Delhivery Faces ₹49.19 Cr Tax Notice Amid Strategic Acquisition of Ecom Express

Indian logistics and supply chain company Delhivery has received a tax demand notice, INC42 reported. Delhivery’s tax notice was sent by the Directorate General of GST Intelligence at the Mumbai Zonal Unit.

The notice relates to multiple financial years, from 2018/19 to 2022/23. The supply chain company says it will challenge the order before the relevant authority.

Delhivery Gets Multiple GST Demand Notices

This is not the first time that the Indian authorities have sent a tax demand notice to Delhivery. In February this year, the company was slapped with a tax demand order by the West Bengal GST department. At the time, the company was required to pay INR 5.35 Cr. Delhivery also received a tax demand notice last year from Karnataka GST authorities.

According to an exchange filing submitted by the Indian logistics firm, Delhivery received the notice earlier this week on May 6. The notice stated that the company owes the Indian government INR 49.19 Cr in interest and penalties.

At the heart of the dispute is a GST compliance issue. The dispute specifically relates to the GST rate that’s applicable to specific services that Delhivery offers as per the provisions of the CGST Act of 2017 and IGST Act of the same year.

But Delhivery isn’t the only company that has received GST demand notices in recent times. Other listed and unlisted firms that have received similar notice include food delivery company Swiggy, Nazara, and Urban Company.

Delhivery’s Acquisition Plans

Delhivery’s ₹49 crore tax notice comes at a time when the logistics and supply chain firm is preparing to acquire a majority stake in Ecom Express. Last month, Delhivery informed stock exchanges about the plan to acquire a 99.4% stake in the ecommerce logistics company for INR 1,407 Cr through a distressed sale.

This amount represents an 80% drop in Ecom Express’s previous valuation of ₹7,300 crore.
According to Ecom Express, the acquisition will boost its overall profitability and enable it to reduce cost while scaling its operations. Delhivery views the Ecom Express acquisition financially favorable because it poses minimal risk. This is because the logistics company will not be changing or creating new technology integrations.

Delhivery also downplayed the impact that Ecom Express’s losses would have on its profitability. Over the last nine months, Ecom Express net losses have risen to INR 398 Cr.
Since its founding in 2011, Delhivery has grown to become India’s largest third-party logistics and supply chain company. The transportation company was co-founded by Bhavesh Manglani, Sahil Barua, Suraj Saharan, Mohit Tandon, and Kapil Bharati. As a leading logistics firm, Delhivery has received financial backing from big investors including SoftBank, Fidelity Investments, and Nexus Venture.

Financial Performance

Delhivery became profitable in quarter three of 2024. During this year, the company cemented its financial position after it posted INR 24.98 Cr in net profit in quarter three of 2024. This represented a 114% year-on-year increase. The company’s total revenue for this period amounted to INR 2,476.96 Cr. Delhivery attributed this performance to strong topline growth.

In the Indian market, Delhivery competes with a wide range of rivals including Amazon Shipping, Blue Dart, Xpressbees, and Flipkart-owned Ekart Logistics. In recent months, Delhivery has undergone important leadership changes. These include the onboarding of Vani Venkatesh as the Chief Business Officer.

Previously, Venkatesh was an executive at Airtel. The company is also in the process of onboarding Namita Thapar and Sameer Mehta as independent and non-executive independent directors respectively. Mehta is the co-founder of boAt while Thapar works at Emcure Pharmaceuticals.