Aditya Birla Retail Ltd (ABRL) has signed an agreement with private equity fund Samara Capital to sell its food and grocery retail chain More for an enterprise value of Rs 4,300 crore, 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.”
Aditya Birla Group declined to comment while Samara Capital did not respond to queries.
ET had reported on May 24 that Aditya Birla Group and Samara were engaged in talks and that the private equity fund had started its due diligence.
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.
Rs 3,000 Crore Invested in Past 3 Years
The restructuring created the country’s largest branded apparel company by sales and number of stores.
ABRL reported a 20% increase in FY17 sales to Rs 4,194 crore, with net losses narrowing 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.
Growth in the Indian retail market has been driven by the rising middle class and rapidly growing consumer spending, which has attracted 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.
