Warburg Pincus-backed Stellar to set up 35 logistics parks in 21 cities

Currently, Stellar has a total logistics area of 10 million sq ft, including five million sq ft of covered logistics space.

Warburg Pincus-backed third party logistics company Stellar Value Chain Solutions will set up 35 built-to-suit logistics parks in 21 cities in the next four years. 

The parks will have a contracted logistics space of 50 million square feet. The 21 cities where the parks will come up include four metros, five mini metros, and 12 tier-II cities, said Anshuman Singh, chairman and managing director at Stellar.

While Stellar’s partner developers and vendors will invest about Rs 10,000 crore in the parks, the company itself will invest Rs 3,000 crore inside them, and that will come from its internal accruals, debt, and private equity, Singh said. “There is dearth of good supply chain and logistics facilities in the country. We are aiming to build world-class supply chain with these parks,” he said, adding the company would inter-connect the parks with 50,000 leased trucks. 

Currently, the company has a total logistics area of 10 million sq ft, including five million sq ft of covered logistics space.

In 2016, US private equity firm Warburg Pincus had invested $125 million in the company and bought a majority stake. The company is looking at a top line of Rs 700 crore in the current financial year and touch revenues of Rs 1,400 crore by 2020-21 financial year, Singh said. “We will be the fastest Rs 1,000-crore supply chain company in the country.”

In transportation vertical, it has 1,600 trucks, including 300-owned trucks in cold chain. Stellar acquired Patel Roadways in April this year for an undisclosed amount, and bought Kelvin Cold Chain Logistics and Innovative Logistics Services earlier.

According to a recent report by property consultant JLL, the annual demand of around 32 million sq ft for logistics and warehousing spaces has outstripped the supply of 31 million sq ft witnessed for the first time in the last four years.

With January-March period of 2019 has witnessed 8.4 million sq ft of absorption, it is expected to clock about 38 million sq ft by the end of year. With high demand, lease transactions have remained high, it added. 

Alongside the rise in transactions, the share of Grade A spaces leases have also gone up in the past four years, it said. Of 32 million sq ft of industrial and logistics leases in 2018, 56 per cent were concluded in Grade A spaces.