The country’s largest supply chain company Future Supply Chains is buying food logistics startup Brattle Foods in a cash, stock and debt deal aimed at strengthening back-end processes for its nearly 1,000-crore food business, a top company executive said. “This acquisition and merger will complement the existing modern technology and automation-based supply chain capability of Future Supply Chains (FSC) in the food and FMCG domain,” said Anshuman Singh, managing director at Future Supply Chains, which is part of Kishore Biyani-owned Future Group. “It will enable FSC to address the frozen, chilled and cold warehousing requirements, coupled with the refrigerated container transportation requirements across the country.“ People aware of the matter said Brattle Foods, along with its subsidiary Laxman Logistics, will be merged into FSC for a total consideration of about 125 crore. Brattle’s shareholders GTI Capital and Epiphany Ventures will get some shareholding in FSC after the deal is signed, they added. Delhi-headquartered Brattle, which was started four years ago by Harvard graduates Kunal Agrawal, Mrinal Sinha and Kiran Pendri, is the second-largest player in the food logistics segment after Snowman Logistics. Snowman had raised a little over Rs 200 crore through an initial public offerings recently. FSC said the deal will create immediate capability to serve Future Group’s recently set up 110 acre food park on the outskirts of Bangalore and the two planned projects in West Bengal and Madhya Pradesh. India’s temperature-controlled logistics sector, valued at Rs.12,000 - 15,000 crore, is highly fragmented with nearly 90% being operated by regional service providers. “If Brattle had to grow, besides organic growth, which it was pursuing anyway, it could either acquire a similar company or merge with a company that is strong in an adjacent business. FSC fits that criteria perfectly and was particularly appealing, considering its integrated food business focus,“ GTI Capital founder Gaurav Dalmia said. Experts say that with less than 10% of produce passing through a cold chain in the country, there is significant potential for growth in the segment. Since the last few years, Biyani’s logistics business has been particularly strong in the apparels and automotive components segment, with the firm generating 40% of its revenues by servicing retail operations of its parent company, the Future Group. The deal with Brattle is part of Biyani’s larger plan to invest in food businesses.

The Group expects revenues from its food brands to grow to Rs.20,000 crore by 2019-20 from about Rs.1,000 crore now. With increasing consumption of perishable food items and greater use of temperature-controlled logistics in categories such

as pharmaceuticals and foods, FSC aims to have an early mover advantage in the market. “The implementation of GST will be a further game changer in this space, and this cold chain network can integrate into FSC’s existing GST ready network of 3.5 million square feet modern warehousing and transport network,“ Singh said.

(Source: The Economic Times, Mumbai, October 27, 2014)