Tata, Reliance, DMart in talks to acquire 24Seven from Godfrey Phillips

Godfrey Phillips India had on April 12 announced its plan to sell the loss-making 24Seven convenience store chain after a review of its retail business division

Godfrey Phillips, backed by the KK Modi group, is in discussions with Tata Trent, Reliance Retail, and Avenue Supermarts for a potential sale of its retail grocery chain, 24Seven, The Economic Times (ET) reported.

The outcome of the talks will depend on the valuation, the business daily said, citing sources.

The leadership of the (Modi) group had started discussions with entities that showed clear synergies and these are said to be currently ongoing, at different stages.

In an exchange filing on April 12, Godfrey Phillips India had disclosed its plan to divest of the loss-making 24Seven convenience chain after a thorough review of its retail business division.

Established in 2005, 24Seven has 145 stores operating across the Delhi-National Capital Region (NCR), Punjab, and Hyderabad. These provide a range of grocery items, staples, snacks, beverages, products of the Modi group's Colorbar beauty brand, and personal care products. They has sell ready-to-eat food items in some larger format outlets. 

Given the growth potential in the grocery retail sector, the 24Seven model could be expanded to encompass hyper-convenience grocery, staples, general merchandise, and even small in-store cafes, despite the company's current accumulated losses, the ET report said, citing another official.

Trent Ltd, the retail arm of the Tata group, manages the grocery chain Star Bazaar, but grocery constitutes only a small fraction of the conglomerate's overall retail business. Acquiring 24Seven might, according to the report, offer only marginal benefits. Trent's other retail chains, Westside and Zudio, have experienced more rapid growth and expansion than Star Bazaar.

Reliance Retail Ventures, as the master franchise partner of the Texas-based 7-Eleven chain since 2021, operates nearly 50 stores under this brand. The 24Seven acquisition, should be happen, would entail Reliance merging its current convenience store chain with it, considering the similarity in their formats, the report added.

Avenue Supermarts, the operator of DMart stores, which primarily focuses on grocery sales but also offers general merchandise and apparel, is actively seeking to expand its grocery segment. For the quarter ended March, the chain reported a 7 per cent increase in revenue per store and a 13 per cent year-on-year rise in store additions, marking 20 per cent growth over the same period last year.

For 2022-23, the retail business division of Godfrey Phillips reported Rs 396 crore in revenue from operations, which was 9.3 per cent of the tobacco maker's total revenue. However, due to accumulated losses, the retail business division reported a negative net worth as on March 31, 2023.

"...decided to exit from carrying out the business operations of its retail business division… A decision in this regard was taken following a detailed review of the company's retail business division and after due consideration of the stakeholders' feedback, long-term performance, prevailing market conditions of the retail sector and long-term business strategy of the company," Godfrey Phillips had announced last week while announcing its decision.