The Hindu Business Line : Tata Realty in joint venture with Dubai’s Jafza for logistics parks

Mumbai, Oct 31 Tata Realty and Infrastructure Ltd (TRIL) said it has signed an equal joint venture agreement with Dubai-based Jafza International to develop a chain of business and logistics parks across the country.

TRIL is a wholly owned subsidiary of Tata Sons, and Jafza International, the global operations arm of Economic Zones World, the parent company of Jebel Ali Free Zone (Jafza).

Land acquisition

In its first phase of operations, the Tata-Jafza joint venture (yet unnamed) will develop logistics parks in seven locations, initially investing Rs 2,400 crore, said Mr Dinesh Chandiok, Chief Executive Officer and Managing Director. Fifteen to twenty hubs will be in the subsequent phase, at a cost of Rs 10,000 crore, he said.

These parks will not be under the SEZ dispensation, although they may seek to be designated SEZs or domestic tariff zones, depending on the requirement of the customers’ requirements, he said.

The joint venture will largely aggregate land on its own, although, depending on the local situation, it may seek individual States’ help in land acquisition. It will also utilise the Tata group companies’ land resources, he said.

Project finance

The details of project finance have not yet been worked out, but typically such projects work on a debt equity ratio of 70:30, said Mr Samir Chaturvedi, Executive Vice-President of Jafza International.

“There is a major gap in logistics in the country,” said Mr R.K. Krishna Kumar, Chairman of TRIL and Director, Tata Sons. “Jafza will provide the specialised expertise required, and bring in best international practices.”

“Identification of land resources for the parks is already under way,” he added. They will necessarily have to be close to highways or ports, said Mr Chaturvedi.

REAL ESTATE FUNDS

TRIL’s real estate fund is nearing closure, poised to collect $750 million, including contribution of $50 million from TRIL itself. The initial amount intended to be raised was $450 million, but the offer fetched such a good response overseas that the fund size was expanded, said an official with TRIL. Finances for the logistics park projects will also be utilised from this fund.

The company would next raise an infrastructure fund that would be at least $1 billion in size, said Mr Chandiok.

TRIL has tied up with Changi airports to bid for airport infrastructure projects; it is also in joint venture with Mitsubishi and sister concern Tata Power in its bid for a Mumbai metro rail project.

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