RIL compensates Metro Rs 254 crore for using its brand name in India

In the fiscal year concluding in September 2023, Reliance Industries (RIL) paid ₹254 crore to Metro AG. This payment was made for using the German retailer's brand name in India, following Reliance's acquisition of its wholesale chain in the country a year ago.

Media reports quoted Metro saying, "Metro AG is providing certain transitional services and licences as part of the transaction to enable the new owner to operate the business. As part of the sale of Metro India, a licence payment of ₹28 million (₹254 crore) received in advance for using the Metro brand is recognised in the financial year."

In December 2022, Reliance Retail Ventures, bought Metro Cash and Carry India for a total cash consideration of ₹2,850 crore.

This deal consisted of all 31 wholesale stores along with the complete real estate portfolio of the six store locations. The finalisation of the sale occurred in May 2023. The decision to divest was attributed to the rising trend of market consolidation, the rapid pace of digitalisation, and heightened competition. The wholesale and retail giant expressed that Metro India's business no longer aligns with its central growth strategy.

As per the report from Metro, taking into account the outgoing cash and factoring in the prepayment for utilising the Metro brand, the initial net cash inflow for the disposed assets and liabilities stands at ₹0.3 billion (₹2,731 crore).

"However, positive Ebitda-effective earnings from disposal of its Indian business was ₹150 million (₹1,363 crore), including transaction costs," it said.

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