TVS Supply Chain set to launch Rs 1,100-crore warehousing venture

TVS Supply Chain Solutions, earlier known as TVS Logistics Services, is looking to launch a new warehousing venture, said a source in the know, with an investment of $150 million (Rs 1,100 crore).

The UK government’s investment arm CDC is pumping in $50 million (Rs 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 focus on tapping growing the footprint of e-commerce ventures in the country. 

Though the exact area the venture is planning to build is not known, experts said with an investment of Rs 1,100 crore, a developer can build around nine million square feet, given the cost of construction comes to around Rs 1,500 per sq ft and land cost comes around Rs 2 crore per acre. TVS did not offer any comment. When contacted, a CDC spokesperson said: “We are unable to comment on deal speculation”.

TVS Supply Chain Solutions is one of the largest warehousing companies with over 300 strategically located warehouses covering over 10 million sq ft of area in 29 states and UTs, its website said.

Rituraj Verma, partner at Nisus Finance Services, said 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”. 

“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,” he said.