Hyderabad: Kotak Mahindra Bank's private-equity group has invested Rs100 crore in DRS Logistics—which operates its services under the Agarwal Packers and Movers brand—aimed at getting a pie in the booming logistics and transport industry.
Financial terms of the deal were not disclosed. The Hyderabad-based logistics firm is a dominant player in the home-relocation-service segment.
DRS Logistics, which currently has 3.5 lakh sq. ft of warehousing infrastructure in Gurgaon, Hyderabad, Mumbai and Chennai, has chalked out a Rs150 crore expansion plan.
The company is setting up new warehouses in Bangalore and Pune and expanding infrastructure at the existing locations as well, adding 1.5 million sq. ft warehousing space, DRS managing director Dayanand Agarwal said.
India’s third-party logistics market is set to “experience a period of explosive organic growth,” Datamonitor, a US market researcher, said in a report last month. The report predicts high double-digit growth rates for both outsourced and contract logistics in India.
“With India's gross domestic product growing at over 9% per year and the manufacturing sector enjoying double-digit growth rates, the Indian logistics industry is at an inflection point, and is expected to reach a market size of over $125 billion (Rs5.5 lakh crore) in 2010,” Datamonitor’s report pointed out.
The Rs200 crore DRS counts LG, Sony, Onida, Blue Star, Bridgestone, Hyundai, MRF Tyres, Reliance Fresh, ITC Foods, Cadburys and Britannia among its customers, he said.
With plans to enter the air cargo segment, DRS has sought permission from the Directorate General of Civil Aviation and expects final approvals in six months, according to DRS director Anjani Kumar Agarwal. “We are planning to have two planes on lease before the year-end,” he said.
Currently present in segments such as bulk transportation, warehousing, parcels, home relocation and air cargo, the company plans to enter the shipping and courier segments as well in the fiscal year 2008, as part of a drive to evolve into an integrated logistics player, Kumar Agarwal said.
Nitin Deshmukh, head of Kotak Mahindra Bank Private Equity, said the DRS investment is being made from a $160 million equity fund, which has so far invested nearly 60% of its corpus amount in eight other ventures. “Typically, we have a holding period of three to five years. Of these eight ventures, two have matured and should go public sometime during the next fiscal,” he said.