Kishore Biyani’s Future group is in talks to buy online retail platform Snapdeal’s logistics arm Vulcan Express for about Rs 50 crore in an all-cash deal.
As per ET report, Vulcan Express, which manages about half of Snapdeal’s deliveries and shipments, replaced gojavas as the primary logistics partner when it was formed about three years ago.
Earlier, logistics arm Vulcan Express had got some interested buyers. Distribution and supply-chain companies Gati, mid-market private equity firm Peepul and supply-chain player TVS Logistics are a few of them.
Against all buyout speculations, Snapdeal invested $23.7 million in its logistics arm Vulcan Express. It was the second round of internal funding for the supply chain solution firm, which had earlier received $5.68 million from the e-commerce parent entity Jasper Infotech in June.
The company, which offers end-to-end logistics and supply chain solutions for merchants is currently operational in more than 100 cities. It also offers a range of services including pickup, consolidation and fulfilment operations, warehousing solutions, intercity movement and last-mile delivery.
The buyout could help Kishore Biyani’s wider strategy of integrating Future Group’s digital and brick-and mortar retail businesses.
The deal will also benefit Snapdeal for its 2.0 strategy of creating an asset-light model and focussing on the e-commerce business. Vulcan will continue to be one of the logistics partners for Snapdeal even under the new owner.
In the fiscal year 2016, Vulcan Express clocked a net revenue of Rs 184 crore, up from Rs 26.7 crore in FY15. However, the jump in revenue also gathered some losses, which increased six-fold to Rs 20 crore from Rs 3.2 crore in FY15.
Biyani owned Future Supply Chain, which is one of India’s largest third-party logistics and supply chain firm, raised Rs 650 crore by listing on the stock exchanges, a couple of weeks back. The company caters to clients across consumer, food and beverages, ecommerce and electronics and gets about 63% of its revenue from group entities.
One of India’s largest organised third-party logistics service operators, Future Supply Chain became the group’s sixth firm to go public. Other listed firms are Future Retail, Future Consumer, Future Market Networks, Future Enterprises and Future Lifestyle Fashions.
In November, the Future Group also unveiled a 30-year vision, Retail 3.0, by when it plans to become Asia’s largest integrated consumer retailer by 2047 with revenue of in excess of USD 1 trillion.