Reliance Industries has reportedly paid ₹254 crore to the German multinational company METRO AG for utilizing its brand name in India. This substantial sum, acknowledged in the annual report of METRO AG, reflects a licensing fee paid by Reliance Industries for the brand usage until September 2023.
The payment is part of the ₹2,850 crore deal through which Reliance Industries acquired the wholesale chain of Dusseldorf-based METRO AG in India last year. METRO AG, in its annual report, explained that the licensing fee was received in advance for the usage of the METRO brand as part of the transaction.
“METRO AG is providing certain transitional services and licenses as part of the transaction to enable the new owner to operate the business,” stated the German company in its annual report. The sale of METRO India, encompassing 31 wholesale stores and the entire real estate portfolio, concluded successfully on May 11, 2023.
In the annual report, METRO AG highlighted the rationale behind the sale, citing factors such as market consolidation, accelerated digitalization, and intense competition. The multinational stated that the business of METRO India no longer aligned with its core growth strategy.
According to the report, the preliminary net cash inflow, considering outgoing cash and the prepayment for brand usage, amounted to €0.3 billion (₹2,731 crore). The positive EBITDA-effective earnings from the disposal of METRO India, including transaction costs, were noted as €150 million, fully attributable to the segment East and allocated to transformation gains as a portfolio measure.
The annual report also mentioned that components of other comprehensive income from currency translation differences attributable to METRO AG shareholders had an effect of €−44 million in the financial result due to de-recognition through profit or loss until the date of de-consolidation.
