City-based logistics solutions provider DRS Logistics Private Limited is embarking on a Rs 450-crore expansion that envisages construction of warehousing facilities in south India by the end of the next financial year.
“We have started scouting for a private equity player to infuse funds and expect to close the deal in 90 days from now. The expansion will see the creation of a 2-million sft warehousing space at Hyderabad in Andhra Pradesh, Hosur in Karnataka and Sriperembudur in Tamil Nadu,” AK Agarwal, director (business) of the Rs 500-crore DRS Group, told mediapersons here on Monday.
DRS proposes to float a special purpose vehicle (SPV) – DRS Warehousing South Private Limited – in which the prospective PE investor will hold 50 per cent while DRS will invest the rest by way of land. The company has already acquired 72 acre, of the required 100 acre for the expansion.
The company currently operates 1.5 million sft of warehousing space in cities like Gurgaon, Khajuri, Palwal and Ambala in north India through an SPV called DRS Warehousing North Private Limited in which investment banker Merrill Lynch has a 55 per cent holding. In north, DRS currently provides third-party logistic (3PL) services to Reliance Retail, HPCL, Dabur, Lifestyle and Max.
“The proposed warehousing facilities in south India will primarily cater to the retail industry offering both rental and 3PL services,” Agarwal said, adding that the company would expand its warehousing business to cities like Jaipur and Chandigarh, with an addition of 1 million sft, in the next two years with an investment of Rs 250 crore.
With a fleet of 850 trucks now, DRS is looking at adding 200-250 trucks each year starting March 2010. The company clocked revenues of Rs 269 crore last year. It foresees an uptick of 20-25 per cent this year.
On the company’s plans to start air cargo and rail cargo services during this year, Agarwal said “they would put these plans on hold until the market recovers.”
