Hyderabad-based DRS Group today said it will set up about 2 million square feet of warehousing facilities in three south Indian cities at an estimated project cost of around Rs 350 crore.
The logistics and infrastructure company will set up DRS Warehousing South Pvt Ltd to execute the project and is talking to private equity investors for holding about 50-55 per cent stake in it.
"We will set up 2 million square feet of warehousing in three places in south India — Hyderabad, Bangalore and Chennai," DRS Group Director A K Agarwal told PTI.
"We are looking at a private equity investor for the Rs 350 crore project. We hope to finalise the deal in 2-3 months," he said, but declined to share details about the potential investors.
Agarwal said the group has a similar Special Purpose Vehicle (SPV) for its north India operations.
He said DRS Warehousing North, which has four facilities in Khajuri, Palwal, Ambala and Jamalpur, has an investment of Rs 250 crore and Merrill Lynch held 55 per cent stake in it.
Agarwal said the new warehousing firm in the South is expected to generate Rs 30-40 crore in revenues in 2011-12. At present, Warehousing business contributes just about Rs 20 crore to the DRS revenues.
He said that led by sectors like retail and FMCG, the demand for warehousing facilities will continue to be big over the next few years.
Agarwal said the group is looking at closing the current fiscal with about Rs 450 crore in revenues and the logistics business is expected to contribute about Rs 350 crore to the total turnover.
He said that about Rs 60 crore is likely to come from DRS' infrastructure firm that builds warehousing facilities and rest from the group's education business.