Reliance ADAG arm invests Rs 32 cr in logistics company

The Bangalore-based company provides reverse supply chain solutions.

Reliance Venture Asset Management (RVAM) has invested around $7 million (Rs 32 crore) in Reverse Logistics (RL), a reverse supply chain solutions company based in Bangalore. The company uses its proprietary technology to increase profitability by reducing supply chain inefficiencies.

RVAM is a venture capital fund promoted by the Anil Dhirubhai Ambani Group (ADAG) along with Kleiner Perkins Caufield & Byers and Sherpalo Ventures.

Reverse logistics is a backward supply chain network where a product moves from the end consumer to the manufacturer for reuse, disposal or surplus sale with the aim of increasing efficiency. The industry deals in products such as cellphones, routers, cable modems, computer peripherals, cameras and white goods.

With an investment from Reliance Ventures, RL will also have synergies from the ADA group companies.

According to market reports, the Indian reverse logistics industry is pegged at $10-15 billion, which includes the secondary market supplying spares and second-hand material.

Harshal J Shah, chief executive officer, RL, said, “The reverse logistics space is fairly untapped and will revolutionise efficiency levels of the fragmented Indian supply chain. It is estimated that just by reducing supply chain inefficiencies, the country’s gross domestic product can go up by 3 per cent. The brand return experience in India is not good and that makes us all the more bullish on this business.”

RL’s clients include Planet M, Future Bazaar and Lenovo. By creating optimum solutions for the reverse supply chain, its clients had reduced supply chain costs by over 25 per cent, increased asset recovery by over 100 per cent and improved productivity by more than 10 per cent, said sources.

Sandeep Murthy, Partner, Sherpalo Ventures, said, “RL is a great example of the next breed of companies that will emerge in India. They are effectively leveraging technology to drive value and cost savings while catering to a very large unmet customer need.”

In developed countries, reverse supply chain management is outsourced and focused on increasing the overall shareholder value. Hence, with its growing importance, Indian companies are now looking to manage this network as a strategic and critical business area.

Hitendra Chaturvedi, managing director, RL, said, “With industries across sectors turning to cost optimisation while remaining eco-friendly, we will continue to offer optimum solutions to bridge the gap between the end consumer and the manufacturer.”

RVAM has invested in companies such as Yatra.com, Suvidhaa Infoserve, Stoke Inc, Pelago Inc, Sequans Communications, E-Band Communications, Seedfund and two MIT startups—Dhama Innovations and Scalable Display Technologies.

The fund invests proprietary money of the Reliance ADA group and has invested close to $100 million so far. The fund expects to invest $50 million across six deals over the next three to six months.