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Business News/ Companies / News/  Reliance retail arm buys Urban Ladder

Reliance retail arm buys Urban Ladder

The retail unit of Reliance Industries bought a 96% stake in the online furniture seller for ₹182.12 crore

The retail unit of Reliance Industries bought a 96% stake in the online furniture seller for ₹182.12 crore. mint (MINT_PRINT)Premium
The retail unit of Reliance Industries bought a 96% stake in the online furniture seller for 182.12 crore. mint (MINT_PRINT)

Reliance Industries Ltd (RIL) has acquired online furniture seller Urban Ladder Home Decor Solutions Pvt. Ltd for 182.12 crore, expanding its presence in India’s fast-growing e-commerce market.

Reliance Retail Ventures Ltd (RRVL), the retail unit of billionaire Mukesh Ambani’s RIL, bought 96% of Urban Ladder and has the option to buy the remaining 4% stake, the company said in a stock exchange filing on Saturday night. RRVL proposes to make a further investment of up to 75 crore, taking its ownership to 100% in the furniture e-tailer, which is expected to be completed by December 2023.

The Urban Ladder acquisition comes three months after Reliance Retail acquired a majority stake in online pharma firm Netmeds for around 620 crore.

“The aforesaid investment will further 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," Reliance said in the filing.

No regulatory approvals were required for the investment, the company added.

“The acquisition of Urban Ladder will create a few, large dominant online furniture retail brands, which will see Reliance and e-commerce marketplaces Flipkart and Amazon gaining market share along with existing furniture e-tailers like market leader Pepperfry," said a person familiar with the development.

Data by RedSeer Consulting shows the online furniture market in India grew at an annual average pace of approximately 80-85% to touch $700 million in FY20. But online has less than 3% share in the overall furniture market, pegged at $17 billion.

Eight-year-old Urban Ladder operates a digital platform for home furniture and decor products. It also has a chain of retail stores in several cities . It was valued at around 1,200 crore in 2018, which dropped to around 750 crore in 2019.

UrbanLadder’s audited revenue was 434 crore, 151.22 crore and 50.61 crore; It posted a net profit of 49.41 crore in FY19 and losses of 118.66 crore and 457.97 crore in FY18 and FY17, respectively, according to stock exchange filings.

The past two years have been challenging for the e-furniture market as funding remained subdued, and investors pressured them to turn profitable.

Bigger rival Pepperfry, which is on the cusp of profitability and plans to go public as early as next year, has seen a sharp rebound in business post-lockdown, co-founder and chief executive officer Ambareesh Murty said in a recent interview. Building an omnichannel business, investing in the brand and multiple private labels are the other things it has benefited from, he said.

Urban Ladder, in particular, has had a rough ride in recent years. Founded by Ashish Goel and Rajiv Srivatsa in 2012, the company raised more than 700 crore from top venture capital funds such as Sequoia Capital, SAIF Partners, Kalaari Capital and hedge fund Steadview Capital. But after its Series E round two years ago, it struggled to raise funds. Last November, it raised 15 crore, though some of its investors did not participate in the round.

According to RedSeer, long-tail categories including home and home furnishings have done better than any time before due to high demand for upgrading work-from-home/study-from-home environment.

However, the share of home furniture continues to be a small part of online retail, and clubbed with e-grocery and online beauty products, raked up only 11% of the overall festive gross merchandise value (GMV) in the first week of e-commerce sales this year.

Tarush Bhalla contributed to the story.

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Madhurima Nandy
I am a part of the long story team at Mint, and write on real estate, infrastructure, e-commerce, urban issues among others. I have over 20 years of experience as a journalist. As a long-story writer, I tell stories behind the news to capture the larger picture through an analytical lens, with authenticity.
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Published: 16 Nov 2020, 05:53 AM IST
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