Analysis of the storage and warehousing market for frozen and refrigerated goods in India
The relevance of research
In connection with the active development of production and the growth in the turnover of products requiring special storage conditions, the role of low-temperature warehouses in the schemes of cold food supplies is increasing.
The use of modern, technically equipped refrigerated warehouses for the storage and handling of goods is a necessary condition for the effective organization of logistics and the provision of the necessary stocks of frozen and chilled goods.
Purpose of the study
Analysis of the state of the market for storage and warehousing of frozen and refrigerated goods, assessment of the market volume, analysis of competitors, as well as identification of factors affecting the storage and warehousing of frozen and refrigerated goods
Content
Part 1. Overview of the Indian frozen and refrigerated storage and warehousing market
1.1. Definition and Characteristics of the Indian Frozen and Chilled Storage and Warehousing Market
1.2. Dynamics of the Indian storage and warehousing market for frozen and refrigerated goods, 2015-2019
1.3. Market structure by type of service provided in India
1.4. Structure of the market for storage and warehousing of frozen and refrigerated cargoes by Union Territories
1.5. Assessment of current trends and development prospects of the studied market
1.6. Assessment of factors affecting the market
1.7. Analysis of sectoral indicators of financial and economic activity
Part 2: Competitive analysis of the Indian frozen and refrigerated storage and warehousing market
2.1. Major players in the market
2.2. Market shares of the largest competitors
2.3. Profiles of major players
Part 3. Analysis of the consumption of storage and warehousing services for frozen and refrigerated goods
3.1. Estimated per capita consumption of storage and warehousing services for frozen and refrigerated goods
3.2. Market Saturation and Estimated Market Potential in India
3.3. Description of consumer preferences
3.4 Price analysis
Part 4. Assessment of factors of investment attractiveness of the market
Part 5. Forecast of the development of the market for storage and warehousing of frozen and refrigerated goods
Part 6. Conclusions on the prospects of creating enterprises in the study area and recommendations to existing market operators
Research excerpt
Part 1. Overview of the Indian frozen and refrigerated storage and warehousing market
1.1. Definition and Characteristics of the Indian Frozen and Chilled Storage and Warehousing Market
In connection with the active development of production and the growth in the turnover of products requiring special storage conditions, the role of low-temperature warehouses in the schemes of cold food supplies is increasing. There is currently a shortage of quality storage space for frozen and chilled products on the market. The construction of new warehouse projects with special storage conditions is quite rare due to the high cost of construction and operation.
Even 10 years ago, the offer on the market of low-temperature warehouses in India was formed by refrigeration plants and freezers from the times of the USSR with equipment of the corresponding antiquity. But this situation did not suit the rapidly growing grocery chains. It was they who formed the main demand for new generation refrigerated warehouses, the construction of which began in 2005.
Usually, products of several groups are stored and processed in low-temperature warehouses. These are the so-called commodities - meat, poultry, butter, fish, standard cheeses. Products related to the FMCG group: quick-frozen seafood, semi-finished products, vegetable mixes; dairy products - butter, cheese, yoghurts, as well as chilled products - meat, poultry, fish, baby food and, among ""other"" goods, medicines.
Refrigerated warehouses are specially equipped rooms, the temperature range of which is maintained from + 8 to - 25 ° C, equipped with modern refrigeration equipment, which allows maintaining a constant temperature level in the room.
A modern low-temperature warehouse is a complex and highly equipped complex for storing goods. Special refrigeration equipment and air conditioning systems make it possible to create the most favorable conditions for storage, thereby avoiding changes in consumer properties and deterioration of the presentation of products.
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Advantages of using a third-party warehouse for chilled and frozen products:
Security and reliability of storage. It is ensured by constant automatic monitoring of cargo storage parameters, qualified personnel and full control over the safety of products.
High tech warehouse. Due to the availability of modern refrigeration equipment, constant humidity and temperature conditions are always maintained in the warehouse, so the client can be calm about the safety of his goods. Maintenance of the warehouse is carried out in accordance with international norms and standards of work, which ensures the conditional safety of the cargo and its consumer qualities.
Developed infrastructure of the logistics complex and comfortable working conditions. For the convenience of the client and warehouse workers, the territory provides for the organization of utility rooms, food outlets, office blocks and other common areas.
