On 22nd December, a division of Reliance Industries Ltd (RIL), Reliance Retail Ventures Ltd (RRVL), has inked agreements to buy a 100% equity investment in METRO Cash & Carry India Pvt Ltd. (METRO India) for a total value of Rs. 2,850 crore. The deal is subjected to close by March 2024.
With over 3 million consumers in India, including 1 million recurrent customers, Metro AG, the multi-channel cash-and-carry merchant has a large customer base. Mukesh Ambani-led Reliance’ s position in Indian retail industry will be strengthened by this acquisition. A chain of METRO India’s 31 big format stores spread across 21 cities and supporting over 3500 employees would be available to Reliance Retail.
The very first firm to bring the cash-and-carry business model to India, METRO India is a fully owned subsidiary of the German corporation Metro AG, which began its operations in India in 2003. For entrepreneurs and retailers, METRO India has positioned itself as a reliable business partner.
It serves customers like hotels, restaurants, workplaces, small businesses, and Kirana stores while also selling things like vegetables and fruits, basic foods, gadgets, housewares, and clothing.
Its highest sales performance since entering the Indian market, METRO India produced revenues of Rs. 7,700 crore (€ 926 million) in the fiscal year 2021-22.
Perks for Reliance
On December 22, Reliance Industries’ stock price opened higher following the company’s announcement that it had acquired a 100% ownership stake in METRO India.
The infrastructure of Metro India’s supply chain and the underside of its operations would be made available to RIL. Along with wholesale clients, RIL will also gain 30 lakh new merchants in the HORECA (Hotel, Restaurant, Café) sector.
By utilizing benefits and economies across distribution networks, technological platforms, and supply capabilities, the purchase will further expand RIL’s physical store base and capacity to better serve customers and small businesses.
Isha Ambani, Director of Reliance Retail Ventures Limited, said that the purchase of Metro India fits with the new business plan, which is to create a special model of shared prosperity by actively collaborating with small businesses and retailers. She is confident that METRO India’s strong assets and Reliance’s comprehensive knowledge of the Indian merchant and kirana system will enable the company to provide small companies in India with a unique value proposition.
With more than 16,000 outlets spread across more than 7,000 cities, Reliance Retail is the largest retailer in India and the industry’s quickest growing company, now also venturing into fast fashion. The firm announced a 36% year-over-year growth in net profit to Rs. 2,305 cr during the quarter while earnings came in at 64,396 crore, as per the Q2 FY23 filings.
Steffen Greubel, the CEO of Metro AG said they were offering METRO India as a lucrative and expanding wholesale company in a fast-moving sector. He claimed he felt confident that the firm has found a reliable business partner in RIL who is prepared to steer METRO India for long term in this competitive market.