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A PROJECT REPORT ON

FINANCIAL IMPACT & OPERATIONAL FUNCTIONS


IN LOGISTIC BUSINESS

SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS


FOR MASTER’s DEGREE IN FINANCE MANAGEMENT

TO
UNIVERSITY OF MUMBAI

BY
NILESH HASMUKHBHAI VADHER
MFM – III SEM I
ROLL NO. 201058
2010-2013

UNDER THE GUIDANCE OF PROF. ASHOK RAINA

LALA LAJPATRAI INSTITUTE OF MANAGEMENT


MAHALAXMI, MUMBAI – 400 034
A PROJECT REPORT ON

FINANCIAL IMPACT & OPERATIONAL FUNCTION IN


LOGISTIC BUSINESS

SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS


FOR MASTER’s DEGREE IN FINANCE MANAGEMENT
TO
UNIVERSITY OF MUMBAI

BY
NILESH HASMUKHBHAI VADHER
MFM – III SEM I
ROLL NO. 201058
2010-2013

UNDER THE GUIDANCE OF PROF. ASHOK RAINA

LALA LAJPATRAI INSTITUTE OF MANAGEMENT


MAHALAXMI, MUMBAI – 400 034
DECLARATION

I hereby declare that this dissertation submitted in partial fulfillment of the


requirement for the award of, MASTER’s DEGREE IN FINANCE
MANAGEMENT (MFM) of the University of Mumbai is my original work and has
not been submitted for award of any other degree or diploma fellowship or other
similar title or prizes.

I further certify that I have no objection and grant the rights to LLIM to publish any
chapter or project if they deem fit in journals or magazines and newspaper etc.
without my permission.

NAME: NILESH H. VADHER

CLASS: MFM III SEM I

BATCH: 2010-2013

ROLL NO.: 201058

DATE: 28TH OCTOBER, 2012

PLACE: MUMBAI

NILESH VADHER
PROJECT GUIDE CERTIFICATE FORM

I Mr. Nilesh Hasmukhbhai Vadher the undersigned Roll No. 201058 studying in
the Third Year of MFM is doing my project work under the guidance of Prof. Ashok
Raina wish to state that I have met my internal guide on the following dates
mentioned below for Project Guidance:-

SR. NO. DATE SIGNATURE OF


THE INTERNAL
GUIDE

______________________ ______________________
Signature of the Candidate Signature of Internal Guide
Certificate

This is to certify that the dissertation submitted in partial fulfillment of the


requirement for the award of MFM of the University of Mumbai is a result of the
bonafide work carried out by Mr. Nilesh Hasmukhbhai Vadher under my
supervision and guidance. No part of this report has been submitted for award o f
any other degree, diploma fellowship or other similar titles or prizes. The work has
also not been published in any scientific journals/ magazines.

DATE: 28-10-2012 NAME: NILESH HASMUKHBHAI VADHER

PLACE: MUMBAI ROLL NO.: 201058

------------------------------ ---------------------------
DR. V. B. ANGADI DR. M. GOWRI SHANKAR
(DIRECTOR, LLIM) (PROJECT GUIDE)
ACKNOWLEDGEMENT

This project has been a great learning experience for me. I take this opportunity to
thank, Prof. Ashok Raina my internal project guide whose valuable guidance &
suggestions made this project possible. I am extremely thankful to him for his
support. He has encouraged me and channelized my enthusiasm effectively.

I express my heart-felt gratitude towards my parents, siblings and all those friends
who have willingly and with utmost commitment helped me during the course of my
project work.

I also express my profound gratitude to Dr. Angadi, Director of Lala Lajpatrai


Institute of Management for giving me the opportunity to work on the project and
broaden my knowledge and experience. My sincere thanks to Prof. Arati Kale for
her valuable guidance and advice in completing this project.

I would like to thank all the professors and the staff of Lala Lajpatrai Institute
especially the Library staff who were very helpful in providing books and articles I
needed for my project.

Last but not the least, I am thankful to all those who indirectly extended their co-
operation and invaluable support to me.
EXECUTIVE SUMMARY

India is one of the fastest growing economies of the world today. This growth
is fuelled by growth in infrastructure, booming manufacturing sector, EXIM trade,
retail and agricultural related activities amongst others. Logistics assumes central
activity in these growth areas. In India logistics cost, as a proportion of GDP, stands
today at 13 per cent which is set to rise as the Indian economy shifts from service
oriented economy to that of non-service activities, like, manufacturing and food-
processing etc. Rural logistics is set to contribute a larger share to this increase as the
infrastructure related to agricultural activity unfolds.

With rising disposable income, changing lifestyle, focus of government and


private sector on rural and agricultural related activities, the rural logistics has
received special attention in the past two to three years. Rural logistics, though
lucrative, has a number of challenges which makes it difficult to tap the opportunity.
Development of cold chain warehousing infrastructure, thus, remains at the core of
the government’s plan to enable growth of rural areas, provide employment
opportunities for rural youths, meet India’s growing food demand etc. Similar is the
trend in cities which have witnessed changing lifestyle and shift to consumerism
which is further fuelling national intra-trade activity and thus the logistics sector.

Indian economy is opening up and one recent step in this direction is the
signing of India-ASEAN trade agreement which will likely to push trade through
Eastern Coast of India many folds. The inclusion of India into Nuclear Suppliers
Group (NSG) and civilian nuclear co-operation agreements with USA and France,
and another one in pipeline with Russia is a pre-cursor to the increase in trade
activities with major powers of the world. By 2030, the economic benefits that will
accrue to India’s economy, as a result of the nuclear trade could touch US $500
billion. Further, the government is strengthening the infrastructure with over US $70
billion of investment planned till 2012. Logistics will be one sector which will be the
backbone of flourishing trade activity and infrastructure development, and will
receive special attention by the government / private sector in coming years.

There are a number of activities in the Indian logistics sector which are
broadly classified under ‘Hardware’, ‘Services’ and ‘Technology’ related activities,
however, not all of these activities are core to the growth of the sector. Indian
logistics sector offers unique opportunities which are mainly driven by an opening
and near double-digit growing economy, and lack of infrastructure in key areas. It
may be noted that although, lack of infrastructure acts as an inhibitor, but the dearth
of adequate infrastructure also presents unique opportunities to players who are ready
for the situation and understand the market.

This report identifies such elements which are growth engines of the Indian
logistics sector and focuses on understanding opportunities related within these
elements. Identifying strategic logistics elements requires one to understand the
supply chain and value chain, EXIM trade elements and their role, government
policies and subsidies etc to identify the most critical elements. The report begins
with identification of such strategic elements which are then studied in deep for each
element to find market structure, growth drivers, barriers to entry, rules / government
policies applicable to the market, competition threat and opportunities. Financials are
discussed with possible scenarios and their financial / technical analysis, wherever
required. And reports end with the recommendation.