The possibility of obtaining additional logistics services. A warehouse operator can offer a client not just a cargo storage service, but also various operations for processing and pre-sale preparation of cargo, delivery of orders to their destination.
Thus, the use of modern, technically equipped refrigerated warehouses for the storage and handling of goods is a necessary condition for the effective organization of logistics and the provision of the necessary stocks of frozen and chilled goods.
1.2. Dynamics of the Indian storage and warehousing market for frozen and refrigerated goods, 2015-2019
During 2014-2016 The market for storage and warehousing of frozen and refrigerated goods was stagnating in monetary terms, …
Diagram 1. Dynamics of the market volume of storage and warehousing of frozen and refrigerated goods in India for the period 2015-2019 in monetary terms, billion Rs.
1.3. Market structure by type of service provided in India
New and modern class A facilities account for …% of the area.
At the same time, the share of low-temperature premises, entirely consisting of refrigerators, does not exceed …% of all warehouse complexes. Multi-temperature warehouses are more common. Usually these are distribution centers of grocery retailers, where a variety of products are stored and both dry warehouse premises and zones with different temperature conditions are organized.
1.4. Structure of the market for storage and warehousing of frozen and refrigerated cargoes by Union Territories
The main share of storage and warehousing services for frozen and refrigerated cargo falls on the Central Union Territories ... . Together, these federal districts occupy …% of the market.
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Diagram 3. Structure of the provision of storage and warehousing services for frozen and refrigerated cargo in India by Union Territories, 2019, %
1.5. Assessment of current trends and development prospects of the studied market
The main trends in the market are:
Currently, most transactions are built-to-suit. Objects are built for a specific tenant, such transactions are concluded, as a rule, for a long period (from seven years), and rental rates are calculated taking into account the investor's investments.
Market participants note the high activity of developers. There is a large presence of typical warehouses on the market, which do not always meet the requirements of potential customers. Individual characteristics are important, assuming proximity to major logistics highways, a certain size of loading and loading zones, temperature conditions, and so on.
Over the past few years, interest in robotic warehouses has increased among large companies. This trend is coming to India from the West. Warehouse operations are performed without human intervention or with minimal human involvement. This is relevant for industries where reducing the influence of the human factor can positively affect the operation of the warehouse. It is reasonable to use automatic warehouses in industries where the work of an ordinary employee can be burdened by a number of factors or other objective reasons, for example, a warehouse that stores deep-frozen products.
The increase in the cost of fuel has led to an increase in the share of electric forklifts and other equipment in the fleet of logistics operators and manufacturers. It should be noted that this trend was observed before, but was caused by a different reason. Recently, more and more logistics centers, medium and high-level warehouses have appeared that are interested in reducing operating costs (they are much lower in electrical engineering) and caring for the environment.
Another trend is the choice of a single supplier of the entire complex of operated equipment to reduce the cost of maintenance and repair of machines.
Thus, the market for warehouse logistics of frozen and chilled goods has objective growth prospects, both in terms of volume and quality. The Indian market is only slightly behind the Western one.
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1.6. Assessment of factors affecting the market
Let's consider the main factors influencing the market and, accordingly, demand.
Social (demographic)
During 2012-2018 India's population is on the rise. The increase in the population in 2015 was not only due to migration and natural increase, but also due to the formation of two new states of the Federation - the Republic of Crimea and the city of Sevastopol.
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General trends in macroeconomic indicators can also be traced in such a value as real incomes of the population, which determine the level of effective demand.
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Economic
GDP is a macroeconomic indicator that reflects the market value of all final goods and services (that is, intended for direct consumption) produced per year in all sectors of the economy on the territory of the state for consumption, export and accumulation, regardless of the nationality of the factors of production used. It is the main, most complete official indicator of public welfare. The absolute and relative values of GDP give an idea of the general material well-being of the nation and the dynamics of its growth / decrease, since the higher the level of production, the higher the welfare of the country.
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Regarding India, experts predict a difficult and unpredictable period. Firstly, because the entire global economy has entered a recession triggered by the coronavirus. Secondly, there was a drop in world oil prices, which is extremely painful for the Indian economy. As a result, it is highly likely that in the medium term the market for refrigerated warehouse services will also be negatively affected by negative processes in the global and Indian economies. The strength and duration of the impact will depend on: the demand for oil and gas and the level of world prices for them, the duration of the period of low prices, as well as the duration of the coronavirus pandemic in the world and India.
