Nippon Express to invest in FSC to strengthen its logistics services in India

Nippon Future invests FSC India

Nippon Express, acting through its subsidiary Nippon Express (South Asia & Oceania), has agreed to make an investment in logistics services provider Future Supply Chain Solutions (“FSC”) by approving execution of a Share Subscription Agreement (“SSA”), a Shareholder Agreement (“SHA”) with FSC and a Share Purchase Agreement (“SPA”) with some of the shareholders of FSC. Nippon Express acquired 22% stake in the Indian logistics firm.

FSC operates in third-party logistics services including contract logistics, express logistics and temperature-controlled logistics. It is listed on the National Stock Exchange of India Limited and, according to Nippon, is one of the main logistics service providers in the country. It is part of the Future Group, a large business conglomerates engaged in modern retail trade in India. Other than the Future Group, FSC’s main customers are several fast growing Indian and multinational corporation customers.

The acquisition of FSC is part of Nippon’s strategic plan laid out in the “Nippon Express Group Business Plan 2023 – Dynamic Growth”. Beginning from financial year 2018, it sets out the company’s ambitions to become a logistics company with significant global presence. As part of the plan, Nippon is planning to focus on strengthening its Indian business to capitalise on the rapid growth expected in the Indian logistics market driven by key factors including:

  • modernisation of the road infrastructure network;
  • reorganisation of traditional supply chain networks due to the implementation of GST (Goods and Service Tax), the indirect tax levied on the supply of goods and services; and
  • consumption growth driven by a fast growing middle income group.

Nippon Express firstly entered the Indian market in 2007 and currently focusses on international freight forwarding of cargo arriving in and departing from India. The company is further planning to enhance its domestic logistics business in India to capture expanding domestic demand. Nippon believes that the partnership with FSC will add complementary capabilities and enable provision of end-to-end logistics services to its customers resulting in the growth of its Indian logistics business.

The investment, consisting of purchase of 5,863,475 existing shares and subscription to 3,789,350 new shares of FSC, is expected to be completed in January 2020. Nippon believes that it will have a minor impact in the fiscal year ending March 2020.

Source: Nippon Express