Kotak equity arm invests Rs 100cr in DRS Logistics

Kotak Mahindra Bank's private equity arm, Kotak Private Equity Group, has invested Rs 100 crore in Hyderabad-based logistics provider DRS Logistics Private Limited.

The investment is to be utilised to expand DRS Logistics' warehousing infrastructure.

"We have already acquired around 70 acres of land in six metros "" Delhi, Mumbai, Pune, Hyderabad, Bangalore and Chennai "" to develop 1.5 million sft of warehousing infrastructure for providing third party logistics (3PL) services to retail enterprises in the country, involving an investment of Rs 150 crore. This private equity investment is being infused into this project, while we would raise the remaining Rs 50 crore through debts," K Agarwal, director (marketing), DRS Group, told mediapersons on Thursday.

Construction work on the project has already commenced and is expected to be completed by August this year.

DRS Logistics currently has 3.5 lakh sft warehousing space in Gurgaon, Hyderabad, Bangalore, Mumbai and Chennai. Besides the creation of 1.5 million sft of warehousing space which is under way, the company plans to add another 1.5 million sft next year and scale this up to 4 million sft across the country by 2010.

The company currently has a fleet of 550 vehicles and employs around 2,000. With the addition of new warehousing space, it plans to add 300 vehicles to the existing fleet and employ 1,600 more by August this year.

Aiming at providing complete supply chain management solutions under one roof, DRS Logistics is planning to enter the courier, shipping and railway services by mid-2008. It currently focuses on relocation movements, logistics, transport, warehousing and parcel. Also on the agenda is an entry into the air cargo services.

"Keeping in view the huge demand for air cargo services, we have applied to the Directorate General of Civil Aviation (DGCA) for permission to purchase cargo aircraft. We are currently awaiting the DGCA's nod. We want to acquire five cargo aircraft and have an international courier division with presence across the world," Agarwal said.

The DRS Group posted a turnover of Rs 116 crore in the last financial year and expects to clock Rs 200 crore this fiscal. Its revenue outlook for the next fiscal is Rs 402 crore, and it aims at becoming a Rs 1,200-crore company by 2010 and a Rs 10,000-crore company by 2018.

"We would take the inorganic route to reach our revenue targets, and are currently in talks with a few companies engaged in logistics services for acquisitions," Agarwal said refusing to divulge more details.