V-Mart acquires Limeroad in distress sale. A worthy experiment.

Value merchandise retailer, V-Mart has announced acquisition of once fancied ecommerce start-up Limeroad on a slump sale basis.

• Total consideration is Rs 67 crore
  • Rs 31 crore cash payout
  • Rs 36 crore liabilities takeover
• Limeroad will operate as a separate business unit under V-Mart and will continue to be run by the existing key team including the founder Suchi Mukherjee.

Some key points on Limeroad

• LimeRoad was founded in 2012 by Prashant Malik, Manish Saksena, Ankush Mehra and Suchi Mukherjee.
• It is primarily focused on fashion and apparel, which contributes 85% of it’s revenues. Balance 15% is contributed by varied categories.
• The main attraction and drive of the website runs through user-generated promotions and content, which somewhat differentiates it from other ecommerce portals.
• The start-up not long back was fancied by investors and had got funding from the likes of Tiger Global, Matrix and Lightspeed. It had raised a total funding of $51 mn. Last funding round was in October 2020 at a valuation of about $110 mn.
• The Company reported declining revenues of Rs 180 cr, Rs 80 cr and Rs 69 crore in FY20, FY 21 and FY 22 respectively.

Rationale for acquisition by V-Mart

• V’Mart’s offline + Limeroad’s online = omni channel offering to the customers
• Synergies in terms of similar demographic and category focus

Is the acquisition attractive and will add significant value?

Optically, the transaction does looks interesting and seems to be ticking the right boxes in terms of the value proposition. Besides, the transaction value is small given V-Mart’s size and scale.

However, one key monitorable in these kind of transactions is – ability of old and new generation entrepreneurs to be able to work together. The culture normally is very different. Old generation likes rationality, profitability and accountability, whereas, the new generation prefers aggression, scale (GMV) and independence.

It remains to be see how this unfolds between V-Mart and Limeroad.

As for now, it does seem like a worthy experiment by V-mart !