Street signals: R-ADAG to buy Patel Roadways
Reliance-ADAG’s private equity arm is all set to acquire Patel Roadways, a Mumbai-based transport company. Sources close to the development said both the parties are engaged in negotiations over the offer price and the deal is likely to be clinched soon for around Rs 100-150 crore.
Arif Patel, vice-chairman, Patel Roadways, told ET that the negotiations were on, but no final decision had been reached. A Reliance-ADAG spokesperson said the company would not comment on speculation. If the deal goes through, this will be Reliance-ADAG’s second major investment in the logistics space.
Reliance Capital has already bought 44% stake in the Bangalore-based courier and express company DTDC. Sources said the deal had been delayed due to differences in valuation estimates by both the parties. Initially, the Anil Ambani company had made an offer of Rs 50 crore, which was subsequently revised to Rs 70-80 crore.
Patel Roadways, covering almost 1,000 destinations, has 300 warehousing facilities spanning a total of 200,000 sq ft. After the amalgamation with Patel On-Board Courier recently, the cumulative annual turnover of the company for ’05-06 stands at around Rs 300 crore, with a cumulative net profit of around Rs 11 crore.
Meanwhile, Mr Patel is going ahead with an integration process to make Patel Roadways a total supply chain management solution provider. “We are positive about our business and aim at expanding and integrating services in order to establish ourselves as a complete solution provider,” said Mr Patel.
The company has initiated a major restructuring exercise to make it a one-stop logistics service provider. Only a few months ago, it had amalgamated Patel On-Board Couriers with itself, and is now ready with a new product — Patel Retail, which is a door-to-door service targeted at bulk cargo movements like Gati and Safe Express.
India’s logistics business is poised for consolidation with big corporate houses and foreign players setting eyes on the growing market opportunity. Recently global express logistics major TNT threw down the gauntlet in India by acquiring 100% of Mumbai-based Speedage Express Cargo for over Rs 200 crore.
Speedage operates in the express road segment and had revenues of Rs 87 crore for the year ’05-06, growing at around 60%. On a similar footing, GeoPost is also in talks to acquire a minority stake in DTDC.
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