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Biyani's FSC to invest Rs 1,000 crore to boost supply chain management

IBEF:  September 04, 2019

Future Supply Chain Solutions (FSC), promoted by Mr Kishore Biyani's Future Enterprise Ltd, has chalked out a capital expenditure of Rs 1,000 crore (US$ 143.08 million) to ramp up its capacity to improve its third-party logistics services to existing and new clients.

With this investment, FSC, India's leading organised third-party supply chain and logistics service provider, plans to create India Food Grid (IFG), a network of 38 integrated food distribution centres providing pan India reach.

The corpus will be invested in the IFG initiative over a period of three-four years. The company envisages procuring a major share of the fund from internal accruals, with the remainder to be financed through a mix of equity and debt. Future Supply Chain presently has a light, strong balance sheet with low debt, which allows the company the leeway to go in for more debt.

"Our novel concept of India Food Grid, which is a network of 38 integrated food and fast-moving consumer goods (FMCG) distribution centres has already created waves in the market. The IFG will require an investment of Rs 1,000 crore (US$ 143.08 million) in the next few years to build one of the strongest and expansive networks for food and FMCG products distribution in India," said Mayur Toshniwal, managing director and chief executive officer, FSC.

"FSC is expanding its warehousing capacity, on an asset-light model, to cater to the increasing demand to add velocity to its customers' aspirations. We have a strong balance sheet and operational cash flows, which will be used to fund our expansion plans," added Toshniwal.

In the previous year, FSC raised Rs 199 crore (US$ 28.47 million) from a non-convertible debenture issuance, the proceeds of which will be used to fund part of its planned warehouse capacity expansion.

According to industry reports, India's retail market size is pegged at around US$ 822 billion, of which the organised segment (excluding e-commerce) accounts for about 11 per cent. This share is expected to increase to around 16 per cent over the next five-six years, with the organised retail market growing at a compound annual growth rate of around 20 per cent.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.