NEW DELHI: Reliance Industries Ltd’s (RIL) retail arm Reliance Retail Ventures Limited (‘RRVL’) on Thursday signed definitive agreements to acquire a 100 per cent equity stake in METRO Cash & Carry India Pvt Ltd. (‘METRO India’) for a total cash consideration of Rs 2,850 crore, subject to closing adjustments. The acquisition by the conglomerate run by billionaire Mukesh Ambani seeks to strengthen its dominant position in India's mammoth retail sector.
The transaction is subject to certain regulatory and other customary closing conditions and is expected to complete by March 2023.
Through this acquisition, Reliance Retail gets access to a wide network of METRO India stores located in prime locations across key cities, a large base of registered kiranas and other institutional customers, a strong supplier network and some of the global practices implemented by METRO in India, RIL said in a statement
METRO India, a wholly-owned subsidiary of German company Metro AG, started operations in India in 2003 as the first company to introduce a cash-and-carry wholesale business format in the country and currently operates 31 large format stores across 21 cities with about 3,500 employees. It also includes METRO India's real estate portfolio that includes 6 store-occupied properties.
The multi-channel B2B cash & carry wholesaler has reached over 3 million B2B customers in India, of which 1 million are frequently buying customers, through its store network and eB2B app, the company claims.
The acquisition, according to RIL, will also strengthen Reliance Retail’s physical store footprint and ability to better serve consumers and small merchants by leveraging synergies and efficiencies across supply chain networks, technology platforms and sourcing capabilities.
In the financial year 2021/22 (FY ended September 2022), METRO India generated sales of Rs 7700 crore (€ 926 million), its best sales performance since its market entry into India.
Speaking about this investment, Isha Ambani, Director, Reliance Retail Ventures Limited, said, “We believe that METRO India’s healthy assets combined with our deep understanding of the Indian merchant / kirana ecosystem will help offer a differentiated value proposition to small businesses in India.”
Steffen Greubel, CEO of METRO AG, said, “With METRO India, we are selling a growing and profitable wholesale business in a very dynamic market at the right time. This, on one hand, will benefit both our customers, and our employees, for whose loyalty and performance we are very grateful, and on the other hand, it will enable METRO to focus on accelerating growth in the remaining country portfolio."
The Reliance Group recently launched its fast-moving consumer goods (FMCG) brand "Independence" in Gujarat, for staples, processed foods, beverages and other daily essentials. The new brand, launched by Reliance Consumer Products, a subsidiary of RRVL, will take on established players such as Hindustan Unilever, ITC, Patanjali and Adani Wilmar.
Reliance is India's biggest brick-and-mortar retailer with over 16,600 stores, and a strong wholesale unit would further deepen its operations in India.
Metro is a leading international specialist in wholesale and food retail in over 30 countries.
Metro Cash & Carry, its wholesale division, entered India in 2003 and currently operates 31 wholesale distribution centres across the country, serving business customers only.
Its sells products such as fruits and vegetables, general groceries, electronics, household goods and apparel to clients like hotels, and restaurants as well as offices and companies, small retailers and Kirana stores.
Reliance Retail, the oil-to-telecom conglomerate's retail arm, is ranked 56th amongst the top global retailers with USD 18 billion in revenues. It is the world's second-fastest-growing retail company behind only South Korea's Coupang.
Indian retail is a Rs 60 lakh crore market with food and grocery constituting 60 per cent of it. Organised retail is expected to be 12 per cent of the entire retail segment.
Reliance already has a 20 per cent market share in the organised food and grocery business, with a store count nearly triple that of its nearest competitor 'More' in the segment.
The B2B segment is considered to be a low-margin business and multinationals such as Carrefour have exited from the country.
E-commerce major Flipkart Group has acquired a 100 per cent stake in Walmart India Pvt Ltd, which operates the Best Price cash-and-carry business.
Earlier, in August 2020 Reliance announced a Rs 24,713-crore deal to acquire the retail business of the Kishore Biyani-led Future group.
The deal was to acquire 19 Future group companies operating in the retail, wholesale, logistic and warehousing segments. The deal was called off by Reliance Industries in April this year after it failed to get lenders' support.
(With PTI inputs)