TVS Industrial & Logistics Parks (TVS ILP), which is planning to double its footprint to 20 million square-feet at an investment of $400 million, is looking at a contract revenue of $750 million in the next few years.
TVS ILP, part of TVS Mobility group, is expanding its presence in another 35 cities across the country to double its warehousing and logistics park infrastructure to 20 million sq-ft from the current 10 million sq-ft (in 11 cities across five states) over a period of three to four years.
Going forward, the company plans to strategically locate warehouses every 400 km across the country.
Nitin Aggarwal, president, TVS ILP told select media persons on Thursday that “contract revenue is an important parameter that the company follows”.
“The client profile comes into the picture because that brings the company the certainty of revenue not only for the next year, but for the next few years as well,” Aggarwal said.
“We do believe that we are in a asset-heavy business and just generating revenue for one or two years won’t serve the purpose. We need to make sure that the revenue stream is absolutely frozen for the next few years. When we talk about the contract revenue, it is of the certainty through the current contracts, basically of the revenue which will be coming for the period of the next few years,” he said.
He said that “demand is robust and the company has been growing at more than 35% of compund annual growth rate (CAGR) over a period of last six years”. “We have been seeing almost zero vacancy in any of our parks in the past few years. We are looking to become a 20 million sq-ft company with a contract revenue of $750 million, in a few years,” he said.
On the funding for the expansion project, Aggarwal said that it will basically be done through internal accruals, institutional funding and some equity raising as well. “We are exploring all options for equity, either PE or InvIT, we have not concretised any plan. We may have to raise around $150 million out of the planned $400 million investment, through equity route,” he said.
For the expansion of warehouses and industrial parks, the company will be focusing on the east part of the country. It is going for a second park in Orissa, in Cuttack, and will also set up projects in West Bengal’s Kolkatta and Siliguri, Patna and other parts of the eastern region.
Manikandan Ramachandran, COO, TVS ILP, said the company’s motto is to “serve the entire country and when it comes to logistics”
“It is not a localised play, it has to be pan India. Every corner of the country is a consumption centre and we definitely should focus on the consumption centres. We are looking at 35 more cities. We want to expand to other states where we don’t have any presence, and which have different land acquisition laws,” he said.
The company has a land bank of 200 acres outside of the 11 cities where it has presence. It has 400 acres across its current projects.