Capt G R Gopinath, founder of India’s first and largest low cost airline Air Deccan (which he sold to Vijay Mallya’s Kingfisher Airlines), is planning to raise $50 million for his new venture, an air cargo business. According to a report, Gopinath needs the capital to part finance the $200 million cargo venture. Gopinath may also sell his remaining 8-9 per cent stake in Deccan Aviation to raise capital. Going by the current market cap, that stake will be worth Rs 74 crore.
Mumbai-based investment banking firm Edelweiss Capital has been given the mandate to seek investors, the report adds. The company, which will be called Deccan Cargo, is completely owned by Gopinath and will provide complete logistics solutions. It will also provide ground logistic services such as using roads and railways.
From Nagpur, Deccan Cargo will service 40 cities across the country with a fleet of 10 Airbus A310 cargo aircrafts. It is also investing $25 million to set up a state-of the art integrated IT system, which will include online “track and trace” facilities and help company cut operational costs. Infosys is believed to have bagged this contract.
After the merger of Deccan Aviation is complete with Kingfisher Airlines, the new entity will be called Kingfisher Airlines. Investors in Deccan Aviation have made fortunes out of their investments after Vijay Mallya’s UB group acquired the airline. S.N. Ladhani’s Brindavan Beverages, who invested about Rs 1.5 crore in the airline made hundred times of his investment when he received Rs 150 crore through both open offer of the UB Group and open market sale of shares. India’s largest private equity fund ICICI Ventures and financial services firm Capital One, who invested around $40 million mopped up a total of around $90 million. With an initial investment of $5 million, Mauritius-based Golden Ventures, a fund by NRIs raked in around $40 million.
There are several other companies who looking to tap into the growing demand for air cargo. This demand is likely to grow in the future with expansion of retail chains and they can also be used for shipping goods out of the SEZs. Recently Reliance Industries Ltd was said to be in talks with India’s biggest airlines Jet Airways Ltd to pick up a stake in its cargo business.
Kingfisher Airlines also intends to start dedicated cargo operations. There have also been several new entrants in the field which include New Delhi-based Aryan Cargo Express Pvt. Ltd, Hyderabad-based Flyington Freighters Ltd, Mumbai-based Avicore Aviation Pvt. Ltd and Bangalore-based Quikjet Cargo.