Kishore Biyani led Future Group, India’s largest consumer retail firm, is reportedly holding discussions to acquire Snapdeal owned logistics startup Vulcan Express for nearly Rs 50 crore or $7.8 Mn. The deal will be most probably an all cash deal, according to people familiar with the matter. Both companies have so far refused to comment on the news report.
Incorporated in 2013, today Vulcan Express handles more than 50 percent of Snapdeal’s deliveries and shipments. The company was essentially formed to replace gojavas, the former logistic partner of Snapdeal. The subsidiary firm, at present, has presence in over 100 cities and boosts more than 1 Mn square feet of warehouse space. Snapdeal, which was once considered to be the poster boy of Indian e commerce sector, has been looking to offload Vulcan Express. The sale would help the embattled company to inject much needed fund in its cash starved business.
Earlier last year, reports were rife in some quarters of media that Snapdeal had almost forged a deal to sell of its logistic business to the Mumbai based transportation & logistic company AllCargo. However, non-agreement over final valuation is said to have led to the breakdown of the deal.
Following the failure of its much anticipated merger with Flipkart, the Gurgaon based company has been on a major rejig exercise. Touted as Snapdeal 2.0, this pilot project aims to transform the Gurgaon firm into a B2B company that will boost a very asset light & lean business model. However, funds have been hard to come by for Snapdeal 2.0, after SoftBank (Snapdeal’s biggest investor) decided to part ways following the failure of merger talks with Flipkart. This desperate situation led to the Gurgaon company selling off its few non-core businesses including the e-wallet business FreeCharge, which was considered to be its golden goose.
What will Vulcan Express deal offer to Future Group?
For Future Group, the Vulcan Express deal may prove to be a great asset for its new digital strategy Retail 3.0, which aims to seamlessly converge new age technologies like artificial intelligence and deep learning with its brick and mortar model. Biyani believes that integration with technology will be key for transforming his company into one of Asia foremost retail company by 2047.
Interestingly, the reports of Future Group’s interest in Vulcan Express has emerged almost a day after its own logistic firm Future Supply Chain raised nearly Rs 650 crore through an IPO issue.