Explained: What Reliance Retail’s Purchase Of UrbanLadder Means For Both Companies

Reliance Industries Ltd’s subsidiary Reliance Retail Ventures Ltd has purchased 96% stake in online home decor company UrbanLadder for Rs 182.12 crore. This is the company’s fourth acquisition this year after Coimbatore-based Kannan Departmental Store in March, and e-pharmacy Netmeds and Future Retail’s assets in August.

What are the details of the deal?

Reliance Retail has bought the 96% stake in the Bengaluru-based UrbanLadder from its existing investors including Sequoia Capital India, Kalaari Capital, and Steadview Capital, who have cumulatively invested around $115 million (around Rs 700-750 crore) since the company’s launch in 2012. This represents a significant markdown in valuation of UrbanLadder, which was only second to its Pepperfry in the online furniture segment. Reliance Retail also has the option of acquiring the balance stake, taking its shareholding to 100% of the equity share capital of UrbanLadder. It said that it would further invest Rs 75 crore in UrbanLadder, and this additional investment is expected to be completed by December 2023.

What does the deal mean for Reliance Retail?

The deal contributes to Reliance’s plans of building a stronger retail portfolio that supports its e-commerce play. According to the company, acquisitions like these enable the group’s digital and new commerce initiatives and widen the bouquet of consumer products provided by the group, while enhancing user engagement and experience across its retail offerings. With its existing portfolio of digital services including telecom, e-payments, online commerce, content streaming, etc these acquisitions open the gates for vertical integration of services that experts believe would enable Reliance to keep a customer within its own ecosystem for everything a user consumes online. The deal also gives Reliance Retail access to a growing online furniture retailer — which has seen its turnover grow by nearly 10-fold in three years to Rs 434 crore for financial year 2018-19.

What does the deal mean for UrbanLadder?

During 2018-19, UrbanLadder reported a profit of Rs 49 crore, the first since its inception in 2012. This was preceded by net losses of Rs 118.66 crore and Rs 457.97 crore in 2017-18 and 2016-17, respectively. The acquisition means that the company can now stop worrying about funding to finance its losses. According to sources, for now the company will continue to operate as a separate brand within the Reliance ecosystem with CEO and co-founder Ashish Goel continuing to hold his post for the time being.

How is the online furniture retail market shaped?

The growth in online furniture retail was effectively a result of the work put in by two companies — Pepperfry and UrbanLadder — and sectoral experts envisaged these companies, along with other smaller ones, to grow further as urbanisation and internet penetration in India increased. However, with the success of the omni-channel model, in which online platforms started establishing physical stores to tackle the ‘touch and feel’ problem in furniture e-tailing, traditional furniture companies like Nilkamal and Godrej soon started consolidating their position, in terms of gross merchandise value, using the same model. This established a scenario where online furniture platforms would look attractive to conventional companies in the furnishings segment as an add-on.

In 2016, Kishore Biyani’s Future Group acquired online furnishings company FabFurnish and a year later, fully absorbed the company and the brand ceased operations. In February this year, chemicals maker Pidilite Industries invested $40 million in Pepperfry, which counts Goldman Sachs, Bertelsmann India Investments, among its key investors. About the investment in Pepperfry, Pidilite Industries’ CFO Pradip Menon had said: “Having an equity stake, obviously means that we will have a very close collaboration with these platforms and therefore bring those insights to our organization and which can form a part strategy as the market moves gradually albeit in a very small manner to sort of a platform where ready to make furniture, etc., becomes more popular”.

Sandip Ginodia , CEO

ALTIUS INVESTECH PVT LTD

We deal in over 60 unlisted companies with 15 years of experience

For latest prices visit : www.abhisheksecurities.com/unlisted.htm / call : 09830271248 .

Email : ginodiasandip1@gmail.com

Reliance's JioMart is averaging half a million orders per day; WhatsApp driving growth

JioMart , Reliance's online-to-offline commerce platform that launched in May , has scaled up rapidly, riding on the pandemic-fuelled digital acceleration. The service, which went live in 200 cities across India, is currently processing an average of 500,000 orders per day. " We can go even higher on peak days", Jio Platforms CEO Kiran Thomas revealed at the Facebook for Fuel India 2020 event. He said, "JioMart is empowering millions of kiranas and small merchants through the simple and secure platform of WhatsApp, and linking them to Reliance Retail's pan-India supply chain. We expect to grow manifold in future, and are optimistic about enabling new cohorts of users and making it easier for them to shop for daily essentials." "Customers are transacting seamlessly on JioMart and the conversational nature of the service enabled by WhatsApp has made people adapt to it intuitively," he added. Reliance also stated that it will continue t

TCS merger with TCS e serve

The board of Tata Consultancy Services (TCS) in its meeting on 18 October 2012 has approved the composite scheme of arrangement between TCS, TCS e-Serve (e-Serve) and TCS e-Serve International (TEIL). The composite scheme of arrangement provides for merger of e-Serve into TCS and demerger of TEIL's special economic zone (SEZ) undertaking(s) to TCS. The appointed date proposed for this scheme is 01 April 2013. TCS holds 96.26% of the paid up equity share capital of e-Serve. TEIL is a wholly owned subsidiary of e-Serve. As per the terms of the scheme of arrangement, shareholders of e-Serve (other than TCS) will receive 13 equity shares of Re 1 each of TCS for every 4 equity shares of Rs 10 each of e-Serve held by them. The board has approved the scheme of merger of Computational Research Laboratories (CRL) and Retail FullServe (RFL) with TCS. The proposed appointed date for the merger of CRL is 01 October 2012 and for the merger of RFL is 01 April 2012. Computational Res

Stock broker SMC Global files for IPO

F inancial services company SMC Global Securities has filed draft red herring prospectus with SEBI for public issue of 1,58,67,380 equity shares of face value of Rs 2 each. The issue comprises a fresh issue of 79,33,690 equity shares by the company and an offer for sale of 79,33,690 shares by Millennium India Acquisition Company Inc. As of September 30, 2012, "We service our broking clients through a network of 43 branches and 2,521 registered sub-brokers and authorized persons spread in more than 500 cities and towns. We have also established an office in Dubai for brokerage and trading activities in that region," the company said. SMC has reported a loss of Rs 0.42 crore and total revenues of Rs 292.24 crore in the year ended March 31, 2012. "The proceeds of the fresh issue shall be utilised for margin maintenance with stock exchanges; part repayment of term loan; investments into subsidiary, SMC Comtrade; and general corporate purposes," according to p

Abhishek Securities

Search This Blog