Reliance Industries Limited (RIL), the largest private sector in the country has always catered to expanding its realm of activities. Its investment in the Reliance Digital segment last year providesmomentum to its objective of expansion and innovation, manifestingits long- sightednessapproach towards its business.
RIL infused Rs. 5,027 crorein Reliance Retail Ltd in fiscal year 2012, based on its 2011-2012 annual report. Previously, its investment in the partially paid up shares of the Retail segment accounted forRs. 1,220 crorein the year of 2009-2010. Reliance Digital stores had been on the top of the headlinesfor its massive store expansion in the last financial year ending March 2012. Its store count increased three times extending itself to the four corners of the country and doubled at anaverage every year since the time of its launch.
The annual report of RIL mentioned that the prime focus of Reliance was to provide impetus to its back- end operations and spread out by increasing the number of stores across value and speciality formats in the country.
SaloniNangia, President at TechnopakAdvisors said, “It is necessary to understand the scope of utilizationof this large investment, whether it has been used for augmenting its supply chain or for increasing its area of operations in the country.” Technospak Advisors isa retail-consulting firm.
RIL believes that the retail sector in the country is booming and is set to grow to around Rs. 36 trillion, i.e. $675 billion over the next four years. At present, the retail business in India is estimated to be around $470 billion. WithReliance Retail business witnessing losses in the FY2012, the fresh investment was necessary.
However,thisconglomerate observed a positiveFY2012with its collective losses in the 34 retail entities lowering to around Rs. 434 crore.The losses in the FY10 werecomparatively higher accounting to Rs. Rs. 491.40 crore.
Nangiaalso mentioned that RIL has changed its formats in the retail sector thrice in the past six years. Besides, it has been astutely taking its decisions considering reworking on a few arenas that demanded corrective actions. It has also taken special care to formulate a strong management team by hiring Rob Cissel who serves as the chief executive of Reliance Retail’s Value Format and Shawn Gray,the present chief operations officer. Rob Cissel and Shawn Gray have previously served as the executives at the Chinese Arm of Walmart Stores Inc. They will spearhead around 700 stores that cater to this format including Reliance Mart, Delight, Autozone, Reliance Superior, and Reliance Fresh.Several significant steps were taken in order to increase its efficiency including the consolidation of its six loss making subsidiaries into Reliance Fresh.
Reliance Gems and Jewels Ltd is the first RIL’s retail format to capitalize and announce its net profit. Reliance HypermartLtd, Reliance Supply Chain Solutions Ltd, Reliance Vantage Retail Ltd, Reliance Home Store Ltd, Reliance Leisures Ltd are some of its retail arms that are performing satisfactorily tapering their losses considerably.
Though the Retail concept of RIL has been witnessing losses presently, it will not hinder itsplans or its operations.Reliance Retail will be able to overcome these challenges in overtime paving way for strong retail base in the country, Nangia said.