Spencer's Retail to fully buy out Nature's Basket in Rs 300-cr deal

The move marks the RP-Sanjiv Goenka Group firm's second attempt to establish a toehold in the country's western region

RP-Sanjiv Goenka Group firm Spencer’s Retail has concluded an agreement with Nature’s Basket to acquire 100 per cent stake in the Godrej Group company for Rs 300 crore, which will mark a second innings for Spencer’s in western India. 

Spencer’s had a store in Malad (Mumbai), which had closed in 2013 due to issues regarding back-end support. The agreement is subject to a nod from shareholders of both companies, as well as regulatory approvals.

Shashwat Goenka, sector head (retail and FMCG), RP-Sanjiv Goenka Group, hopes the approvals are granted in another three months.

“This acquisition indeed makes us a pan-India player. It was only the western zone missing from our footprint. We had decided to turn profitable before expanding,” he said. For the first time, Spencer’s reported a full year of net profit — at Rs 2.39 crore on a consolidated basis.

With this acquisition, the retail division of the RP-Sanjiv Goenka Group increased its presence to 192 stores. Nature’s Basket operates 36 stores in Mumbai, Pune, and Bengaluru.

Responding to a question on whether the two will be amalgamated, exist as different brands, or if the brand will be extended, Goenka said: “After necessary approvals are in place, we will take a call on this. Nature’s Basket has a strong consumer connect. At the moment, the Nature’s Basket brand will stay as it is.”

However, he is keen on exploring cross-availability and sale of the private label portfolios of both brands.

While the private labels of Spencer’s include Spencer’s Finest, Tasty Wonders, Smart Choice, Clean Home, and 2BMe, those of Nature’s Basket are Healthy Alternatives, Nature’s and L’Exclusif.

Besides, Goenka said the proposed acquisition will strengthen the group’s e-commerce presence, as Nature’s Basket has strong online operations that fit with his omni-channel strategy.

Operating since 2005, Nature’s Basket is a grocery retailer that operates on a convenience store format. It sells products ranging from fresh fruits and vegetables to fish and meat, artisanal breads, FMCG, and staples.

The Godrej Group firm posted a turnover of Rs 338.28 crore in the last financial year — up 17.08 per cent from FY18. The sale of Nature’s Basket will mark the end of Godrej group's interest in retail. People in the group said the business was non-core and it made sense to exit the segment, amid growing competition from online and offline players. The group was advised by investment banking firm Lodha Capital Markets for the transaction.

In the last decade and a half since its launch, Nature’s Basket — which tried its hands at large and small format stores (in line with other retail companies) — tried to enter Delhi, but with little success.

Meanwhile, Spencer’s reported a net profit of Rs 1.83 crore in the March quarter (Q4), as against a loss of Rs 8.94 crore in the same quarter last year, despite same-store sales growth falling 0.7 per cent.

After Spencer’s broke away from CESC to function as a stand-alone company under the RP-Sanjiv Goenka Group, it posted a 3.67 per cent increase in its revenue from operations at Rs 523.46 crore, in Q4.

Its gross margin percentage increased to 21.24 per cent in Q4, versus 19.17 per cent last year.