Future starts third-party logistics with Hitachi, Nestle

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Future Logistics Solutions, an arm of Kishore Biyani’s Future Group, has forayed into third-party logistics (3 PL) operations by signing leading electronic and fast moving consumer goods (FMCG) players such as Hitachi and Nestle.

Future Logistics was hitherto catering to the logistics needs of more than 1,100 outlets of the group in the country. However, over three years, the company is expected to earn half its revenues from outside the group, as it is in talks with over 15 companies, said sources.

The company is expected to post revenues of Rs 300 crore in the current financial year and plans to triple its income in the next three years with multi-model transportation, international logistics, reverse logistics and brand distribution services, the sources said.

A third-party logistics provider helps manufacturers with part or all of their operations such as transportation, distribution and warehousing. The 3 PL space in the country grew from a Rs 4,500-crore industry in 2005 to around Rs 10,000 crore in 2009. The entire Indian logistics market is now expected to be around Rs 5 lakh crore, with the share of organised players around six per cent. This organised segment is expected to grow at 25-30 per cent yearly in the next couple of years.

When asked, Anshuman Singh, chief executive officer of Future Logistics, confirmed the company has started three PL but declined to comment on the clients. “There is a huge opportunity in the space, as there are no end-to-end third party logistics players here. We want to build an entire consumption-led logistics company to take care of all segments of consumption,’’ he says.

Recently, Fung Capital, the private equity arm of the Hong Kong-based Li & Fung Group, bought a 25 per cent stake in Future Logistics for Rs 150 crore ($30 million), valuing the company at Rs 600 crore.

According to sources, Future Logistics also plans to start brand distribution services in the country in the next six to eight months, where it will buy merchandise from international and domestic brands and supply it to retailers. The company is expected to manage the logistics needs of the Future Group when the latter starts supplying its private labels in fashion, food and apparel products to other retailers and stores in the country.

Future Logistics has a fleet of 600 vehicles, with warehousing space of over three million square feet. It plans to have total warehousing space of 7.5 million square feet by 2010-11.

Source: Business Standard

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