Mukesh Ambani, Chairman of India's biggest conglomerate Reliance Industries Ltd, aims to make Reliance Retail an unbeatable force in organised retail space in India. The segment has consolidated even further after Rs 24,713 crore deal with Kishore Biyani's Future Group in August, making it around seven times bigger than the closest rival, Avenue Supermarts' D'Mart retail chain. Reliance Retail, a subsidiary of Reliance Retail Ventures Ltd launched 14 years ago, now caters to all aspects of consumers' life -- from electronics to fashion and lifestyle, grocery to petro retail.
In its mega plan to take the game to the global level, the RIL retail unit is now going the Jio Platforms way to raise funds from a series of strategic private equity investors and sovereign funds. Besides helping it expand to smaller cities of India, this will give it an extra edge over top FMCG players, vendors, logistic partners, which is also a worry for many retail players.
To start with, Silver Lake Partners has picked up a 1.75 per cent equity stake in Reliance Retail for Rs 7,500 crore ($1 billion), and as reports suggest, more investments are on the way. In all, the RIL is aiming at raising around Rs 63,000 crore from the existing JPL investors.
All of this combined with Reliance Retail's existing retail network makes the company one of the strongest pillars of Reliance Industries. To put things in perspective, here's how big Reliance Retail is in terms of a network of stores and revenue.
Reliance Retails, as per its annual report for FY20, already runs around 11,784 retail stores, spanning 7,000 towns and cities of India. In the grocery space alone, Reliance Retail has 797 stores across over 180 towns and cities, while the company runs 8,601 consumer electronics and 2,386 fashion and lifestyle stores. Reliance Retail also runs around 519 petrol retail outlets, the annual report data as on March 31, 2020, suggests.
The deal with Kishore Biyani gives it access to over 1,800 Future Group stores and will bring in the total business worth $5.5 billion in grocery segment alone, a recent CLSA report said. With Future Group deal, Reliance has captured around 27 per cent of the organised retail market space worth over $544 billion. The Future Retail deal gives Reliance access to its BigBazaar stores, Future Lifestyle Fashions stores and Future Consumer chains, which also covers everything from groceries to cosmetics and apparel to food stores.
Besides featuring a host of multinational FMCG companies across its retail chains, the company also runs in-house brands like RECONNECT, LYF, avaasa, fusion, Healthy Life, Yeah!, Petals, Graphite, among others. It has many exclusive partners such as Burberry, Diesel, Dune, Boss, KURT GEIGER, Payless, Paul Smith, among others, onboard.
The company's organised retail revenue grew by 24.8 per cent y-o-y to Rs 1,62,936 crore in FY20. The retail segment EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortisation) for the financial year grew 55.7 per cent y-o-y to Rs 9,654 crore.
Despite clocking in huge revenue, Reliance Retail's grocery business is yet to make a big difference; it accounts for only a fifth of its total sales. Considering the huge potential of the grocery segment, Reliance is seeing an opportunity to scale it to greater heights by consolidating the sector and expanding further.
The company also aims to transform the traditional retail space of India -- by connecting customers through JioMart. With JioMart, which is already running in over 200 cities, Reliance wants to make further inroads into the general trade market by connecting Kirana stores with consumers via its platform. Customers can place orders via a simple WhatsApp message on JioMart.
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Despite coronavirus-led lockdowns ravaging businesses and economies at large, Reliance Retail's net profit for the April-June quarter of the fiscal year 2020-21 stood at Rs 431 crore. The revenue stood at Rs 31,633 crore, while cash profit stood was recorded at Rs 793 crore. Reliance Retail's EBITDA fell by nearly half to Rs 1,083 crore against Rs 2,060 crore in the corresponding period of the previous year.