set up. Casa Grande has also tied up with private recruitment agencies to source workers for clients, should they need labour on demand.
The growth of the Chennai-Bengaluru industrial stretch is aided by heavy traffic along traditional warehousing hubs in north Chennai. Sri Kailash was close to finalising a patch of land off north Chennai but chose Oragadam (about 18 km from Sriperumbudur) for its Logicity for the same reason: accessibility and ease of warehousing. It is acquiring more land to take the built-up space at the logistics park to up to 2 million sq ft in a Rs 300-crore expansion plan.' Having been in the business for five years now, Shri Kailash believes the transport time has become important. "It's called justin-time warehousing. FMCG firms want to reach the city through the shortest routes possible. For this reason, Oragadam, as it is accessible through highways to Bengaluru and the GST Road, is emerging as a good bet," said S Rajkumar, chairman of Shri Kailash Logistics.
According to data provided by real estate consultant JLL, the new-found demand for logistics is due to the interest of foreign funds such as Everstone, Blackstone and AMB-ProLogis, which are partnering with realty developers to avoid land acquisition complications.