Japanese forwarder eyes bigger footprint in fast-growing market.
Japanese forwarder Nippon Express is to acquire a 22% stake in Indian logistics firm, Future Supply Chain Solutions (FSC), a subsidiary of retail conglomerate, Future Group, in a deal valued at just over $91 million, according to reports in the Indian media.
The transaction is subject to regulatory and shareholder approval.
In a statement, Nippon Express said the proposed shareholding in FCS was in keeping with the group’s ‘Dynamic Growth Business Plan 2023.’
“An important part of our core strategy is to focus on strengthening our India business to capitalize on the rapid growth expected in the Indian logistics market.”
The statement underlined that this market is expected to have significant growth driven by key factors such as the modernization of the road infrastructure network; the reorganization of traditional supply chain networks due to the implementation of GST (Goods and Service Tax) and consumption growth driven by a fast growing middle income group.
Nippon Express first entered the Indian market in 2007 and currently focusses on international freight forwarding of cargo arriving in and departing from India.
“As a next step to further expand our India business, we are enhancing (our) domestic logistics business in India to capture expanding domestic demands.”
The statement went on to note that with its headquartered in Mumbai, Future Group is one of the largest business conglomerates engaged in the modern retail trade with a pan-India footprint.
“Future Group’s rapid growth in retail business is supported by FSC’s logistics capabilities. In a short span of time, FSC has established itself as one of the largest players in India, counting not only the Future Group as its anchor customer but also several fast growing Indian and MNC customers.
“The partnership with FSC will add complementary capabilities to us and enable us to provide end-to-end logistics services to our customers resulting in the growth of our Indian logistics business,” it added.
Commenting on the proposed transaction, Mayur Toshniwal, managing director, FSC, said:“We welcome Nippon Express, a highly-respected logistics globally, into the FSC family and are excited about the potential of this strategic partnership in creating an best-in-class supply chain service offering.
“Through this partnership, Nippon Express and FSC are well poised to derive significant synergies given their complimentary skill sets and servcies offering and gain a deeper foothold in the large and growing Indian logistics sector.”
FSC and Nippon Express will jointly evaulate leveraging Nippon Express’ competency in diverse sectors for the Indian market. FSC plans to leverage Nippon Express’ Japanese and MNC (multi-national corporation) clients with the aim of exploring new business opportunities in India, especially for 3PL and express logistics operations.
Speaking in The Hindu newspaper, Toshniwal said: “We are going to sit together and discuss specifics in terms of collaborations. This would mean new customers, new segments and new sectors. As of today, our focus is entirely on fashion and consumption sectors. As we move along, we could enter into other sectors where similar services may be needed.
“We don’t do much of freight forwarding right now. That’s a very small part of our business but Nippon is very strong on international freight forwarding. So, we could try and get into some of these sectors where FSC has not focused aggressively using the complementary skills of Nippon and FSC.”
According to FCS’ website, the company has network of 96 distribution centres, including four temperature-controlled facilities, 14 hubs and 134 branches across India (including franchisees).
Indian media reported that FSC covers the whole spectrum of supply chain services including smart warehousing, transportation and distribution and last mile delivery for a diverse set of clients, among them Reckitt Benckiser, Kellogg’s, Mondelez, ITC, Benetton, TTK Prestige, Pepe Jeans, Snapdeal, Hitachi, and Tata Motors.
Source: Lloyd’s
