Mukesh Ambani-led business conglomerate Reliance Industries Industries has acquired 100% stake in Coimbatore’s Kannan Departmental Store for Rs 152.50 crore.
In a regulatory filing with the Bombay Stock Exchange Limited (BSE) and the National Stock Exchange Limited on March 4, Reliance Industries said that its wholly owned subsidiary Reliance Retail Ventures Limited purchased all the equity shares in Shri Kannan Departmental Store Private Limited.
“The aforesaid investment will further strengthen the group’s retail operations and presence in the state of Tamil Nadu and will further enable retail and new commerce initiatives,” the filing added.
Founded by T Thanushgaran, who opened a single store in Erode in 1985, the homegrown brand has grown into a household name in the last 20 years. It now has around 29 stores across Coimbatore and also has presence in other cities such as Madurai, Erode, Salem, Tiruppur, Pollachi etc.
The departmental store is involved in retail sale of household items like vegetables and fruits, groceries, home and personal care products, electronics and other items and has a retail area of over six lakh square feet.
Over the last three years, the revenue from operations and the net profits of Shri Kannan Departmental Store has been steadily declining, according to the filing made by Reliance. In 2016-17, the company made a revenue of Rs 481 crore and recorded a net profit of Rs 4 crore, which declined to Rs 450 crore (revenue) and Rs 3 crore (net profit) in 2017-18. In 2018-19, the revenue from operations further fell to Rs 415 crore with the net profits declining to Rs 2 crore for the entire year.
The acquisition by Reliance is aimed at strengthening its hold over Tamil Nadu markets. Reliance Retail Ventures Limited which is the holding company of Reliance Retail Limited currently owns the brands Reliance Fresh, Reliance Smart, Reliance Digital etc.
The acquisition of Shri Kannan Departmental Store comes at a time when Reliance is betting big on retail chain to further its ‘new commerce’ plans. As per Reliance’s new commerce plans, it wants to penetrate into the retail market and link producers, traders, brands and merchants with consumers using technology.
As part of this, it also recently launched JioMart in December 2019, which is its online food and grocery venture
In the past, Reliance acquired British toys company Hamleys and John Players, the menswear brand from ITC limited in 2019.