Thread by @jshilanjanm

Acquired by Mukesh Ambani in a hostile takeover, #Milkbasket is growing on steroids 🚀🚀

It’s growing in cities where no competition has reached yet, & that too without much upfront investment!

Here’s how 👇

Founded in ’15, Milkbasket (MB) raised ~$40 million in its lifetime 💰💰

🔆 It would let people order till midnight & then deliver by 7am

🔆 By 2021, having grown to scale, it had burnt a lot of funds. Thus, the company was exploring sale to BigBasket, Swiggy or Amazon

This was when Reliance Retail swung into action:

🔆 It got Vani Kola’s Kalaari Capital to sell its entire 15.26% stake to Mahendra Nahata at mere Rs 400cr valuation!

🔆 As Nahata a Director on Reliance Jio Infocomm’s board, it was clear who the real buyer was

Thus, no one else would touch MB now, and the founders & investors had to make a distress sale to Reliance.

Weeks later, Kalaari received a $100 million cheque from Reliance to support its latest fund 😅

And, that was the end of Q2FY22.

Then 2 qtrs later, in an investor’s earnings con-call, the mgmt said:

MB is ready for scale-up. And this was big!

Game plan?

🔆 MB was doing deliveries from 11 warehouses it had built

🔆 However, these remained mostly idle during the days, except for when stocking up happened

🔆 Reliance said, our 4k+ stores selling groceries & daily essentials across all major cities do nothing in night. Use them!

Framework?

🔆 MB would study a city’s potential & the target localities

🔆 Ask Reliance Retail, if their stores in those cities could offer 4-5k sq ft of space to manage MB’s ops

🔆 If yes, game on!

Benefits?

🔆 Big fall in the cost & time to enter a new city

🔆 Allowed MB to list the SKUs available in the stores

🔆 Improved the sales from the existing infra & supply chain on which Reliance’s stores operate

🔆 Provided a new channel to sell Reliance’s pvt labels stocked in stores

Most important of all 👇

The presence of a Reliance store in a city allowed MB to enter smaller cities where no competitor is present right as building a warehouse and logistics is not viable.

For example: Salem in Tamil Nadu. No competitor operates there. But, MB does via Reliance’s existing store 💯

Outcome?

⚡ Over 2L daily orders in 42 cities
⚡ 5k+ SKUs (Thanks to Reliance’s stores)
⚡ Reliance’s pvt labels account for ~15% of sales
⚡ Commands ~50% market share along with BigBasket’s BBDaily

What a turnaround! Hats off! 👏👏

(Disc: Invested)

Biz News+ WA group: openinapp.co/6wrx2

PS: I post one such deep-dive daily 11am. If interested, do follow!

Note: This is a personal #investment thesis & not a #stock / #stockmarket rec.

Sources:
> Last 8 qtr investor presentations & con-call transcripts
> Aayush’s @TheKenWeb report from 2 days ago
> Company website

Tags: Reliance Industries Limited | #MukeshAmbani #Startups #IndianStartups #milkbasket @Milkbasketin