Let's take a look at some experts' assessments:
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The industrial production index shows the total volume of all industrial production, utilities, etc. in terms of money.
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Уровень РёРЅС „Р” СЏС † РёРё
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Retail volume
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Diagram 10. Volume of retail trade in India, trillion Rs., 2015 - 2020 (4 months)
technological
Import dependence. In warehouses, a large share is occupied by imported equipment. However, the instability of the rupee provokes an increase in the cost of spare parts and components.
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Refrigeration equipment, which allows maintaining the temperature regime within the specified perimeters, requires increased energy consumption and connection to additional capacities. At present, there is a lack of capacity in India, and every winter this translates into localized blackouts of heat or electricity. Even in places where there are reserves of capacity, it is difficult to access them.
The need to build a special building structure, change the characteristics of the floor to avoid freezing of the soil, as well as waterproofing. It should be noted that the installation of floors, which is one of the most expensive and technologically complex work in the construction of a warehouse, adapting the floor to the needs of a cold storage warehouse further complicates the project. In addition to floors, all other structures undergo similar changes. As a rule, thickening of wall sandwich panels, necessary insulation, adaptation of the roof (or overlapping with heat-insulating materials at the level of load-bearing trusses), separation of deep-freeze zones with internal partitions, organization of special shock freezing chambers, allocation of zones for working with goods in a separate room are carried out.
Warehouses of this type require:
additional lifting and sectional doors to deep-freeze chambers;
additional thermal curtains for external docks;
additional treatment of metal structures against corrosion;
compliance with frost resistance requirements for all utilities located in low temperature zones;
additional technical rooms (compressor room, control panel for refrigeration equipment, etc.);
additional costs for IRD and coordination of project documentation, etc.
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Staff. To date, one of the problems in the development of the studied market is the insufficient level of qualification of the personnel of companies. Technical personnel, including for starting positions, are quite easy to find in large cities, while in the regions, searches can sometimes be delayed. The average age of a technician is steadily increasing. To avoid a shortage of qualified personnel in the future, companies prefer to recruit young people and provide them with the widest possible opportunities for professional growth.
Implementation of IT-technologies. Currently, the requirements for solutions for automating logistics processes are changing - now they must have sufficient functionality, a high level of reliability, show results that are understandable to the business and fit into the existing IT infrastructure, as well as meet global automation trends. All this, on the one hand, increases the speed and accuracy of operations, optimizes logistics processes, and on the other hand, creates new opportunities for adaptive planning.
Political
Credit policy. Today it is quite difficult to imagine the progressive development of the economy without the active participation of the credit system. It should also be noted that the assessment of the availability of credit resources for both legal entities and individuals is a significant indicator that allows assessing not only the demand for credit funds, but can also serve as a reflection of the real economic situation in the region ...
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The Government of India is actively working towards the availability of credit funds. The weighted average interest rate after the growth in 2015 tends to decrease. Low stable interest rates allow you to plan your business more confidently. Order of the Ministry of Economic Development of India dated February 19.02.2015, 74 N 2020 approved the Main Provisions of the Strategy for the Development of the National Guarantee System for Supporting Small and Medium Enterprises for the period up to . The main goals of the Development Strategy are to increase the availability of credit resources for SME states and the formation of a unified system of guarantee support for small and medium enterprises and medium business.
The development strategy establishes a mechanism for actions aimed at increasing the guarantee support of states for small and medium-sized businesses and improving business lending conditions, and also defines technologies, target client segments, geographic and industry boundaries, and promising opportunities for the national guarantee system. The positive influence of the factor.
World politics and anti-Indian sanctions. In 2018, due to the deterioration of the export situation in the world market (the impact of the US-China trade war) and the stagnation of domestic demand on the eve of the expansion of anti-India sanctions, a slowdown in the growth rate of cargo transportation was noted and, as a result, a decrease in demand in the market under study.
Warehouse insurance. For the warehouse market, insurance of premises is becoming the norm (which was predicted back in 2014). Experts attribute this to two reasons:
Investments of modern users in logistics are growing (temporarily, but at a high rate).
