Mukesh Ambani, the richest entrepreneur of India, led Reliance Industries Subsidiary arm Reliance Retail Ventures has acquired around 96 per cent stake in eighty-year-old online furniture marketplace Urban Ladder for Rs. 1821.2 million or 182 crore according to a stock exchange filing.
The initiative has been taken to boost the e-commerce industry in India. As per the update, this acquisition would further amplify Ambani’s e-commerce initiative that is holding as a strong competitor to current e-commerce companies such as Amazon and Walmart’s Flipkart in India.
The share of stake which has been bought by the Reliance Retailer Venture Ltd is about 96 per cent. The Bengaluru-based Urban Ladder is an online start up home decor E-commerce company that have been serving its customer a quality based home decor items and furniture.
This is the company’s fourth acquisition this year after the Coimbatore-based Kannan departmental store in March, and E-pharmacy Netmeds and Future Retail’s in August.
The main aim of the acquisition is to expand the Reliance Retail business in India. Reliance Retail also has the option of acquiring to 100% of the equity share capital of Urban Ladder. It said that it would further invest Rs.75 crore in Urban Ladder, and this additional investment is expected to be completed by December 2023.
Is deal Beneficial:
The market value of Urban Ladder was falling since 2018 only after Pepperfry in the online furniture segment. According to the report, Urban Ladder made 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 457.97 crore in the year 2017-18 and 2016-17 respectively. Reliance Retailer Ltd ensuring Urban Ladder that this acquisition will reduce its burden of worrying as Reliance Subsidiary will fund it to manage its financial inability.
According to a statement published by the Reliance Industry, 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 serve his post for the time being.
The online furniture market is growing at around 80-85 per cent CAGR from $104 million in 2017 and is likely to be worth $700 million in the current year, as per a ReDSeer’s August 2020 analysis. The share of metros cities and Tier-I cities remains in the majority holding worth $525 million followed by $140 million coming from Tier-II cities and $35 million from Tier-III and beyond cities and towns. The overall furniture market is expanding at around 15-17 percent from $16 billion in 2018 to an estimated $28 billion in 2023.
The filing also stated,” Urban Ladder would further enable group’s digital and this initiative of expanding online e-commerce by Reliance Industry widen the bouquet of consumer products provided by the group”.
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