This Article is From Nov 25, 2011

RIL buys 35% stake in Deccan 360 for Rs 100 cr

RIL buys  35% stake in Deccan 360 for Rs 100 cr

Reliance Industries Ltd (RIL), India's largest private sector company, has bought a significant stake in Deccan 360, the cargo airline venture floated by aviation entrepreneur Captain G R Gopinath.

GR Gopinath, CMD of Deccan 360 on Thursday said RIL's stake would be over 26 per cent, but below 50 per cent.

But sources tell NDTV Profit that RIL has bought over 35 per cent stake for over Rs 100 crore.

"We want to make it clear that it is not a sale... We would rather say that they (RIL) have invested in the company," Gopinath said. While the branding will change, he said they will not induct two RIL officials on Deccan 360's five-member board of directors.

"We were in talks with some private equity players and some other potential strategic investors, but we chose Reliance, not because theirs was the highest bid, but because of strategic advantage of this deal," he said, but did not elaborate further.

Both these companies will now be looking at working out the deal synergies.

“We will be investing the funds in our Nagpur hub and thus adding new capacities and buying more aircraft. Reliance could benefit in terms of IT infrastructure, logistics and supply chain,” Gopinath said.

But sources say Deccan 360 will now manage almost the entire retail backend for Reliance’s supply chain, something where they have been struggling in making its farm to form retail model. And to do so there could be another round of investments from Reliance if need be.

"We believe that our collaboration with Deccan 360 will see a transformation in the logistics domain in India," RIL's Chairman and MD Mukesh Ambani said in a statement.

RIL's investment would help Deccan 360 increase its air and surface network coverage across the country, the company said.

Gopinath is credited with pioneering low-cost passenger airline service in India and had previously founded Air Deccan, the country's first budget air carrier that he later sold to billionaire industrialist Vijay Mallya-led Kingfisher Airlines.