Carriers and cargo owners are moving from buying to leasing. Insurance of a warehouse received for temporary use is one of the standard conditions of serious landlords.
Table 5. STEP analysis of factors affecting the storage and warehousing market for frozen and refrigerated goods
In general, the influence of macro factors on the market under study can be assessed as a negative moderate force. A group of economic and social factors has a negative impact. In addition, factors such as global politics and anti-India sanctions, equipment import dependence, the need to build a special building design, increased energy consumption and connection to additional capacities, low staff qualifications, and rising electricity prices are negatively affected.
Factors such as warehouse insurance, government credit policy, and the introduction of IT technologies have a positive impact.
1.7. Analysis of sectoral indicators of financial and economic activity
Consider the financial and economic indicators for the industry (52.10.1) ""Storage and warehousing of frozen or refrigerated goods"", in dynamics, for 2015-2019.
Profit from the sale of services
Industry profit dynamics in 2015-2016 had an upward trend. …
Gross margin
Gross margin is gross profit divided by sales revenue (excluding excise taxes and VAT). Gross margin shows how much gross profit falls on a unit of revenue. Gross profitability serves as an assessment of the economic efficiency of an enterprise, which reflects the rational use of labor, material, monetary and other resources.
Table 7. Gross margin of the industry ""Storage and warehousing of frozen or refrigerated goods"" in comparison with all sectors of the Indian economy, 2015-2019, %
Return on profit
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Absolute liquidity
Industry ""Storage and warehousing of frozen or refrigerated goods"" in 2015-2019 had indicators of absolute liquidity above the value for all sectors of the economy.
Table 9. Absolute liquidity in the field of ""Storage and warehousing of frozen or refrigerated goods"" in comparison with all sectors of the Indian economy, 2015-2019, times
Current liquidity
Values of current liquidity in the industry in 2015-2019 were fluctuating...
Business Activity Indices
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Financial stability
Financial stability indicators in 2015-2019 in general for the industry were above the normative value ... which indicates a sufficient amount of own working capital in the industry, necessary for its financial stability.
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Thus, the gross margin indicators of the industry in comparison with the gross margin indicators of the Indian economy as a whole in 2015-2019. had higher values, and the profitability before tax in 2019 for the industry is comparable to the indicators for all sectors of the Indian economy. In the period under study, the industry had absolute liquidity indicators higher than the values for all sectors of the economy.
At the same time, current liquidity indicators indicate an irrational capital structure.
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Part 2: Competitive analysis of the Indian frozen and refrigerated storage and warehousing market
2.1. Major players in the market
In total, 887 companies are registered in India providing services for the storage of products in refrigerated warehouses. But in fact, the market is much wider. Since many large retailers and manufacturers have their own refrigerated warehouses.
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2.2. Market shares of the largest competitors
As of 2019, the largest operators of the storage and warehousing services for frozen and refrigerated cargo in India is Orientir Group, occupying …% of the market.
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2.3. Profiles of major players
GC ""XXX""
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FM XXX
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XXX
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XXX
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Corporation ""XXX""
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Part 3. Analysis of the consumption of storage and warehousing services for frozen and refrigerated goods
3.1. Estimated per capita consumption of storage and warehousing services for frozen and refrigerated goods
In 2019, the volume of consumption of storage and warehousing services for frozen and refrigerated goods per capita amounted to … Rs./person, …
Diagram 15. Consumption of storage and warehousing services for frozen and refrigerated goods per capita, 2014-2019, Rs./person
3.2. Market Saturation and Estimated Market Potential in India
The Indian low-temperature warehouse market is in a stage of rapid development, which is associated with a strong growth in demand and the almost complete absence of vacant premises. The development of retail and the productivity of companies leads to a tightening of requirements for warehouse cold storage.
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The most acute shortage is in refrigeration areas for storing pharmaceutical products. They are subject to increased requirements for temperature and humidity, the availability of energy-saving equipment and air circulation systems. There are also special requirements for finishing materials for the interior walls of the warehouse. They must comply with SNiP and the requirements of the sanitary and epidemiological service.
According to Landmark experts, the demand for such services from retailers will remain high, and, first of all, due to increased sales through online channels, including through various partnership schemes with online companies. In any case, such expansions lead to the need for additional warehouse and fulfillment areas, which will allow the storage of products in both refrigeration and freezing areas.
