BL reported that the economic slowdown has prompted Mahindra Logistics, the 100% subsidiary of Mahindra & Mahindra, to phase out its investment of INR 1,000 crore over the next 3 to 4 years instead of the originally planned 2 year period.

Mr Sanjay Sinha MD of Mahindra Logistics said that the company will kick off with an investment of INR 400 crore over the next 18 to 24 months. He said that “The decision is a fall out of the current market situation.”

Mr Sinha said that the money would be primarily utilized for modern warehouses. Currently, it has 6.5 million square feet of warehousing space and plans to add 2.7 million square feet in the next few months. However, only a fourth will be owned by the company.

The biggest constraint it is facing is the non availability of sophisticated warehouses. However, it is not looking to enter into large scale construction. He said that “We will invest in them only till real estate companies begin building those levels of warehouses.”

For the remaining requirement, the company is asking its customers to have them, which would be managed by Mahindra. Mahindra Logistics is also looking for a strategic partner in a 50:50 JV.

Mr Sinha said that “This ally will ideally bring in the best global practices, higher competencies and technology along with finance. In the event this does not work out, it might go in for debt from banks. M&M has already put in INR 100 crore in the form of equity and now the ball is in our court to raise the next INR 100 crore. We don’t want to leverage equity beyond 1:1.”

(Sourced from Business Line)