KK Modi Group-backed Godfrey Phillips is reportedly in talks with Tata Trent, Reliance Retail, and Avenue Supermarts to sell the retail grocery chain 24Seven, as reported by ET, citing executives familiar with the matter.
In an exchange filing on April 12, Godfrey Phillips India announced its intention to divest from the 24Seven convenience chain due to its lack of profitability, following a thorough review of the company’s retail business division.
As per one of the cited sources, the negotiations will revolve around valuation.
“The (Modi) group leadership has engaged in discussions with other groups that exhibit clear synergies at present. These discussions are currently at various stages,” stated the executive.
Continue Exploring: Godfrey Phillips India to shut down 24Seven retail chain citing financial struggles
24Seven has a presence in approximately 145 stores across the Delhi-National Capital Region (NCR), Punjab, and Hyderabad.
Established in 2005, the chain provides a variety of goods such as groceries, staples, snacks, beverages, personal care items, the Modi group’s exclusive beauty brand Colorbar, and even ready-to-eat food counters in certain larger format stores.
According to the executive mentioned earlier, grocery retail presents considerable potential for growth, and the 24Seven format can be expanded due to its combination of hyper-convenience grocery, staples, general merchandise, and even small in-store cafes, despite its current accumulated losses.
Trent Ltd, the retail subsidiary of the Tata Group, manages the grocery chain Star Bazaar. However, grocery constitutes a minor segment of the conglomerate’s diverse retail operations, with 24Seven potentially providing only marginal additional value, as per another executive’s perspective. Trent’s other retail brands, Westside and Zudio, have experienced swifter growth and expansion compared to Star Bazaar.
Reliance Retail Ventures, serving as the master franchise partner for the Texas-based chain, oversees approximately 50 stores under the 7-Eleven brand, having begun operations in 2021.
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“Should an acquisition occur, Reliance might consider merging its existing convenience store chain with 24Seven, given the similarity between both formats,” stated another executive.
Avenue Supermarts, the operator of DMart stores, offers a range of general merchandise and apparel, yet its primary focus lies in groceries, with plans for aggressive expansion in this segment. The chain witnessed a 7% growth in revenue per store and a 13% year-on-year increase in store additions for the quarter ending in March, marking a 20% rise compared to the corresponding quarter from the previous year.
Samir Modi, the managing director of Modi Enterprises, did not respond to inquiries. Representatives from Tata Trent and Avenue Supermarts declined to provide comments.
In an email statement, a spokesperson from Reliance Retail stated, “As per our policy, we refrain from commenting on media speculations and rumors.”
In the fiscal year 2023, Godfrey Phillips’ retail business division recorded revenue from operations amounting to INR 396 crore, which accounted for 9.3% of the tobacco maker’s total revenue. Nonetheless, the retail business division reported a negative net worth due to accumulated losses as of March 31, 2023.
Godfrey Philips announced last week that, “following careful review of stakeholder feedback, the division’s performance since its establishment, current market conditions in the retail sector, and the company’s long-term business strategy, the board has resolved to exit its retail business division.”
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