Embassy, Maini Group form logistics JV to build warehouses

Bangalore: Bangalore-based Embassy Property Developments Ltd and Maini Group, electric car pioneers in India with the Reva, have formed a warehousing and logistics joint venture company.

Embassy-Maini Logistics Bangalore Pvt. Ltd will establish a logistics park on about 200 acres of land on the outskirts of Bangalore and build ready-to-use warehouses of around 500,000 sq.ft, the companies announced on Thursday at the Global Investors Summit.

Embassy, being in the real estate business, will source the land either on its own or with the help of the Karnataka government.

Maini, a design and manufacturing firm that deals in high-precision engineering components, will work on the racking and fit-outs for the facilities, as it also has experience in material-handling equipment and products for warehouses.

“This is a strategic diversification initiative for us and our strategy will be similar to the lease rental model that we have adopted for our IT (information technology) park projects, which we develop through internal accruals and once fully done, divest it to (private equity) funds,” said Jitendra Virwani, chairman and managing director, Embassy Property.

At the Global Investors Summit in Bangalore, Embassy signed a memorandum of understanding (MoU) with the government of Karnataka for developing four large projects, including IT parks near Bangalore at an estimated investment of about Rs. 15,000 crore over five years.


It will invest about Rs. 500 crore on the warehousing business, said Virwani.

After establishing its facilities in Bangalore, Embassy-Maini Logistics will expand pan-India to locations such as Manesar, Gurgaon, Gujarat and Chennai.

“We see tremendous movement in the logistics sector and though growth and FDI (foreign direct investment) in retail is delayed, it will happen,” said Sandeep Kumar Maini, chairman, Maini Group.

Property consultants said many developers are looking to diversify their portfolios and enter new businesses such as warehousing and even education and oil and gas.

But the slowdown of 2008 had most of them stall their plans and stick with their core real estate business.

Chintan Patel, director (real estate practice), Ernst and Young, a consultancy, said warehousing is not too complicated a business and the most important requirement to begin with was land.

“If a company has land in place, near industrial and good catchment areas, then it would be fairly easy to get into this. However, one has to see if a company which has real estate expertise also has the operational expertise to run and manage these warehousing facilities,” said Patel.

Source:www.livemint.com