Another Multinational Corporation (MNC) has decided to shut shop in India, the latest in the line of MNCs leaving India or heavily downsizing has been German company METRO Cash & Carry India, which has decided to sell its entire stake to Reliance Retail. Its 100% stake will be sold for a total consideration of Rs 2,850 crore, which is subject to closing adjustments.
This will also be Reliance Retail’s (RR) further foray into the B2C market of India, after fighting Amazon to get hold of Future Group’s Big Bazar. This acquisition will give RR access to a wide network of METRO India stores in locations across key cities, a large base of registered kirana stores and other institutional customers and supplier networks. This was announced recently in a Reliance Retail press release.
The transaction is subject to certain regulatory and other customary closing conditions and is expected to be completed by March 2023.
“The acquisition will further strengthen Reliance Retail’s physical store footprint and ability to better serve consumers and small merchants by leveraging synergies and efficiencies across supply chain networks, technology platforms and sourcing capabilities. The symbiotic relationship will create greater value for all stakeholders in the retail ecosystem,” Reliance Retail said.
METRO Cash & Carry began operations in India in 2003 and was the first company to introduce the cash-and-carry business format in the country. It currently operates 31 large-format stores across 21 cities and has about 3,500 employees.
Before that a B2C format was brought into India by French retail giant Carrefour. That company barely made its footprint felt in the country before it decided to fold back operations. Walmart of the US, the world’s largest retail chain operator, also barely scratched the surface of the Indian retail market, before shutting shop. B2B margins in India are wafer thin, and what had brought these international giants to India was the hope of massive volumes that would make up for the thin margins. That had not materialised.
This pullback has benefited Indian retail giants, led by Reliance Retail and Jio mart. The Adani Group is also aggressively moving into this field, with already a substantial presence through Adani Wilmar, though they have yet to establish a retail chain of any substance.
Other MNCs to have pulled out of India in the past have been automobile giants Ford and General Motors, apart from other players. There was a time recently when even Vodafone, one of the world’s largest mobile networks, was on the verge of moving out of India, till a change in government plans pushed through mainly by its partners in India in the Birlas’ Idea, applied some balm.