The beleaguered e-commerce company Snapdeal, which is trying to sell its logistics arm Vulcan Express, has again pumped in fresh funds worth ₹27 crore into the venture.
This is the third time since June, Snapdeal has injected funds into the company.
In June, Snapdeal invested ₹36.5 crore into Vulcan and then came its biggest investment of ₹152.44 crore, and in December this year, the company invested another ₹27 crore as per the business intelligence platform paper.vc.
The filings with the Registrar of Companies said Snapdeal has allotted 2.7 crore shares worth ₹27 crore to Vulcan Express. For 2015-16, Vulcan Express has posted losses of about ₹20 crore on revenues of around ₹185 crore.
After a possible merger with Flipkart failed early this year, Snapdeal had started shedding weight through the sale of its subsidiaries including Freecharge which it sold for ₹385 crore to Axis Bank.
At the time of the sale, the digital payments company had 50 million users and over two lakh merchants.
For the sale of Vulcan, there were early-stage talks with a few contenders including Gati, the express distribution and supply chain company, considered one of the largest in the country. But it did not materialise into a firm deal.
Snapdeal is part of Jasper Infotech and was co-founded by Kunal Bahl and Rohit Bansal in 2010.
“It is interesting that Vulcan Express has received repeated fund infusions exceeding ₹200 crore this year from its parent company which makes one question reports that indicated a ₹ 30-crore sale as recently as October,” paper.vc Founder Vivek Durai told BusinessLine .
Merger plans When the Snapdeal-Flipkart merger talks were under way, Vulcan was also seen as being part of the merger plans.
The logistics arm was formed in 2014 after Snapdeal abandoned its plans to acquire GoJavas, another logistics company in which it had invested about ₹250 crore and owned over 40 per cent stake.
Sources said that Vulcan Express operates in over 100 cities and over 50 per cent of the deliveries of Snapdeal is carried out by the logistics subsidiary.
“If Snapdeal sells Vulcan Express, it will then have to entirely depend upon third-party support for its deliveries which could lead to quality issues which already is battling because of increase in complaints,” an executive with the logistics company said.
e-commerce market According to a KPMG report, the e-commerce market in India estimated to grow at a CAGR of 31 per cent to touch $80 billion by 2020.
The e-commerce retailing industry witnesses about 1.2 million transactions per day, and therefore, the e-logistics plays a very important role in the success of the e-commerce industry.
The logistics sector specific to e-commerce retailing in India which was valued at $0.46 billion in 2016, is projected to witness a CAGR of 48 per cent in the upcoming five years to reach $2.2 billion by 2020, the KPMG report said.
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