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Future supply chain buys logistics arm from Snapdeal

Date: 2018-01-31
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Kishore Biyani-promoted logistics provider Future Supply Chain Solutions has acquired Vulcan Express, the logistics arm of Snapdeal-promoter Jasper Infotech, in a ₹35-crore, all cash deal. The completion of the transaction was formally announced on Friday, a day after ET reported that FSC, one of the country's largest third-party and logistics companies, had agreed in principle to acquire Vulcan, talks for which had been on for almost a year.
"Through Vulcan, we plan to boost our last-mile capabilities and also offer state-of-the-art solutions to our ecommerce and retail clients, including realising our disruptive vision of Retail 3.0," retail titan Biyani, founder of Future Group, said in a statement.

On Thursday, shares of Future Supply Chain Solutions closed 0.55% higher on the Bombay Stock Exchange at ₹689.

The sale of Vulcan Express is the second such by Jasper Infotech over the last six months, as it continues to shed, what have been deemed as non-core assets, in a bid to raise cash and focus more on its core marketplace operations.

Last year, after fighting off a takeover bid by larger rival Flipkart, the company pivoted to what has been termed as Snapdeal 2.0, or a pure marketplace model, loosely modelled on Alibaba's Taobao platform.

"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 — Snapdeal 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," Jason Kothari, chief strategy and investment officer at Snapdeal, said.

Kothari, who led the sale of Free-Charge to Axis Bank for Rs 385 crore last year, also spearheaded the latest deal for the Gurgaon-based company.

Apart from Future Supply Chain, the logistics arm had also been evaluated by a number of bidders, including TVS Logistics, Allcargo and private equity firm Warburg Pincus, among others.

Future Supply Chain is present pan-India with 44 warehouses, 14 logistics hubs, 106 branches and over 4.2 million square feet of warehousing space.

The company's network provides services and solutions to Future Group, as well as third-party customers across contract logistics, express logistics, and temperature-controlled logistics.

Vulcan Express, which counts Snapdeal, Airtel and UPS as its primary clients, provides end-toend logistics services, including warehousing, line haul and transportation, last-mile distribution and reverse logistics, as well as quality control and refurbishment of goods.

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