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Stake sale by Deccan 360

Stake sale by Deccan 360. Deccan Cargo was evaluating a stake sale option Reliance Industries Ltd., Bharti Enterprises Limited and FedEx Corporation were in the race to acquire a stake in Deccan 360 Mr. Gopinath was learnt to be seeking INR 2 billion for a 25% stake. Other interested players.

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Stake sale by Deccan 360

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  1. Stake sale by Deccan 360 Deccan Cargo was evaluating a stake sale option Reliance Industries Ltd., Bharti Enterprises Limited and FedEx Corporation were in the race to acquire a stake in Deccan 360 Mr. Gopinath was learnt to be seeking INR 2 billion for a 25% stake
  2. Other interested players Singapore Airlines Cargo Pte, Ltd., IBM Venture Capital Group and Intel Capital have shown interest in Mr. Gopinath’s airline cargo business. Few other private equity firms were also interested in acquiring stake in Deccan 360
  3. The Deal Reliance bought a controlling stake in Deccan 360 for an undisclosed amount. Reliance will use Deccan’s transport fleet to ferry goods from central warehouses to shops across several cities. Deccan 360 will use funds from Reliance to expand connectivity to several more cities and towns.
  4. The Deal Deccan 360 chose Reliance, not because theirs was the highest bid, but because of strategic advantage of this deal. Many believe that Reliance's investment in Deccan 360 is a "purely financial" one and hinted that Reliance might exit at an appropriate time.
  5. The Deal The investment is unlikely to figure in RIL's books RIL will have 2 nominees on Deccan 360 board Capt Gopinath will continue as CMD of the firm
  6. Analyst’s Views Analysts said the move will also help Reliance test waters in the logistics market, where it wants to grow in a big way. RIL can also use this investment as a stepping stone for its future expansion in the logistics business. Reliance will get a huge footprint as the entry barriers have eased and the most important part, the IT, has been built from scratch by Deccan 360
  7. Analyst’s Views Deal will boost supply chain & logistics ops of RIL's retail biz Analysts say that both companies will benefit from the synergies.Reliance will get access to the huge domestic air cargo network of Deccan 360 while the airline would get access to a captive client base, including Reliance Industries and Reliance Retail. Deccan 360 will also get a much-needed fund infusion to scale up across the country.
  8. Analyst’s Views Analysts said the move will also help Reliance test waters in the logistics market, where it wants to grow in a big way. RIL can also use this investment as a stepping stone for its future expansion in the logistics business. Reliance will get a huge footprint as the entry barriers have eased and the most important part, the IT, has been built from scratch by Deccan 360
  9. Analyst’s Views Some industry insiders treat the partnership with scepticism. Logistics is not a business where Reliance Industries is in. It has no expertise in this sector, unlike in petroleum refining. The business model of Deccan 360 itself is faulty as rivals such as Blue Dart Express Ltd and First Flight Couriers Ltd have 1,200 and 850 owned offices respectively. Deccan is operating purely on a franchisee model.
  10. Capt. Gopinath’s View Captain Gopinath believes that a cargo airline is just one part of his business plan. The major portion will come from handling small parcels and documents through a surface transport network. He believes that both Deccan and Reliance will gain with this deal.
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