Pharmaceuticals will become another driver of demand growth for storage and warehousing services in low-temperature warehouses. The pharmaceutical industry has shown steady growth over the past few years. Further growth of the segment will lead to an increase in demand for high-quality multi-temperature warehouses.
3.3. Description of consumer preferences
The demand for ""cold"" storage facilities is primarily due to the demand from companies whose products require special temperature storage conditions. It was mainly formed by retailers.
Trade accounts for more than 50% of transactions made in 2018. Pharmaceutical companies are in second place in the structure of demand for such warehouses.
Consumers of the service pay attention not only to the quality of the storage itself and the rental rate, but choose the premises based on such important criteria as the location of the warehouse, its transport accessibility, infrastructure development, etc.
The first requirement that ensures the interest of tenants is the convenient location of the complex. Logistics is inextricably linked with geography and traffic flows. For efficient logistics, both general transport accessibility to the warehouse and convenient access roads from the point of view of the supply chains of a particular retailer or supplier are important. The most demanded are warehouses located near large and not too busy highways, near airports. Warehouses built at the intersection of major highways and ""rings"" are of particular interest to tenants, which makes it possible to quickly access other highways. For many tenants, proximity to airports is important.
Modern high-quality warehouse is high-tech. Optimization of logistics processes reduces the time for processing and shipment, which means that it gives tenants an advantage over competitors, increases its economic efficiency. For the installation and smooth operation of modern warehouse equipment, high-quality premises are required. Floors require special attention in the construction of speculative warehouses - the higher the quality of the floor and the possibility of maximum load, the wider the range of potential tenants will be.
The quality of the warehouse complex is determined by the availability of communications and the received capacities, first of all, by the supply of electricity. Experts recommend that a warehouse be provided with the second category of reliability, when two independent sources of electricity enter the facility at once - this significantly reduces operational risks and eliminates cases of disconnection of one of them. It is mandatory to have a backup source of electricity - at least for the needs of life support systems. The best option is if the facility has the ability to connect an additional generator for residents with special power supply requirements. For example, if a tenant uses deep freezers or cold stores for dairy products, a power outage, even for a short time, can lead to large losses.
The warehouse building must be equipped with a high-quality fire extinguishing system. It will be important to have our own pumping station located on the territory of the industrial park. An additional benefit, which is an important requirement of most foreign insurers, is the availability of spare diesel pumps in addition to electric ones.
3.4. Price analysis
Due to the fact that there are no official data on the dynamics of the cost of storage and warehousing services for frozen and refrigerated goods, in this study, consumer price indices for the Union Territories are considered as a whole for the transport and logistics services industry, which includes the market under study.
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Despite the fact that the volume of new warehouse space commissioned already exceeds that of 2019, vacant space continues to decline rapidly. This is happening against the backdrop of high demand, which will continue to provoke an inevitable increase in rental rates.
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Part 4. Assessment of factors of investment attractiveness of the market
The positive factors of the investment climate in the market for storage and warehousing of frozen and refrigerated goods dominate over the negative ones.
The most significant positive factors.
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The most significant negative factors include the following.
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Part 5. Forecast of the development of the market for storage and warehousing of frozen and refrigerated goods
We will analyze the market based on methods based on identifying trends over time, adjusted for expert opinion in the industry.
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Since the market for storage and warehousing of refrigerated and frozen goods belongs to the secondary market - the provision of services - the peak of the decline in the industry occurred in mid-2009, while the manufacturing industry has already begun to experience gradual growth and revival.
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Participants in the market of transport and logistics services and industry experts identify a number of key trends that emerged in the field of domestic logistics in 2014:
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Within the framework of two quarantines, GidMarket analysts predict the growth of the storage and warehousing services market for frozen and refrigerated goods in India by … % …
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Part 6. Conclusions on the prospects of creating enterprises in the study area and recommendations to existing market operators
Warehouse organizations in India are considered to be a young activity, which has a lot of stages of development. Since the demand for logistics services is constantly growing, we should also expect continuous modernization of this industry.
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The demand for ""cold"" storage facilities is primarily due to the presence of end-user demand for products that require special temperature storage conditions. With the growth of incomes of the population, there are qualitative changes in the way of life of people: many people prefer not to cook at home, but to eat in cafes and restaurants or use semi-finished products. At the same time, the consumption of chilled or frozen foods is growing. Demand for these products remained stable even during the crisis. Thanks to this, refrigerated warehouses continue to be in steady demand.
