RIL takes to the air; buys into Deccan 360

Reliance Industries Ltd (RIL) will buy a strategic stake in freight services firm Deccan 360, owned by G R Gopinath, for an undisclosed sum. The investment is being made through a wholly-owned subsidiary of RIL.

While RIL did not disclose the financial details of the deal, the company’s stake in Deccan 360 is expected to be between 26 per cent and 50 per cent. Two RIL representatives will be on the board of the cargo venture. A Reuters report pegs the investment by Reliance between $20 million and $30 million.

Gopinath told reporters today Deccan 360’s strategic partnership with Reliance will enable the company to realise “our dream of creating world-class logistics reach every nook and corner of India faster.”

The deal with Deccan 360 will boost the supply chain and logistics for RIL’s retail business — Reliance Retail, which operates 900 multi-format stores in 80 cities across India — and also help Deccan 360 expand its network.

“We believe that our collaboration with Deccan 360 will see a transformation in the logistics domain in India. We are sure that this will enhance customer experience in the logistics domain,” RIL Chairman Mukesh Ambani said in a statement.

Deccan 360 has eight aircraft currently. “RIL’s investment will help Deccan 360 increase its air network across the country,” he said.

The company, which also has has 300 trucks, 850 bikes and other small carriers nationwide, currently connects 50 domestic cities. Gopinath founded India's first budget airline Air Deccan and later sold it to UB Group's Kingfisher Airlines in 2007.

Deccan 360, which started operations a year ago from its hub in Nagpur, claims to be the first logistics company in India to adopt and develop a hub and spoke model. The core of its model is being developed across 50 acres at Nagpur, which will form an extensive state-of-the-art multimodal (surface and air) storage, transportation and delivery network.

Deccan 360 Chief Financial Officer G.K. Anantha Raman said the company was likely to complete the proposed warehousing facility at the multi-modal international cargo hub and airport at Nagpur (MIHAN) by December. “We want to make MIHAN a warehousing hub, which will help companies bring their inventory costs down,” he said.