Delhivery Limited issued Frequently Asked Questions (FAQs) on 11 April 2025, regarding its proposed acquisition of Ecom Express Limited, following the initial announcement on 5 April 2025.
Rationale for Acquisition:
Scale: Enhances Delhivery's operating scale in the logistics industry, aiming to become the bedrock of commerce in India.
Profitability: Aims to improve network utilization and overall profitability by reducing overlapping network assets and central overhead costs. Revenue from the acquisition is expected to retain Delhivery's high incremental gross margins.
Ecom Express Financial Performance (in ₹ Crore):
FY24 (Audited): Total Revenue ₹ 2,609 Cr, EBITDA ₹ 104 Cr, PAT ₹ (249) Cr.
9MFY25 (Unaudited): Total Revenue ₹ 1,912 Cr, EBITDA ₹ (11) Cr, PAT ₹ (398) Cr, Adjusted PAT ₹ (184) Cr.
Integration Challenges: Expected to be lower than the SpotOn acquisition due to:
High customer overlap (>95% revenue overlap).
Ecom Express's volumes being ~40% of Delhivery's Express Parcel volumes.
Minimal technology integration required.
Valuation: Purchase consideration based on expected steady-state profits (assumed ~30% of FY25 base revenue) minus integration costs. Integration costs are conservatively estimated at ~₹ 300 Cr over 2 quarters post-completion. The acquisition is expected to be margin accretive.
Network Footprint: Ecom Express operates with ~9 million sq. ft. of infrastructure and ~3,750 facilities. Network rationalization will involve repurposing or exiting facilities based on Delhivery's needs.
Capex Impact: Acquisition is expected to reduce Delhivery's Capex intensity as a percentage of revenue due to Ecom Express's existing assets (Net block ~₹ 450 Cr as of Dec 31, 2024).
Liabilities: Due diligence did not identify material liabilities; quantified risks are factored into the acquisition price.
Timeline: Acquisition is subject to Competition Commission of India (CCI) approval. The long-stop date is 6 months from signing definitive documents (5 April 2025), extendable mutually.