TVS Supply Chain Solutions, formerly known as TVS Logistics Services, are in talks to roll out a new warehousing venture, with an investment of $150 million (INR 1,100 crore), as per sources.
The UK government’s investment arm CDC is pumping in $50 million (INR 369 crore), said sources. The venture is expected to be launched this month.
“The venture will focus on building modern warehouses on the outskirts of large industrial clusters such as Chennai, Pune and so on,” sources said, adding that it would also shift its focus on exploring the growing footprint of e-commerce ventures across the country.
With an investment of INR 1,100 crore, it is expected that a developer can build around nine million square feet, given the cost of construction comes to around INR 1,500 per sq ft and land cost comes around INR 2 crore per acre, said experts.
However, TVS declined from commenting on the deal speculation.
As one of the largest warehousing companies, TVS Supply Chain Solutions has over 300 strategically located warehouses across 10 million sq ft of area in 29 states and UTs.
Rituraj Verma, partner at Nisus Finance Services, said “We expect consolidation in the sector and new money coming into the sector for existing players to the tune of $ 1-2 billion in the next few months. The prices for land are, therefore, likely to increase significantly and will be matched with increased rentals in specific clusters. We are also seeing significant interest in pre-leased warehouses at attractive yields providing existing players with an opportunity to cash in on their investments in the recent past”.
Investor interest in warehousing has spiked because of the sector’s relative resilience to Covid-19 and huge inflows projected to be coming into Reliance Jio and Tata group’s “super app”, he added.