Another Distressed Sale For Snapdeal, Offloads Vulcan Express To Future Group For $5.5 Mn

Kishore Biyani led Future Group has finally acquired the logistics subsidiary of Snapdeal, Vulcan Express for mere $5.5 Mn (INR 35 Cr) in an all-cash deal.

As stated by Kishore Biyani in a media statement, Future Group will utilise Vulcan Express to boost its last mile capabilities and also offer state-of-the-art solutions to its e-commerce and retail clients.

Future Group was looking to acquire Vulcan Express from past few months and the earlier reports projected the deal to happen for an approximate amount of $7.8 Mn. Considering the amount invested by Snapdeal in Vulcan Express in past few years, the sale has happened at a much lower valuation.

Snapdeal kept pouring money into its 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.

In accordance to Snapdeal Chief Strategy and Investment officer Jason Kothari, “Similar to our recent sale of FreeCharge, we believe Snapdeal’s sale of Vulcan Express to Future Group is a successful deal for all three parties. The company “divests off an asset that is non-strategic in nature for Snapdeal 2.0, allowing it to focus its capital and management on its core e-commerce business.”

To be noted, last year Snapdeal sold off its digital payment subsidiary Freecharge for $60 Mn to Axis Bank. Founded in 2010 by Sandeep Tandon and Kunal Shah, FreeCharge, once valued at $5 Bn, was acquired by Snapdeal as part of a $400 Mn-$500 Mn deal.

Snapdeal Struggle Behind Vulcan Express Sale Off

Snapdeal was looking to offload Vulcan Express since it moved out of the merger fiasco with Flipkart in 2017. However, despite holding talks with several companies like AllCargo, TVS Logistics, Warburg Pincus amongst others, the deal could not take off due to legal tangles surrounding the subsidiary.

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.

What Vulcan Express Acquisition Means For Future Group

Vulcan Express currently handles over 250K daily deliveries and has reportedly acquired more than 1 Mn square feet of warehouse space.

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 centers covering four million square feet of space and 105 branches servicing 11,228 pin codes in the country.

All in all, as Vulcan Express gets a new home, Snapdeal camp can take a breath of relief and can focus its entire energy on gaining its foothold again in the Indian ecommerce market. Going ahead, how fruitful will this acquisition be for Future Group, only time would tell.

[The development was reported by LiveMint]