TVS ILP eyes expansion into 10 smaller cities

TVS Industrial and Logistics Park (ILP) Private Limited, a part of the TVS Mobility Group, is set to expand its footprint into 10 additional cities. Fueled by robust demand from the fast-moving consumer goods and consumer durable (FMCG & FMCD) sector, the company aims to double its existing portfolio from 10 million sq.ft to 20 million sq.ft within the next three to four years. Land acquisition and construction have already commenced in cities such as Vizag, Sricity, Patna, Jammu, Siliguri, Gauhati, Hubli, Jaipur, and Cuttack.

The ambitious plan includes further expansion into 35 tier-II and tier-III cities by 2027-28, with a strategic focus on the north and north-east markets to complement its significant presence in the south.

According to Manikandan Ramachandran, COO of the company, there is a growing interest in Grade A projects in non-metro cities. The demand for Grade A space has increased, driven by clients seeking to transition from non-compliant godowns, particularly in the aftermath of the pandemic.

The company views smaller cities as central hubs for nearby towns and consumption centers, effectively reducing logistics costs. However, challenges such as higher land prices, a lack of organized land aggregators, and time-consuming compliances in certain states need to be addressed.

TVS ILP sees potential for growth in Grade A warehousing space across various industries in non-metro cities, with the FMCG and FMCD sectors showing particular aggressiveness in adopting Grade A spaces, thereby propelling demand. Additionally, the surge in manufacturing activity contributes to the overall demand for top-tier warehousing solutions.

While e-commerce has traditionally been a major driver of warehousing demand, Manikandan notes a general trend of a slowdown in warehouse absorption from e-commerce players. Despite ongoing demand during festivals, there is a shift in strategy, with companies redesigning and utilizing capacity more efficiently, reaching up to 150%. He anticipates a potential improvement in the e-commerce warehouse absorption trend in the coming year.

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