Reliance Retail to demerge FMCG business to boost growth

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Reliance Industries is carving out its fast-growing FMCG business from Reliance Retail into a separate unit, chief financial officer Dinesh Taluja said in a conference call after the company reported its quarterly earnings on July 18.

This business is in the process of being demerged out of Reliance Retail into a subsidiary of Reliance Industries, he said. “Once the regulatory approvals are in place, it will become an independent business.”

Earlier this month, media reports said that Reliance is transferring all its consumer goods brands to a new wholly owned subsidiary as the billionaire Mukesh Ambani-led oil-to-telecom conglomerate prepares for an initial public offering of its retail business.

The brands, spanning apparel, fashion, food, personal care and beverages, currently housed under Reliance Retail Ltd, Reliance Retail Ventures Ltd, and Reliance Consumer Products Ltd will be moved to the so-called New Reliance Consumer Products Ltd, the reports said, citing a National Company Law Tribunal order dated June 25.

The conglomerate’s fast-moving consumer goods (FMCG) vertical reported revenues of Rs 4,400 crore in the June quarter, marking a 2x year-on-year growth. Taluja attributed the surge to the company’s expanding footprint across general trade, B2B, and its own store network. Total store count stood at 19,592 stores in Q1, up 3.6 percent from a year earlier. Since the March quarter, the company has added 252 stores.

“While it has a big advantage of being able to sell through our network of stores, both B2C and B2B, the business has built its own independent distribution network, which is pretty substantial,” he added. About 70 percent of the consumer business sales come from the general trade, according to the company.

Among its key brands, Campa Cola has gained double-digit market share in core markets, aided by a high-decibel marketing campaign during the IPL season.

Disclaimer: MoneyControl is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.