News: The wagonwheel: Anil Ambani is closing in on logistics firm

(DNA 17/08/2006) Mumbai - Anil Ambani’s Reliance ADA Group, through its private equity arm, is in talks to acquire a significant stake in Patel Roadways.

If the discussions reach their logical end, it will be Reliance-ADAG’s second major investment in pure-play logistics.

Group firm Reliance Capital had acquired 44% stake in the Bangalore-based courier and express company, DTDC.

O P Harshwal, CEO of Patel Roadways, declined to comment saying he’s not aware of such a move , adding, “only the promoters could throw light on such matters”.
Arif Patel, vice-chairman of Patel Roadways, could not be contacted as he was travelling.

Sources said the senior management of Patel Roadways and Reliance-ADAG officials have been holding talks in the recent past. Reliance-ADAG may be aiming to penetrate the nascent retail sector by readying supply chain efficiencies at a time when global majors are bracing for an entry.

The group is also currently weighing a role in the country’s pharmaceuticals supply chain.

Patel Roadways recently un-wrapped a major restructuring exercise which enables it to morph into a full fledged one-stop shop for logistics.

A large part of the revenues of Patel Roadways accrue from plying trucks on highways. But the company has of late been expanding its business profile by foraying into full-fledged logistics services that include supply chain management solutions or third-party services.

Towards this strategy, Patel Roadways recently amalgamated its group company, Patel On Board Couriers, with itself.

Patel Roadways recorded net freight earnings of Rs 120.89 crore in the last fiscal, while Patel On Board had registered an income of Rs 134.39 crore during the same year.

The company focusses on routes that are less than 1,000 km and between 100-500 km. Founded in 1959, as a one truck activity Patel Roadways has since grown rapidly into one of the largest surface logistics and road transportation companies in Asia. It has a network that spans 1,000 stations countrywide and a workforce of over 1,000 highly trained people.

At the time of the DTDC takeover, Reliance Capital said that the industry is poised for mega growth and third-party logistics is becoming important as India’s retail sector gets more and more organised.” DTDC already has a network of 3,700 franchisees.