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Diagrams
Diagram 1. Dynamics of the market volume of storage and warehousing of frozen and refrigerated goods in India for the period 2015-2019 in monetary terms, billion Rs.
Diagram 2. Structure of the market for storage and warehousing of frozen and refrigerated goods by type, 2019, %
Diagram 3. Structure of the provision of storage and warehousing services for frozen and refrigerated cargo in India by Union Territories, 2019, %
Diagram 4. Dynamics of the population of India, as of January 1, 2012-2020, million people, thousand people
Diagram 5. Population forecast in India for the period 2021-2024, million people
Chart 6. Dynamics of real incomes of the population of India, 2012-2019
Diagram 7. Dynamics of India's GDP, 2011-2019, Q1 2020, % to the previous year, trillion Rs.
Chart 8. Monthly dynamics of the US dollar against the rupee, 2015-2020 (Jan-May), Rs. for 1 US dollar
Chart 9. Dynamics of the inflation rate in India, 2015-2020 (5 months), %
Diagram 10. Volume of retail trade in India, trillion Rs., 2015 - 2020 (4 months)
Chart 11. Dynamics of growth in electricity prices in India, 2015 - 2020 (February)
Chart 12. Dynamics of the average interest rate on loans to legal entities, 2014-2020
Diagram 13. Current liquidity (total coverage) in the field of ""Storage and warehousing of frozen or refrigerated goods"" for 2015-2019, times
Diagram 14. Shares of the largest competitors in the market for storage and warehousing services for frozen and refrigerated goods in India in 2019, in %
Diagram 15. Consumption of storage and warehousing services for frozen and refrigerated goods per capita, 2014-2019, Rs./person
Figure 16. Market life cycle stage
Diagram 17. Forecast of the volume of the market for storage and warehousing services for refrigerated and frozen goods in 2020 - 2024 – in case of a single quarantine scenario
Diagram 18. Forecast of the volume of the market for storage and warehousing services for refrigerated and frozen goods in 2020 - 2024 – in the scenario of two quarantines
Tables
Table 1. Classification of warehouses for the storage and warehousing of frozen and refrigerated goods
Table 2. Expert forecasts for the decline in real GDP in India in 2020, %
Table 3. Industrial production index by state of India (in % of the previous year), 2015 - 2019
Table 4. Weighted average interest rates of credit institutions on loans to non-financial institutions in rupees (% per annum), 2014 - 2020
Table 5. STEP analysis of factors affecting the storage and warehousing market for frozen and refrigerated goods
Table 6. Profit (loss) from the sale of services ""Storage and warehousing of frozen or refrigerated goods"" in the Union Territories of India, 2015-2019, million Rs.
Table 7. Gross margin of the industry ""Storage and warehousing of frozen or refrigerated goods"" in comparison with all sectors of the Indian economy, 2015-2019, %
Table 8. Profitability of profit before tax (profit of the reporting period) in the field of ""Storage and warehousing of frozen or refrigerated goods"" in comparison with all sectors of the Indian economy, 2015-2019, %
Table 9. Absolute liquidity in the field of ""Storage and warehousing of frozen or refrigerated goods"" in comparison with all sectors of the Indian economy, 2015-2019, times
Table 10. Business activity (average period of receivables turnover) in the field of ""Storage and warehousing of frozen or refrigerated goods"", for 2015-2019, days days
Table 11. Financial stability (security of own working capital) in the field of ""Storage and warehousing of frozen or refrigerated goods"" in comparison with all sectors of the Indian economy, 2015-2019, %
Table 12. Main market players in India
Table 13. Basic information about the market participant GC ""XXX""
Table 14. Basic information about market participant XXX
Table 15. Basic information about market participant XXX
Table 16. Basic information about market participant XXX
Table 17. Basic information about the market participant Logopark XXX
Table 18. Consumer price indices for transport and logistics services in the Union Territories of India, 2014 - 11 months 2019, %
Table 19. Dynamics of prices for the rental rate of warehouse premises, 2014 - 2019, %
Table 20. Assessment of factors of investment attractiveness of the market for storage and warehousing services for frozen and refrigerated goods
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