R P Sanjiv Goenka Group-owned Spencer’s Retail Ltd is set to acquire gourmet retail chain Nature’s Basket Ltd for ₹300 crore, as it seeks to expand its footprint in the Western region, the company’s filings with the BSE show. The acquisition is subject to shareholders’ approval.
The deal will give Spencer’s access to 36 Nature’s Basket stores in prime locations of Mumbai, Pune and Bengaluru. The Kolkata-based retail chain will also get access to Nature’s Basket’s online platform.
On Friday, Spencer’s Retail shares rose 2% to ₹132.70 on BSE, while Godrej Industries Ltd, which owns Nature’s Basket, closed at ₹449.70, up 2.34% from the previous day’s close. “The board meeting held earlier today has approved a proposal for acquisition of the entire 100% stake held by Godrej Industries Ltd in its wholly owned subsidiary Nature’s Basket Ltd," the statement said.
Investment banker Lodha Capital Markets advised Nature’s Basket Ltd on the deal.
Natures Basket, which began operations in 2005, sells fruits, vegetables, fish and meat, besides fast moving consumer goods (FMCG) and staples.
The retail chain is known for stocking up on niche gourmet products, including imported food such as Italy’s Grana Padano Cheese, Blue Cheese, Parma Ham, and bluish-purple chips from the US.
It competes with the likes of Future Retail Ltd’s Food Hall, and Alibaba Group-backed Big Basket.
“Nature’s Basket has a strong portfolio of private label brands which has huge traction with its consumers. We believe there is huge potential to expand this to Spencer’s stores. It also has a strong e-commerce presence, and we believe that fits in well with our omni-channel strategy at Spencer’s," said Shashwat Goenka, sector head, retail and FMCG, RP Sanjiv Goenka Group. “We realized that to further unlock the immense potential of this brand and to grow it to even greater heights, we need to pass on the torch to owners who have prioritized retail in their portfolio strategy and have the relevant ecosystems to take the business to the next level," Tanya Dubash, executive director and chief brand officer, Godrej Group, said in a statement.
In 2017-18, Nature’s Basket contributed just about ₹291 crore to Godrej Industries’ consolidated revenue of ₹9,968.83 crore, the company’s annual report shows.
Spencer’s Retail Ltd, a separate listed entity, had earned total revenue of ₹1,051.81 crore in 2017-18, on a stand-alone basis, according to BSE filings. In 2018-19, it generated a total revenue of ₹2,214.98 crore. “Our key observation out of the Spencer’s-Nature’s Basket deal is that high-end grocery is very niche in India. It is also a very tough and loss making market. We also think that this consolidation is in favour of core retailers," said Abneesh Roy, an analyst at Edelweiss Securities. Nature’s Basket has been reducing its dependence on imports by adding private labels, including L’Exclusif, which offers savories, ice-creams and chocolates.