Reliance Retail reports 3.5 times y-o-y operating profit; revenue up 19 per cent

BENGALURU: Reliance Industries Limited’s (RIL) retail segment - Reliance Retail (RR) is a tiny fraction of the Rs 434,460 crore revenue that India's largest private corporate reported in FY-2014. However, this segment has been growing consistently, quarter on quarter.

For the quarter ended 31 December, 2014 (Q3-2015), RR reported an 18.9 per cent growth in revenue to Rs 4686 crore from Rs 3941 crore in the corresponding quarter of the previous year. Q-o-Q, the segment reported a 12.5 per cent revenue growth from Rs 4167 crore reported in Q2-2015. For the nine month period ended December 31, 2014 (9M-2015), RR reported 17.9 per cent growth in revenue to Rs 12852 crore from Rs 10903 crore in 9M-2014.

RR reported 3.5 times y-o-y operating profit (Earnings before interest and tax – EBIT) in Q3-2015 to Rs 133 crore compared to the Rs 38 crore in Q3-2014 and 34.3 per cent growth from Rs 99 crore in Q2-2015. For 9M-2015, RR reported EBIT of Rs 313 crore, a growth of 232.9 per cent from Rs 94 crore in 9M-2014.

Comparatively, RIL reported a 20.4 per cent drop in consolidated revenue in Q3-2015 to Rs 96330 crore from Rs 121077 crore in Q3-2014 and a 15.5 per cent drop from Rs 113396 crore in Q2-2015. For 9M-2015, RIL reported a 6.6 per cent drop in consolidated revenue to Rs 317631 crore from Rs 340131 crore in 9M-2014.

RIL consolidated net profit decreased 4.5 per cent to Rs 5256 crore in Q3-2015 from Rs 5502 crore in Q3-2014 and a 12 per cent drop from Rs 5972 crore in Q2-2015. For 9M-2015 consolidated operating profit rose 3.4 per cent to Rs 17185 crore from Rs 16612 crore in 9M-2014.

RIL chairman and managing director Mukesh Ambani said, “Our focus on operational efficiency and the superior configuration of assets helped us deliver an industry-leading performance in the refining and petrochemicals business despite sharp decline in crude and feedstock prices. The performance also highlights the robustness of our risk management and proficiency of people and processes across the integrated chain. We continued to advance our refining and petrochemicals business capital investments, which will come to fruition over the next 4-6 quarters. These investments demonstrate our commitment to creating value through the business cycle. During the quarter, Reliance Retail registered Y-o-Y growth of 19% in turnover with improved margins and profitability.”

Company Speak

Reliance Retail now operates 2,285 stores across the country. RIL, in its press release, says that RR saw net addition of 279 stores during the quarter accelerating the pace of store opening to over three stores a day. The value formats added 15 new Reliance Fresh stores to its network in the quarter and further consolidated its position as the largest grocery retailer in the country. Strong private label offering continued to attract consumers thereby becoming a favored option against established national brands. Reliance Fresh Direct, home delivery of fresh grocery currently being piloted in a limited territory is showing encouraging response.

Reliance Market continued to expand and further consolidate its position as the largest Cash and Carry operator in the country. Reliance Market continued additions to its store network, reaching out to more and more kiranas, traders and institutions as partners across the country. Reliance Market serves over 15 lakh registered members.

Digital format sector kept up the pace of expansion through Digital Xpress Mini, a format that is positioned towards serving communication and mobility needs. In a short period, the format has established itself as the largest mobile phone retail chain in the country. During the quarter, the sector added 231 stores taking the total store count of the sector to 920.

The Fashion and Lifestyle sector witnessed strong growth during the quarter owing to a relentless focus on providing customers with fashionable, high quality products at great value. During this period, Reliance Trends crossed the milestone of operating stores in over 100 cities thereby extending their reach to fashion seeking customers.

Reliance Retail grew its presence through its partnerships during this period. Its partnerships with Marks and Spencer and Grand Vision continued expansion and witnessed strong sales growth from existing stores. Reliance Brands partnered with ABG Juicy Couture, LLC for a distribution agreement for the brand, Juicy Couture in India.

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