Reliance Industries chief sees his group’s business in the sector growing 10-fold in five years.
Mukesh Ambani, chairman of Reliance Industries (RIL), today said he was expecting Rs 45,000 crore of business from its retail ventures in the next five years. The figure in 2009-10 was Rs 4,500 crore.
Reliance Retail, the main retail subsidiary, posted profit of Rs 18.2 crore in 2009-10, for the first time after opening its first store nearly three-and-a-half years ago, mainly aided by a tax provision of Rs 25 crore. The company posted a net loss of Rs 20.2 crore in financial year 2009.
“Over the next five years, I can realistically foresee this business growing 10-fold from current levels, and becoming a significant value creator for Reliance in the coming years,” Ambani said in his speech at the annual general meeting today.
RIL’s retail business currently operates 1,150 stores in 86 cities across 14 states. It has nearly 5.5 million RelianceOne membership customers.
Recently, Reliance Retail unveiled plans to put its expansion drive back on track, by strengthening presence in multi-format and hypermarket models, taking leadership positions in fresh foods and putting in place world-class infrastructure through distribution centres, fresh processing centres and retail academy and customer innovation centres.
Though RIL talked about an investment of Rs 25,000 crore in the retail space and a presence in 1,500 cities and towns, it had to put its plans on hold due to the slowdown. It shut over 50 loss-making stores and almost stalled expansion during the slowdown.
To improve prospects, it rejigged the top management of retail business and brought in expats. Reliance had to rope in Gwyn Sundhagul and four other key employees of Tesco Lotus from Thailand to revitalise operations after key staff, such as president and CEO Raghu Pillai and Gunender Kapur, CEO of fresh business, put in their papers.
At a ‘Let’s Talk Growth’ meeting with around 700 key employees of the chain’s Mumbai and Pune operations on May 20, Ambani vowed to make RRL “a world-class retailer”.
“I never give up. I want to make a world-class retail chain and I am committed to this cause. I will support the venture throughout,” Ambani said at the meet.
He said Reliance’s value formats—Reliance Fresh, Reliance Super and Reliance Mart — had reoriented themselves around a new expression, Aapki khushi, Hamari khushi and that cheered its consumers
“Each of the speciality formats developed its own winning formula for its market segment, and are currently in the process of scaling up rapidly to become market leaders in their businesses,” Ambani said today.
Apart from speciality formats such as Reliance Digital and Reliance Footprint, it runs store tie-ups with Marks & Spencer, Diesel and Apple, among others.
