Amid the booming e-commerce market in India, IPO-bound Ecom Express is mulling to invest in automation and also expand its reach in Tier II and Tier III cities. As per the draft red herring prospectus (DRHP), the company proposes to utilise Rs 387.44 crore towards funding capital expenditure towards set-up of new processing centres with automation and new fulfilment centres.
In an interaction with Business Today, Ajay Chitkara, MD & CEO, Ecom Express said that the company will also expand its reach in Tier II and Tier III cities as growth in B2C e-commerce shipments is increasingly coming from smaller regions.
He further added that the Ecom Express has a significant presence in Tier II and III towns, which is developing to be the next big hub for e-commerce. As of March 31, 2024, Ecom Express had the widest coverage pan-India and in TierII+ regions compared to its peers, covering over 27,000 PIN codes.
Ecom Express, which is India’s pure-play B2C e-commerce logistics solutions provider and operates a pan-India express logistics network covering first-mile pick-up, mid-mile transportation and last-mile delivery as well as reverse logistics (returns) and fulfilment services or warehousing, has plans to raise Rs 2,600 crore which consists of Rs 1,284.50 crore of fresh issue and offer for sale worth Rs 1,315.50 crore, as per the Draft Red Herring Prospectus (DRHP).
The DRHP further highlighted that as much as Rs 73.71 crore would be set aside for investment in computers and IT equipment and Rs 239.23 crore would be utilised for enhancement of technological and data science capabilities including cloud infrastructure.
In general, the country is on the threshold of a jump in the e-commerce market, which is expected to grow at a compound annual growth rate (CAGR) of 27% to reach $163 billion by 2026. The industry is projected to reach $325 billion by 2030.
India’s e-commerce market registered a significant growth and reached a Gross Merchandise Value (GMV) level of $60 billion in financial year 2023, which is a 22% increase over FY22, according to a Redseer report. The Indian e-commerce sector is anticipated to reach approximately $350 billion by 2030.
DRHP further showed that the company will continue to invest for the growth of business. It has plans to scale existing business lines, expanding and optimising network infrastructure through capital expenditure.