Sources said Metro has agreed to RIL’s purchase deal for its local cash-and-carry business, which also includes the Indian conglomerate retaining the former’s employees for at least one year. RIL, India’s largest company in terms of market value, will also gain Metro’s wholesale centers across the country and land assets as part of the transaction.
RIL declined to comment on the report. It, however, said that the company evaluates various opportunities onan ongoing basis.
RIL is the country’s largest organised retailer in terms of store network and the proposed buy of Metro’s wholesale unit will further deepen its operations. Reliance Retail is perhaps the only company in the country that has both front and backend capabilities to absorb the operations of Metro’s India cash and carry operations, a source said, adding that whether it is to supplying to kiranas through its online grocery service JioMart, using Metro’s wholesale centres as warehouses or fine-tuning Metro’s sourcing at the back-end to benefit local MSMEs.
RIL’s retail interests are routed through its subsidiary Reliance Retail Ventures, in which marquee international investors like Mubadala, ADIA and PIF own stakes. Ambani built the retail unit using cash from his core refining and petrochemical business, enticing customers with superior value, revered international labels and acquisitions.
The dynamics of the wholesale business in India, low margins, among other factors, has forced the German wholesaler to evaluate its India strategy including an exit.
