Here are some of the major updates that could move the markets tomorrow:
RIL, Superdry signs JV for IP in India, Bangladesh, and Sri Lanka
Reliance Brands Ltd’s (RBL) subsidiary, Reliance Brands Holding UK Ltd (RBUK), has signed a £40 million joint venture (JV) agreement with Superdry Plc. The JV is for the sale of Superdry’s intellectual property assets in India, Sri Lanka and Bangladesh. Reliance Brands (RBL) is a subsidiary of Reliance Retail Ventures Ltd (RRVL). RRVL and Superdry will each own 76% and 24% of the joint venture vehicle, respectively.
JSW Neo Energy signs ₹15,000Cr MoU with Uttarakhand govt
Uttarakhand Government has signed a Memorandum of Understanding (MoU) worth ₹15,000 crores with JSW Neo Energy Ltd (JSW NEL) at the roadshow of its Global Investor Summit. As per the MoU, two pumped storage of 1,500 megawatts (MW) will be developed in the state’s Almora district. JSW NEL is a subsidiary of JSW Energy Ltd.
L&T secures order from West Bengal Power Development Corp
Larsen & Toubro’s (L&T) power business arm secured an order (in the range of ₹1,000-2,500 crore) from West Bengal Power Development Corporation Ltd. The engineering, procurement and construction (EPC) order pertains to setting up wet Flue Gas Desulphurization (FGD) systems for its Thermal Power Plant at Sagardighi, West Bengal.
Manufacturing operations disrupted at Alembic Pharma’s Sikkim plant
Manufacturing operations at Alembic Pharma’s Sikkim plant have been disrupted due to flash floods in the Teesta River. However, the company stated that no loss or harm was caused to any personnel and the assessment of loss will take a while. All assets of the company are adequately insured and necessary intimations have been given to insurance companies.
Strides Pharma gets USFDA approval to market HIV drug
Strides Pharma’s Singaporean subsidiary, Strides Pharma Global, has received approval from the US Food & Drug Administration (USFDA) to market Efavirenz, Emtricitabine, Tenofovir Disproxil Fumurate (EET) tablets. The drug helps control HIV infection. The drug is a generic version of Gilead Sciences’ Atripla tablets. As per IQVIA data, the tablet has a market opportunity of $7.5 million in the US.
Hindustan Zinc to use LNG-fuelled trucks of GreenLine
Hindustan Zinc Ltd (HZL) will use Greenline’s liquefied natural gas (LNG)-powered trucks in its supply chain and transportation operations to cut its carbon footprint. HZL has set a target of becoming a net-zero carbon emitter by 2050. GreenLine (promoted by Essar Group) will invest ₹200 crore to deploy LNG-powered trucks for Hindustan Zinc’s road logistics.
HealthCare Global Enterprises Ltd (HCG) has acquired SRJ CBCC Cancer Hospital in Indore. This acquisition marks HCG’s entry into the key geography of Madhya Pradesh. HCG plans to further expand by adding 100 beds and state of art cancer diagnostic and treatment facility within an estimated operational timeline of 2 years.
SBI launches Mobile Handheld Device to provide banking services
State Bank of India (SBI) launched a ‘Mobile Handheld Device’ to provide banking services to its financial-inclusive (FI) customers. The move is aimed at enhancing accessibility, convenience in availing banking services and empowering financial inclusion and extending essential banking services to the masses. The new device brings kiosk banking directly to customer’s doorstep.
Bandhan Bank’s advances grew 12.3% year-on-year (YoY) to ₹1.08 lakh crore, while its loan collection efficiency remained stable at 98% at the end of the September quarter (Q2 FY24). Total bulk deposits stood at ₹29,098 crore in Q2 FY24, compared to ₹25,705 crore a year back. The Kerala-based bank saw its deposit growth at 23% YoY to ₹2.33 lakh crore in Q2.
Here are some of the major updates that could move the markets tomorrow:
India’s retail inflation cools to 6.83% in August
According to the National Statistics Office (NSO), India’s annual retail inflation (measured by the Consumer Price Index) eased to 6.83% in August. Inflation came down from a 15-month high of 7.44% in July. The fall was largely led by a decline in vegetable prices. Food inflation fell from 11.51% in July to 9.94% in August.
