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Food delivery giant Swiggy is looking to buy Metro Cash & Carry, an Indian subsidiary of Germany-based Metro AG, after the Gurugram-based company faced losses.

As per an ET Now report, Metro Cash & Carry, which has 31 stores in India, has approached close to 10 companies to acquire its India operations for a price between $1.5 Bn to $1.7 Bn.

According to RoC filings, Metro Cash & Carry posted an INR 23.33 net loss in FY20 while its turnover stood at INR 6,915.3 Cr during the same fiscal year. 

Metro Cash & Carry has been incurring losses for years now except in FY18 when it reported net profit for the first time. Mulling over the poor financial performance, Metro AG has decided to sell its Indian business, Metro Cash & Carry.

Besides Swiggy, Reliance Retail, Tata Group, Avenue Supermarket and Amazon and Thailand’s conglomerate Charoen Pokphand(CP) group are also contending to buy a stake in Metro Cash & Carry. 

Sourced told ET Now that the deal will help strengthen Swiggy’s Instamart delivery model.

When Inc42 reached out to Swiggy, the company denied commenting on the latest development. 

By acquiring Metro Cash & Carry, Swiggy is looking to create a hub-and-spoke model where Metro’s wholesale stores will supply goods to Instamart stores that will further be delivered to customers’ doorstep or sold in the stores.

Earlier, Swiggy launched Minis where sellers can list their products, create product catalogs and reach out to customers directly. By rolling out Minis, Swiggy has diverted its focus on the D2C segment. It is also working along with several clothing and accessories D2C brands. 

Previously, Swiggy acquired the restaurant table booking service platform Dineout from Times Internet for an amount between $150 Mn to $200 Mn. With this deal, the foodtech giant is now competing with Zomato’s dine out business.  

If Swiggy cracks the deal with Metro AG, then Metro Cash & Carry can improve its position in the online ecommerce market that is predominantly led by DMart, Amazon and Flipkart. Moreover, Metro’s retail stores and its links with FMCG companies will help Swiggy stay ahead of its rival companies in the online grocery retailing space. 

According to a report, India’s ecommerce sector, which will grow at a 19.24% CAGR by 2025, is anticipated to reach $111.40 Bn by 2025. Of all sub-segments, grocery and fashion are considered to be key drivers for growth. 

The report also states that the country’s online grocery market is estimated to reach $26.93 Bn in 2027, expanding at a CAGR of 33% by 2027.

Swiggy’s archrival Zomato is already in the online grocery retail space with its platform Blinkit. Earlier this year, Zomato invested $100 Mn in Blinkit. By entering this space, Swiggy might want to take the rivalry a notch higher with Zomato.