Reliance Logistics Pvt. Ltd., an associate company of Reliance Industries Ltd., and the public sector Container Corporation of India Ltd. (Concor) have formed a joint venture company, Infinite Logistics Solutions Pvt. Ltd. The Mukesh Ambani-controlled Reliance Logistics will hold 51 per cent of the shares of the joint venture, and Concor the rest.

The purpose of the joint venture is not very clear. The joint press release issued by Reliance Logistics and Concor says that the joint venture will "provide end to end inter modal logistics solutions to its customers". This is exactly what Reliance Logistics claims it does: "We provide end-to-end logistics solutions to manage the movement of complete range of solids and liquids products through the combination of road, rail and multi-modal routes." Concor does not make such a claim, but the press release says that it is "currently the undisputed market leader in inter-modal transportation in India".

Is this a pointer to a possible acquisition of Concor by the Reliance group? Given the stubborn opposition to privatisation by the Left parties whose support is vital for the continuance of the government in New Delhi, there is little chance of Concor straying out of the public sector anytime soon. The government holds over 63 per cent of Concor''s equity. Over 33.6 per cent of its equity is held by foreign institutional investors, mutual funds, and banks and financial institutions.

But, as and when the government is able to divest its holding in Concor, it will become an attractive strategic buy. Building a joint venture, which will create strong links between the operations of the two promoting companies, may well turn out to be a basis for Reliance to become the preferred suitor for Concor as and when the government decides to part with its control of the company.

The press release says: "Infinite Solutions shall attempt to play the role of the Lead Player in this segment by leveraging the combined strengths of RLPL and CONCOR in the respective areas of logistics and inter modal transportation. While mainly investing in talent, it shall supplement the same by trucking, warehousing and material handling equipment assets to support the vision.

"Infinite shall provide customised and standard containerised transportation by road and rail, distribution and related ancillary services. The expected customer base shall range from manufacturers, traders and retailers from a variety of different industries spread across the length and breadth of India."

The prospects are huge. The press release says India''s logistics business, estimated at more than Rs.4,50,000 crore will grow at more than 15 per cent over the next decade. It says logistics accounts for as much as 12 to 13 per cent of the country''s GDP, "which gives Infinite a unique opportunity to participate in the growth as logistics service provider".

Reliance Logistics already has a big start in this business. See what the company says on its website:

• Reliance Logistics Pvt. Ltd., a Rs1,200 crore group company of Reliance Industries, is India''s leading integrated logistics services provider, growing at over 50 per cent year on year!
• Over 40,000 tons of cargo handled daily with more than 10,000 trucks on the road at any point of time!
• A customer base of 500 satisfied customers across "a myriad of industries" - petrochemicals, FMCG, food products, pharmaceuticals, steel and minerals like iron ore and cement.
• With a nationwide network of more than 100 branches and 46 warehouses, RLPL is well poised to be the strongest link in your supply chain.
• RLPL''s bouquet of services include road transportation, distribution, integrated logistics services, including RORO and rail movements, container placements for export-import cargo, and vehicle tracking systems.
• RLPL has 47 distribution centres in 27 locations across India and handles more than 100,000 tons of cargo distribution to over 2,700 customers every month.

With the joint venture arrangement with Concor, the railway part of the logistics network gets strengthened. That leaves only airfreight. Should you expect Reliance to enter this business? While existing players like DHL and Transport Corporation of India may not like the idea, do not be surprised if Reliance Logistics announces an air arm sooner rather than later.

The press release says, "RLPL and its associate company have a combined turnover of Rs.1,730 crore, move an aggregate of 15 million tonnes of cargo and own more than 400 trucks and tankers, making it India''s largest logistics service provider. With a network of nine regional offices, 82 branches and 103 warehouses under management, makes it the largest and widespread network covering almost all major logistics locations in the country."

Concor has a network of 57 container terminals located in almost all parts of India. The joint venture press release says, "In addition to providing facilities for terminal handling and inland transportation of containers by rail and road, it (Concor) has also expanded to cover management of ports, air cargo complexes and establishing a cold-chain. It has and will continue to play the vital role of promoting containerisation of India by virtue of its modern rail wagon fleet … Though rail is the main stay of its transportation plan, it also provides supplementary road services to cater to the need of door-to-door services, both in international and domestic business segments."

Consider the combination of these two players - and ask, where does it leave the other contenders in the logistics business?