According to data published by the Ministry of Statistics and Programme Implementation, India’s Index of Industrial Production (IIP) expanded at a rate of 5.7% in July 2023. The expansion was at a faster pace in July than a month ago. Mining output grew 10.7% YoY, while manufacturing output and electricity generation expanded at 4.6% and 8% YoY, respectively, in July.
Govt may impose addl tax to restrict sale of diesel vehicles
Nitin Gadkari, the Minister of Road, Transport & Highways (MoRTH) plans to propose to the Indian govt to consider imposing additional taxes on diesel vehicles. The additional tax is to restrict the sale of diesel vehicles unless automakers voluntarily move away from it. The minister made the statement while speaking at the 63rd Annual Convention of the Society of Indian Automobile Manufacturers (SIAM).
NTPC pays final dividend of ₹2,908.99 cr for 2022-23
NTPC announced the payment of ₹2,908.99 crore final dividend for 2022-23. This payment constitutes 30% of the paid-up equity share capital of NTPC. The total dividend disbursed for FY 2022-23 stands at ₹7,030.08 crore, being 41% of the profit after tax (PAT). This marks the 30th consecutive year in which the company has distributed dividends.
Tata Power Delhi Distribution ties with US-based Utiltyx for cyber security
Tata Power Delhi Distribution has partnered with Utiltyx, the Indian subsidiary of a US-based cyber security and data analytics software company. The partnership aims to enhance the company’s preparedness against future threats and challenges related to cyber security. The association is aimed at augmenting Intelligent Electronic Device (IED) visibility, strengthening Tata Power-DDL’s capabilities to fight cyber threats.
Reliance Retail Ventures gets ₹2,000 crore from KKR
KKR is investing another ₹2,069.5 crore through an affiliate in Reliance Retail Ventures (RRVL). This follow-on investment will translate into an additional equity stake of 0.25% in RRVL. The additional acquisition will take KKR’s total stake in RRVL to 1.42%. The private equity firm acquired the stake at a valuation of ₹8.36 lakh crore.
Hindalco Industries has signed a technology partnership agreement with Italy-based Metra to manufacture high-speed aluminium rail coaches. The partnership is aimed at sharing extrusion and fabrication technology for building high-speed aluminium rail coaches. Hindalco is the world’s largest aluminium rolling and recycling company.
SpiceJet paid Kal Airways and its promoter Kalanithi Maran ₹100 crore towards an arbitral award. The payment was made a day after the Delhi High Court ordered it to complete the payment by September 12. On August 24, the court had asked SpiceJet and Singh to pay ₹100 crore to Maran by September 10, failing which the court had said it might consider the attachment of their properties.
IndiGo is looking to induct up to 22 aircraft from the secondary lease market as it faces the grounding of several Airbus A320 Neo aircraft powered by Pratt & Whitney engines. Over 1,000 P&W engines will need to be inspected after the manufacturer found that contamination of powder metal defects could lead to the cracking of some engine components.
Coal India to invest ₹24,000 crore in green transportation
Coal India Ltd (CIL) is planning to invest ₹24,000 crore in green transportation in three phases. This investment is part of CIL’s plan to ensure the eco-friendly transfer of coal from its production point to handling plants. The phases will cover 61 First Mile Connectivity (FMC) projects, which will have a combined capacity of 763.5 million tonnes per annum. Under these green projects, coal will be loaded directly into rail wagons through mechanised piped conveyors with a rapid loading system.
Uno Minda to buy an additional 3.81% stake in European subsidiary
Uno Minda Ltd’s Board of Directors approved the acquisition of the remaining stake in Uno Minda Europe Gmbh. The acquisition will be at a consideration of 1.3 million euros (~₹11.58 crore) to make it a wholly-owned subsidiary. The stake will be purchased by SAM Global Pte Ltd, a wholly-owned subsidiary of Uno Minda Ltd.
India’s retail market is estimated at Rs 60 Lakh Crores in FY 2019-20 and is expected to grow at a CAGR of 10% over the next 5 years to reach Rs 90 Lakh Crores by FY 2024-25. It accounts for around 10% of the country’s GDP. Only around 8-10% of the retail market is organised retail, the remaining 92% fall under unorganised retail.
