With petrol pumps, Reliance turns retail into Rs 34,000-crore biz

Reliance Retail, the retail arm of Mukesh Ambani-led Reliance Industries, reported a 65.6 per cent jump in profit before depreciation, interest and tax (PBDIT) to Rs 366 crore for the quarter ended March 31, against Rs 221 crore in the same period last financial year. The PBDIT stood at Rs 333 crore in the quarter ended December 31.

The figures are not strictly comparable, though, as the company put its petroleum retail business under its organised retail segment from 2016-17. 

The company’s revenue for the fourth quarter was Rs 10,332 crore, up 18.9 per cent sequentially. Revenue for the full year was Rs 33,765 crore ($5.2 billion), up 60.2 per cent as compared to the previous year. But, again, the previous year’s numbers did not include fuel retailing.

“The increase in turnover was led by growth across all consumption baskets,” the company said in a media release. 

During the last quarter, Reliance Retail added 63 stores across various store concepts. At the end of the financial year, the retailer operated 3,616 stores across 702 cities with an area of over 13.5 million square feet. 

“Though the numbers of Reliance Retail are not comparable with other retailers, it is important to note that unlike some large retailers it is profitable,” says Arvind Singhal, chairman and managing director at management consulting firm Technopak. 

Aditya Birla Retail that runs a supermarket chain under More brand is still struggling to turn profitable.

Reliance Retail reported 2.4 per cent earnings before interest and tax (Ebit) margin in the March quarter, down from 2.7 per cent in the previous quarter.

“Reliance Market and Reliance Trends are two most profitable formats of the company’s retail business. Its petroleum retail business may not be as profitable, as it has a franchise model and market forces do not allow charging a premium on the product,” says Singhal. 

In the fourth quarter, Reliance Market continued additions to its store network and launched a 50,000 sq ft store at Amritsar. Reliance Retail added 24 new Trends stores during the quarter and now operates 344 stores.

The company also expanded its womenswear fashion offering by launching Trends Woman. As part of Reliance Retail 2.0 initiatives, its e-tail venture Ajio launched kid’s wear during the quarter and rolled out various features, such as IMPS, EMI, automated refunds, among other initiatives, to enhance consumer experience.