Senior Correspondent, IndianRetailer.com & Retailer Magazine Jun 30, 2018 / 4 MIN READ
Aditya Birla Retail Ltd (ABRL) has agreed to sell its food and grocery retail chain More for an enterprise value of Rs 4,300 crore to private equity fund Samara Capital, said two persons with direct knowledge of the plan.
“We managed to break even after significant cost restructuring in recent times... but the group has decided that it is comfortable with offline apparel retailing and to halt investments in online as well as grocery retailing,” said one of the two persons.
“The deal will be closed in September,” the person added.
Aditya Birla Group and Samara were engaged in talks and that the private equity fund had started its due diligence, a financial daily had reported earlier this year.
The $41-billion aluminium-to-mobile telephony diversified conglomerate entered the grocery retail market after acquiring smaller retail chain Trinethra Retail about a decade ago that was later absorbed into ABRL.
It had also restructured its retail business by carving out the apparel-making Madura Fashion and Lifestyle division from Aditya Birla Nuvo and merging it with the listed Pantaloon Fashion and Retail Ltd a few years ago.
The restructuring created the country’s largest branded apparel company by sales and number of stores.
In 2017 fiscal, ABRL reported a 20% increase in sales to Rs 4,194 crore, narrowing net losses to Rs 644 crore from the year earlier. However, the company had debt of about Rs 6,573 crore on its books and financing costs amounted to Rs 471 crore at the end of March 2017.
The accumulated debt was mainly due to the acquisition of Trinethra and Fabmall a decade ago, and Jubilant’s Total Super Store two years ago. Nearly two months ago, Aditya Birla Group chairman Kumar Mangalam Birla and his family converted bonds worth more than Rs 2,800 crore into equity in the group’s food and grocery business.
A top official close to the development said the group had invested more than Rs 3,000 crore in grocery retail in the past three years.
With the rising middle class and rapidly growing consumer spending, Indian retail market has been on surge attracting investments from both local and global companies. The sector attracted Rs 950 crore of investment in FY18, up 35% from Rs 700 crore in FY17, according to a May Ficci study.
ABRL has huge competitors with nearly 493 more branded supermarkets and 20 hypermarkets like Reliance Retail, Future Group and Avenue Supermart, which runs the D-Mart retail chain.
In the month of June this year Aditya Birla Retail (ABRL) has signed an agreement with private equity fund Samara Capital to sell its food and grocery retail chain ‘More’.
ABRL, the operator of More supermarkets, reported a 20% increase in FY17 sales to Rs 4,194 crore, with net loss narrowing to Rs 644 Cr.
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