RP-Sanjiv Goenka Group company, Spencer’s Retail, has concluded an agreement with Nature’s Basket to acquire the entire stake in the Godrej Group company for Rs 300 crore, which will mark a second innings for Spencer’s entry into the western part of the country.
Spencer’s had a store in Malad in Mumbai, which it closed in 2013 on account of inadequate back-end support.
The deal is subject to nods from shareholders of both firms along with regulatory approvals, which Shashwat Goenka, sector head–retail and FMCG, RP-Sanjiv Goenka Group hopes can be had in three months.
“This acquisition indeed makes us a pan-India player. It was only the western zone which was missing from our footprint. We had decided that we need to turn profitable first before we enter new geographies,” he said.
For the first time, on a consolidated basis, Spencer’s posted a full year of net profit at Rs 2.39 crore.
With this acquisition, the retail division of the RP-Sanjiv Goenka Group has taken its store count to 192. Nature’s Basket operates 36 stores in Mumbai, Pune and Bengaluru.
On whether Spencer’s and Nature’s Basket will be amalgamated or exist as different brands or if the brand will be extended, Goenka said, “After the necessary approvals are in place, we will take a call on this. Nature’s Basket has a strong consumer connect. At the moment, Nature’s Basket brand will stay as it is”.
However, he is keen at exploring the cross availability and sales of the private label portfolios of both Spencer’s and Nature’s Basket.
While Spencer’s private labels include Spencer’s Finest, Tasty Wonders, Smart Choice, Clean Home, 2BMe and others, the latter’s private labels are Healthy Alternatives, Nature’s and L’Exclusif.
Besides, Goenka said the proposed acquisition will also boost the Group’s e-commerce presence as Nature’s Basket has a strong online presence that fits with his omni-channel strategy. Spencer’s has also overhauled its own app.
Operating since 2005, Nature’s Basket is a neighbourhood convenience store format grocery retailer that sells products ranging from fresh fruits and vegetables, fish and meat, artisanal bread, FMCG and staples.
The Godrej Group firm posted a turnover of Rs 338.28 crore the last fiscal, up 17.08 per cent over 2017-18.
For the Godrej group, the sale of Nature's Basket will mark an end of its interest in retail. Group sources said the business was non-core and amid growing competition from online and offline players it made sense for the company to exit the segment.
In the last decade and a half since launch, Nature's Basket, which tried its hands at large and small format stores (in line with other retail companies); attempted to enter Delhi, but met with little success.
Meanwhile, despite its same store sales growth falling by 0.7 per cent in the fourth quarter (Q4) of the 2018-19 fiscal year, Spencer’s reported a net profit of Rs 1.83 crore as against a loss of Rs 8.94 crore in the same quarter of 2017-18.
After Spencer’s broke away from CESC Ltd to emerge as a standalone company under the RP-Sanjiv Goenka Group’s fold, it posted a 3.67 per cent rise in revenue from operations at Rs 523.46 crore during the period under review.
Its gross margin rose to 21.24 per cent in the Q4 period of 2018-19 from 19.17 per cent a year ago.
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