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Reliance Retail Ventures Ltd, a subsidiary of Reliance Industries Ltd (RIL), has acquired a 96 per cent stake in omnichannel furniture retailer Urban Ladder in a fire sale for ₹182.12 crore in cash. It also has the option to pick the balance stake in the start-up.
Reliance Retail proposes to make a further investment of up to ₹75 crore, which is expected to be completed by December 2023, RIL informed the stock exchange on Saturday night. “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,” it said.
The eight-year-old furniture start-up, which has been struggling to raise funds for over two years, axed 40 per cent of its staff in the March 2019 quarter in a bid to stay afloat as it continued to work at cutting costs to achieve profitability. While this may have bought it some time, the outbreak of Covid-19 came as a nail in its business. Last October, co-founder Rajiv Srivatsa exited the company.
Urban Ladder had shifted from an inventory-led online business model to omnichannel retail after it received the single brand retail licence from the Department of Industrial Policy & Promotion in August 2017. It set up a chain of 10 retail stores in Mumbai, Bengaluru, Delhi, Chennai, Noida, Hyderabad and Pune, some of which were shut down during the lockdown.
“With 90 per cent of the furniture industry still unorganised in India and leading business house like Reliance showing strong interest in this domain, there is high potential in this space and there is a big gap that needs to be filled in a more organised way,” said Lokendra Ranawat, co-founder and CEO, WoodenStreet, a Jaipur-based recent entrant into the online furniture space.
“It also gives a strong message to the start-up community and entrepreneurs about the importance of building more fundamental and true sustainable business models” he added.
Similar sales
In a similar distress sale, Future Group had acquired Rocket Internet-backed FabFurnish for ₹20 crore in April 2016. In August of that year, Mebelkart, which had raised $20 million, was forced to shut shop when its investor AskMe closed its operations because of the unplanned exit of its principal investor, Astro Holdings.
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