Nippon in tow, Future Supply eyes Rs 10,000-crore top line in 5 years

Future Supply, the logistics arm of Future group, proposes to take its turnover to Rs 10,000 crore in the next five years, riding on its partnership with Nippon Express. On Tuesday, the Competition Commission of India (CCI) approved the latter's Rs 641-crore investment in Future Supply, giving the Japanese major a 22 per cent stake and board seat.

Kishore Biyani, founder and chief executive officer, Future group, said the collaboration with Nippon allowed Future Supply to become a key player in third-party logistics. "Logistics is an area we'd like to grow because it is not only synergistic with our own operations (of manufacturing and retailing), but companies who want to outsource this function to an external player can do so with firms such as ours," he said.

The third-party logistics market in India is currently estimated to be Rs 22,000 crore in size, growing at a compound annual growth rate of 20 per cent. In the next five years, this market is projected to touch nearly Rs 55,000 crore, according to industry experts.

Future Supply, whose FY19 top line was Rs 1,228 crore, will tap Nippon's Japanese clients and will also use its technical expertise in areas such as express logistics, Managing Director Mayur Toshniwal said. "While third-party logistics has been our focus, express or last-mile delivery will increasingly become an important area as we go forward. The collaboration with Nippon will help in this regard," he said.

Nippon, on the other hand, will get a foothold in the domestic logistics business, something it has been eyeing for a while now.

The Japanese company first entered the Indian market in 2007 and currently derives its revenue from international freight forwarding of cargo arriving in and departing from the country.

"As a next step, we are enhancing our domestic logistics business in India to capture local demands," Satoshi Horikiri, senior managing executive officer, Nippon Express, said.

Future Supply is also expected to utilise the investment from Nippon to set up more distribution centres across the country as it eyes delivery of products across the consumer value chain. Currently, the company focuses on segments such as fashion, lifestyle, electronics and fast-moving consumer goods via 94 distribution centres in the country, covering 8.31 million sq. ft of warehouse space. The company has identified 14 different consumer clusters that it will tap in the future.

"We are clear that we do not want to get into the delivery of commodities. Our strengths do not lie there. The objective of the collaboration with Nippon would be to enhance our existing skills and add new areas of expertise," Toshniwal said.