Metro Cash & Carry’s dwindling fortunes amid Reliance’s onslaught
The company, which had turned profitable in FY2019 after 16 years of India operations, slipped into red post-COVID, data from RoC shows.
- May 20, 2022,
- Updated May 20, 2022 5:41 PM IST
Wholesale retail giant Metro Cash & Carry India’s latest financial performance has come under scrutiny as its German parent begins search for a buyer. The local subsidiary of the German wholesale major Metro AG, that set up shop in 2003 in India, slipped into red again post-COVID after briefly turning profitable.
As per documents available at Registrar of Companies (RoC), under the Ministry of Corporate Affairs, while Metro Cash & Carry India managed to grow its business in FY2020-21, its bottom-line remained in red. During the year, its turnover stood at Rs 6,915.3 crore - up from Rs 6,553 crore in FY2018-19. Financial numbers for FY2019-20 and FY2021-22 were not accessible.
However, Metro, that had posted a net profit for the first time in its history in FY2018-19, struggled with its bottom-line again in FY2020-21. In FY2018-19, Metro Cash & Carry India had reported a Rs 217.4 crore net profit -- pipping other foreign retail giants like Amazon India (Rs 141 crore net loss) and Walmart India (Rs 172 crore net loss). It was the first time since it launched its first store in 2003 that Metro had posted net profit. In FY2020-21, though, it reported a Rs 23.33 crore net loss, filings available at the RoC shows.
Commenting on financials of Metro Cash & Carry, the company's spokesperson said, "Metro India business is doing very well and has been profitable since 2018; now continuously four years in a row. We have seen a big jump (+57 per cent) in our EBITDA for FY21 vs FY20. Our e-commerce business in FY21 grew by 5.7x vs. PY [previous year] and we have successfully opened three new stores in India in the last 9 months."
As per sources, Metro’s German parents are now looking for a buyer to sell the majority stake that they hold in the local unit at a valuation of Rs 11,000-13,000 crore. The management is already in talks with leading wholesale and retail giants like Reliance Group, Tata Group, Avenue Supermarket and Amazon, among others.
In response to queries sent to Metro AG, the German parent firm, a spokesperson said, "Metro India is a growing business in a market with enormous potential for wholesale. We are reviewing strategic options with potential partners to enhance Metro’s existing wholesale capabilities and accelerate the business development in India."
However, according to a source closely watching the developments, Metro AG is looking for a local partner so that it can reinvest the money into expanding Metro Cash & Carry's business.
Incorporated on January 18, 2001 at Bangalore, the German wholesale major opened its first store in India at Kolkata with an aim to cater to the millions of kiranas or local groceries. Apart from offering consumer staples at a lower price in bulk purchases, convenience has been its key USP (unique selling proposition).
In recent years, the onslaught launched by newer players in the wholesale and retail market like Reliance Group have altered the dynamics of the game. From rapidly expanding its retail footprint to launching mobile application like Jio Mart - backed by a massive warehousing and distribution network - Reliance has not only impacted the established players in the organised retail market in India but has also disrupted the business models of distributors in the general trade.
While it is yet to be decided whether Metro exits from the India market, sources say, the parent company is averse to investing more to ramp up the India business that is in desperate need of an overhaul to counter the growing challenges. Due to Metro’s inability to turn profitable for years, its parents have already burned cash worth over Rs 2,000 crore, as per one estimate.
Also Read: Consumer protection regulator issues notices to Ola, Uber for unfair trade practices
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Wholesale retail giant Metro Cash & Carry India’s latest financial performance has come under scrutiny as its German parent begins search for a buyer. The local subsidiary of the German wholesale major Metro AG, that set up shop in 2003 in India, slipped into red again post-COVID after briefly turning profitable.
As per documents available at Registrar of Companies (RoC), under the Ministry of Corporate Affairs, while Metro Cash & Carry India managed to grow its business in FY2020-21, its bottom-line remained in red. During the year, its turnover stood at Rs 6,915.3 crore - up from Rs 6,553 crore in FY2018-19. Financial numbers for FY2019-20 and FY2021-22 were not accessible.
However, Metro, that had posted a net profit for the first time in its history in FY2018-19, struggled with its bottom-line again in FY2020-21. In FY2018-19, Metro Cash & Carry India had reported a Rs 217.4 crore net profit -- pipping other foreign retail giants like Amazon India (Rs 141 crore net loss) and Walmart India (Rs 172 crore net loss). It was the first time since it launched its first store in 2003 that Metro had posted net profit. In FY2020-21, though, it reported a Rs 23.33 crore net loss, filings available at the RoC shows.
Commenting on financials of Metro Cash & Carry, the company's spokesperson said, "Metro India business is doing very well and has been profitable since 2018; now continuously four years in a row. We have seen a big jump (+57 per cent) in our EBITDA for FY21 vs FY20. Our e-commerce business in FY21 grew by 5.7x vs. PY [previous year] and we have successfully opened three new stores in India in the last 9 months."
As per sources, Metro’s German parents are now looking for a buyer to sell the majority stake that they hold in the local unit at a valuation of Rs 11,000-13,000 crore. The management is already in talks with leading wholesale and retail giants like Reliance Group, Tata Group, Avenue Supermarket and Amazon, among others.
In response to queries sent to Metro AG, the German parent firm, a spokesperson said, "Metro India is a growing business in a market with enormous potential for wholesale. We are reviewing strategic options with potential partners to enhance Metro’s existing wholesale capabilities and accelerate the business development in India."
However, according to a source closely watching the developments, Metro AG is looking for a local partner so that it can reinvest the money into expanding Metro Cash & Carry's business.
Incorporated on January 18, 2001 at Bangalore, the German wholesale major opened its first store in India at Kolkata with an aim to cater to the millions of kiranas or local groceries. Apart from offering consumer staples at a lower price in bulk purchases, convenience has been its key USP (unique selling proposition).
In recent years, the onslaught launched by newer players in the wholesale and retail market like Reliance Group have altered the dynamics of the game. From rapidly expanding its retail footprint to launching mobile application like Jio Mart - backed by a massive warehousing and distribution network - Reliance has not only impacted the established players in the organised retail market in India but has also disrupted the business models of distributors in the general trade.
While it is yet to be decided whether Metro exits from the India market, sources say, the parent company is averse to investing more to ramp up the India business that is in desperate need of an overhaul to counter the growing challenges. Due to Metro’s inability to turn profitable for years, its parents have already burned cash worth over Rs 2,000 crore, as per one estimate.
Also Read: Consumer protection regulator issues notices to Ola, Uber for unfair trade practices
Also Read: Apple’s AR/VR headset has reportedly been tried on by company's board of directors