Reliance Taking Over Kishore Biyani’s Future Will Result in a Mammoth Retailer. Here is How

Close to three decades after Kishore Biyani became the poster boy of India’s retail sector, Mukesh Ambani’s Reliance Retail will take over his ‘Future’.

The acquisition of Future Group’s retail and logistics business for Rs 24,713 crore will make RIL the top player in brick-and-mortar space after getting access to over 1,800 Future Retail stores in India.

The privately held subsidiary of Mukesh Ambani’s Reliance Industries Ltd. is nearly twice the size of the comparable business—grocery, technology products and apparel—of the Future Group, according to their filings for the year ended March.

Bankers said Reliance was like a white knight for FRL, which was reeling under high debt. The RIL takeover will give a fresh lease of life to what was one of the biggest entrepreneurial success story in the Indian retail sector.

People involved in the deal said it would be good for MSMEs and the suppliers in the retail ecosystem. The employees of Future Group could get absorbed as Reliance Retail is still in an expansion mode.

According to reports, revenue sales of Reliance Retail stood at over Rs 41,000 crore in the year ended March. Sales of comparable retail business of Future Retail Ltd. and Future Lifestyle Ltd. stood at about Rs 22,700 crore during the period.

The Biyani-led conglomerate’s revenue-per-store rose at a slower pace than Reliance Retail, but it still earns more.

Reliance Retail was able to scale up its retail operations with average revenue per store rising by 42 percent. Reliance Retail added 2 million square feet area and ended the year at close to 15.5 million sq. ft. The Future Group, having added 2.3 million sq. ft., now operates 20.2 million sq. ft. An average Reliance Retail store is 4,040 sq. ft. compared with 14,777 sq. ft. for Future Group.

Both the retailers managed to squeeze more margins from operations in the last financial year. While Reliance Retail’s EBIT margin expanded by 200 basis points (100 basis points = 1 percentage point), Future Group’s improved by 130 basis points.

Reliance Retail, on the other hand, operates close to 11,784 stores split across value fashion, footwear, premium fashion, grocery, jewellery, electronics, connectivity, etc. In the last financial year, Reliance Retail achieved a turnover of Rs 1.63 trillion. Reliance Retail also works as the master distributor for Jio connectivity services.

Disclaimer:Disclaimer: Reliance Industries (RIL), which also owns Reliance Retail, is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments