Reliance Annual General Meeting: What to expect in retail business

India’s multinational conglomerate, Reliance Industries Limited (RIL) with its stronghold in almost every sector is set to hold its Annual General Meeting (AGM) on August 28 with a major focus on its financial services but announcements and a future roadmap for its retail arm could also be expected.
“Expecting disclosures around the retail business to improve over the coming quarters,” said JPMorgan Chase, a leading global financial services firm.

"The Street will want to know further plans for the retail business, which now forms the largest part of RIL’s valuation apart from announcements related to Jio Financial," reported ET.

Recently, even before the AGM, Reliance Retail made a big announcement that Qatar Investment Authority will pick up a nearly 1 per cent stake in the retail arm, valuing the country’s largest retail firm at $100 billion. The valuation of the retail business of Ambani has doubled within three years, and this has increased the noise of a possible initial public offer (IPO) of Reliance Retail on the Street, said ET.

At present, the retail business contributes approximately 12 per cent to Earnings before interest, taxes, and amortization (EBITA) of its entire business arena which includes oil, gas, chemicals, telecom, retail and several other ventures, revealed Reliance Industries' annual report for the year 2022-23.

Since its last meeting, Reliance Retail has increased its EBITDA, which is a measure of company profitability used by investors, from Rs 12,423 crore in 2021-22 to Rs 17,974 crore in 2022 to 2023.

Over Rs 2 lakh crore revenue has been generated by Reliance Retail in 2022-2023 as compared to nearly Rs 1 lakh crore in 2021-22.

Reliance Retail further established itself as a market leader as it has been featured in the top 100 retailers globally.

The company’s retail sector has already crossed the 1 billion transactions mark, according to the annual report.

Upcoming AGM Expectations:
Despite hitting milestones in its retail business, RIL Chairman Mukesh Ambani could use this AGM to soothe the worries of its shareholders by providing a roadmap for its retail business.

“A bigger concern is the retail business as they are unsure of the endgame for Reliance Retail, even as the conglomerate has been steadily growing the business across categories,” said JP Morgan.

The firm further expects that the retail segment could turn out to be one of the most important sectors from investors' point of view as there are chances of a "much better operating environment for RIL over the coming years."

Key Announcements of Previous AGM
In the last AGM, Isha Ambani was announced as the director of its retail business.

In her address to the shareholders, she announced the company’s decision to foray into the FMCG business where it will face fierce competition from old giants like ITC and Hindustan Unilever.

However, despite competition, the company has been valued at more than $100 billion, making it bigger than FMCG giants like ITC and HUL, as calculated by global brokerage firm JPMorgan.

The global firm pegs Reliance Retail’s enterprise value at $112 billion and implied equity value at $102 billion.

While, on the other hand, multinational investment bank UBS has valued it at $110 billion, Bernstein at $111 billion while domestic brokerage JM Financial estimates it at $105 billion, reported ET.

“The objective of this business is to develop and deliver high quality, affordable products which solve every Indian's daily needs,” said Isha Ambani on the launch of the FMCG business of Reliance Retail.

Since its last AGM, Reliance Retail on June 22 of this year has stepped up its fight to increase its footprint in the FMCG space by focusing on producing "made-for-India" consumer packaged goods brand ‘Independence’ for North India.

Reliance Consumer Products, a subsidiary of Reliance Retail Ventures Limited (RRVL), announced the expansion of the brand this year that sells FMCG products ranging from staples to processed foods and other daily essentials in the densely-populated Punjab, Haryana, Delhi NCR, Uttar Pradesh, Uttarakhand, and Bihar.

Reliance Retail's FMCG arm first launched the brand in December last year in Gujarat.

Along with its announcement to enter the FMCG business, the director also commented on its latest collaboration of Jio Mart with Whatapp.

‘The launch of JioMart on WhatsApp is a truly novel initiative which combines online shopping experience with the simplicity of instant chat services,” said Reliance’s annual report for 2022-23.

The retail business expanded its store network with over 3,300 new stores added during the financial year, taking the store tally to 18,040 stores Pan-India which stood at nearly 15,000 stores during its last AGM, highlighted the annual report of the company.

The report further said footfalls at its stores increased by 50 per cent from last year to 780 million. The registered customer base also grew to 249 million. Between 2022-23, Reliance Retail entered into the beauty segment by launching Tira, a digital platform, along with opening its flagship store in Mumbai.

“The business also expanded its product basket through acquisitions and partnerships at both local and global levels like Metro, Campa Cola, GAP, Pret A Manger, Lotus, Sosyo, Maliban, Toffeeman to name a few,” said RIL’s annual report.

Through digital brands like Ajio and Netmeds, the company is using digital commerce to scale up at a rapid pace and is contributing to the strong growth of the retail segment.

“Growth in new commerce business has been fast-paced with rapid expansion of its merchant partner network. Currently, more than 3 million merchants have partnered with our new commerce platforms,” said the report.

"The sustained growth across consumption baskets has further consolidated our position as a market leader. We continue to innovate and invest in our stores and digital platforms to make shopping more engaging for our customers," said Reliance Retail Ventures Executive Director Isha Ambani.