Logistics firm Pigeon Express is in talks to buy out entire stake of Snapdeal in its subsidiary parcel delivery firm GoJavas.
“We are in discussion to buy out stake of Snapdeal in GoJavas,” Pigeon Express MD Anand Rai said on sidelines of the launch of Aangadia mobile app for consignment booking by delivery personnel.
Pigeon Express acquired 51 per cent share in GoJavas in August 2016, in which Snapdeal holds 49 per cent stake. Snapdeal has stopped using services of GoJavas and is currently delivering shipments mainly through its own new logistics venture Vulcan Express. Rai said that Pigeon acquired GoJavas after it was running in losses mainly due to reconciliation issues with ecommerce companies.
“There was no transparency in ecommerce deliveries. Ecommerce wave in 2013 very badly impacted logistics segment. Reconciliation is big issue with ecommerce firm. They often blamed logistics firm for loss and damage of return goods. GoJavas also suffered from this blow,” Rai said.
GoJavas has Rs 110 crore loss on its books and reconciliation claims of about Rs 300 crore to be paid by ecommerce companies.
He said that in the first phase ecommerce firms hired delivery personnel at double salary and laid them off after six months, paid more than double rentals for warehouses, offices which created problems in the logistic industries.
“We are now calling this time as second phase of ecommerce business where they have learnt from their mistake and now rationalising expenses. GoJavas is still getting over 90 per cent from ecommerce. We expect GoJavas to post operational profit by the end of this month,” Rai added.
He said that the company expect 1,000 delivery personnel to enrol with Aangadia mobile app which will boost GoJavas business. Pigeon Express will pay 20 per cent of consignment booking charge to delivery personnel.
“Anyone with Aadhaar id can download Aangadia on their Android phone. We will complete e-KYC of the registrant after which he or she will be able to operate. The Aangadia service will be available at around 2,400 PIN codes where GoJavas is operational. Even customers can place order for consignment booking using this app,” Rai said.
Pigeon delivers documents at around 6,000 pin codes and GoJavas deal in parcels.
“Pigeon and GoJavas are also providing network support to each other. Decision on their merger will be taken based on outcome of discussion with Snapdeal,” he said.
Rai said that warehouses of both GoJavas and Pigeon Express have ample capacity and there is no need for expansion at least in the next fiscal year.
Source: India Today