TVS Industrial and Logistics Park, which offers industrial warehousing space, plans to develop 20 million square feet of industrial space by 2027.
Ramnath Subramaniam, CEO, TVS ILP, told businessline that the development will help it emerge as a billion-dollar platform. It would complete the construction of an additional 3 million square feet by the end of CY2023.
The company, which has a presence across 11 cities and operates 7 million square feet of warehouse space, is looking to build a presence across 30 cities, which would include cities beyond the metros and Tier 1 cities, the CEO said.
The focus of warehousing has largely been restricted to the metros and Tier-1 cities, which shows the huge market potential. “We don’t want to restrict ourselves to the metros or the Tier-1 cities and, therefore, we are working on an exhaustive 30-city ambition.”
The company also aims to achieve a contracted revenue of $750 million. “Basically, we consider contracted revenue because most of our tenants are generally long-term; on average, the contracts are signed for over 10 years,” explained Subramaniam. In FY22, the company clocked in revenues of $19 million.
Over the past one to two years, TVS ILP has deployed around $75 to $85 million in CAPEX, which he said, “we plan to continue for the next few years essentially.”
According to the CEO, most of the funding comes from a mix of internal accruals, capital from external sources (banks and other financial institutions), and deposits from tenants. Moreover, every two to three years, the plan is to go for some sort of liquidation loan, he added.
To launch first Invit
In addition, the company has received internal approval to launch its first Infrastructure Investment Trust (Invit).
“We have assembled transaction teams and other necessary constituents. Barring any unforeseen surprises, we aim to launch the first Invit in the industrial park space during the next financial year (FY24). This is our primary target, while we continue to pursue peripheral debt financing options from lenders.”
In recent years, TVS ILP has also explored funding options owing to the capital-intensive nature of the business. “We successfully completed our first round of funding with BII, followed by CDC joining us in March 2021.”
Currently, it has projects in cities such as Vijaywada, Odisha, Vizag, Guwahati, Siliguri, Ranchi, and Raipur, among others. It has a customer base of around 30 companies from sectors such as e-commerce, consumer products, rail transportation, logistics, agriculture and machinery, electronics, and FMCG.
By developing a road, rail, and rocket roadmap, TVS ILP intends to diversify its clientele across all three sectors.
The company, which is a joint venture of TVS SCS, a part of the T.S. Rajam family, and Ravi Swaminathan & family, says its warehouses have seen zero vacancies for the past six years.