SUMMARY
Snapdeal Has Been Looking To Offload Vulcan Express Since September 2017
Kishore Biyani led Future Group is reportedly in talks to buy ecommerce firm Snapdeal’s logistics arm Vulcan Express. The acquisition will likely be made for $7.8 Mn (INR 50 Cr) in an all-cash deal.
Launched in 2013, Vulcan Express currently handles over 250K daily deliveries and has reportedly acquired more than 1 Mn square feet of warehouse space. Snapdeal has been looking to sell off its logistics arm since September 2017. Earlier in October 2017, reports also surfaced that Snapdeal might sell off Vulcan Express to AllCargo, a Mumbai-based global transportation logistics solutions provider in over 160 countries. The firm is listed on BSE and the deal was expected to get closed for $4.6 Mn (INR 30 Cr).
At the same time, Snapdeal is continuously investing money into the logistics subsidiary, despite running on the limited funds itself. In 2015, Vulcan received $3.75 Mn (INR 25 Cr) from its parent entity Jasper. Also, Vulcan Express raised $23.8 Mn in September 2017 and $5.68 Mn (INR 36.5 Cr) in July 2017 from Jasper Infotech. Even in December 2017, Snapdeal pumped in $4.2 Mn in its logistics arm.
Post the failure of the merger with Flipkart, Snapdeal has been facing tough times and is trying to rebuild its region from almost a scratch. The company has already sold off its digital payment subsidiary Freecharge to Axis Bank for $60 Mn. While the sale of Vulcan Express was also in progress, the logistics firm got itself tangled a legal war initiated by GoJavas, run by Quikdel Logistics.
For those who are unaware of the incidence, on October 4, 2017, Quickdel had sent a legal notice worth $45.8 Mn (INR 300 Cr) to the ecommerce firm founders, Kunal Bahl and Rohit Bansal, and parent company, Jasper Infotech for criminal breach of trust against GoJavas which resulted in the erosion of the value of Quickdel. On October 25, 2017, Quickdel again filed a fresh complaint against the ecommerce firm and its logistics subsidiary Vulcan Express. This time Anand Rai again accused the company founders of criminal breach of trust, cheating, intellectual property theft, theft of trade secrets and data and misappropriation of funds, among others.
These incidents, have further delayed the offloading of Vulcan Express from the Snapdeal Cart.
If the deal with Future Group goes through, Snapdeal can get the much-needed boost to continue its survival in the Indian ecommerce ecosystem, currently witnessing the tug war between Indian rivals Flipkart and PaytMall.
Future Group, on the other hand, is now on a move to build Retail 3.0 business model ‘Tathaastu’ which would blend technology with brick and mortar. Under this model, it plans to become Asia’s largest integrated consumer retailer by 2047 with revenue in excess of $1 Tn. The leading retail chain is also in an aggressive expansion mode and had recently announced opening 10,000 member-only Easyday stores. Thus, the acquisition of Vulcan Express will certainly add to the logistics fleet of the Future Group-owned Future Supply Chain. As per reports, at present Future Supply chain has 44 distribution centres covering 4 Mn square feet of space and 105 branches servicing 11,228 pin codes in the country. However, whether the deal will go through or will get fume away into the heat of speculations, remains to be seen.
[The development was reported by ET.]
