The Biyani-owned Future Group is reportedly in talks to buy online retailer Snapdeal’s logistics arm, Vulcan Express. The purchase is said to be an all cash deal valued at about Rs 50 crore.

Vulcan Express manages approximately half of Snapdeal’s deliveries and shipments. The company replaced GoJavas as Snapdeal’s primary logistics partner. The company was formed three years ago and is currently operating out of 100 cities across the country, offering logistics and supply chain related solutions to retail and consumer companies.

“It will be a distress sale and the final valuation could be less than Rs. 50 crore. The contours of the deal, including the size and through which the company it will be done, are still being worked out,” said sources familiar with the matter. Both, Snapdeal and Future Group did not respond to queries.

This deal comes less than a month after the Future Group raised Rs 650 crore in funding from an IPO. The company currently has 44 distribution centres spanning 4 million square feet of space and 105 branches serving 11,228 pin codes across the country, thereby making it one of the country’s largest third party logistics and supply chain company. Additionally the company has also been investing in artificial intelligence and developing a supporting infrastructure like last mile delivery for online sales. The company currently caters to clients across a range of industries including consumer, food beverages and e-commerce and is presently earning 63% of its revenue from the group entities.

Furthermore, the future group is currently piloting its technology integration strategy called Retail 3.0 , wherein the company is turning its Easyday stores into a marketplace thereby giving its customers digital access to its entire inventory. The acquisition of Vulcan Express is expected to enable this integration of the Future Group’s digital and brick-mortar retail businesses.

Vulcan Express, on the other hand, provides logistics services like warehousing and transportation as well as reverse logistics services, quality control and refurbishment of goods to Snapdeal, small retailers, cosmetic companies and other high quality product retailers.

“This deal will also benefit Snapdeal for its 2.0 strategy of creating an asset light model and focusing on the e-commerce business. Vulcan will continue to be one of the logistics partners for Snapdeal even under the new owner,” a source was quoted saying.

India’s logistics industry is currently worth an estimated R.s 7.5 lakh crore. This figure excludes the rail freight and port handling segments of the industry. Approximately 12 % of the stated figure consists of  big companies while the rest of the market consists of small and local players.

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