To protect the interest of agriculturists and small retailers in India, the government has a restricted FDI policy for the retail sector. You can read more about FDI in the retail sector here.
Reliance Retail Ventures Limited (RRVL) is a subsidiary of Reliance Industries Limited. It was founded in 2006. It is one of the largest retailers across India by revenue. Reliance Retail has about 11,748 stores all across India, with 70% of them being consumer electronics stores. Additionally, it owns 328 warehouses or 310 Mn Sq. Ft of warehousing space.
Talking Numbers
Reliance Retail Revenue Contribution By Segment (Source: Company Annual Report)
Reliance Retail’s generates maximum revenue from Connectivity, which essentially is the from the sale of recharge coupons of Reliance Jio (the conglomerate’s telecom arm) and Jio Store. The Consumer Electronics Segment is next accounting for almost 28% of Total Revenue in FY20 followed by Grocery at 21%, Fashion and Lifestyle at 8% and Petro Retail at 8%.
Ever seen those Reliance gas stations? They are actually owned, managed and marketed by Reliance Retail. All of the gas stations fall under the Petro Retail Segment. Reliance Retail owns around 519 of such Petro retail outlets all over the country.
Reliance Industries and its subsidiaries have been in the news a lot lately. This is because they have been on an acquisition and fundraising spree. Over the past decade, Reliance Retail has grown tremendously. The charts given below shows Reliance Retail’s growth over the past 5 years in terms of Profit After Taxes and EBITDA.
EBITDA and Profit After Tax for Retail(FY15-FY20)
During COVID, Store functioning was severely impacted by lockdown and restrictions. Consumer Electronics and Fashion & Lifestyle business remained suspended in April and partially in May/June. Around 50% of stores were fully shut throughout the quarter, 29% were operational partially.
Grocery stores continued operations with limitations and logistical challenges. Operations across the network including supply chain were disrupted by sporadic changes in regulations. Due to the current pandemic situation Reliance Retail did face a revenue drop of 17%.
Performance of Reliance Retail Venture Limited During COVID-19 (Q1FY21) (Amount: Rs. Crore)
Reliance Retail saw a 21% growth across fully operational businesses of Grocery and Connectivity.
Brands and Subsidiaries of Reliance Retail
Reliance Fresh Reliance Smart JioMart Reliance Market Reliance Digital Jio Store Other Partner Brands
Reliance Petro Retail (Reliance Petro Marketing) Outlet.
With refined e-commerce especially in Grocery, JioMart, the newest member of Reliance Retail is expected to rise and it matters a lot to Reliance Retail, but why?
Why does JioMart matter?
Reliance Retail has ventured into the digital commerce space with JioMart in January, 2020. JioMart services were launched across 200 cities on a pilot basis. JioMart also uses WhatsApp ordering feature for consumers through its partnership with Facebook.
JioMart will operate on the Online to Offline business model. This means that it will connect with local retailers and deliver goods to customers by procuring them from the nearest store located in the customer’s vicinity.
This separates JioMart from its competitors like Amazon and Grofers who follow the Warehouse Model, where they stock pile inventories in warehouse spread over various locations.
JioMart will therefore save on fixed costs and other costs associated in maintaining the warehouses. Moreover, it can onboard any retailer in any part of the country into its system.
JioMart order flow is now 4 times more than what it was before the lockdown period.
Future of Reliance Retail
Reliance Industries Limited announced the acquisition of Future Group for Rs 24,713 crore, aiming to boost its presence in the offline retail market. Reliance Retail Ventures Ltd (RRVL), acquired the retail & wholesale businesses along with the logistics & warehousing businesses of the Future Group.
Reliance Retail will have access to around 1800 stores across Future Group’s Big Bazaar, FBB, Easyday, Central, Food hall formats, which are spread in over 420 cities in India.
To Read More about the Future Group Deal, Click Here.
Also, Reliance Retail acquired a majority equity stake in Vitalic Health Pvt. Ltd./ NetMeds for an amount of ~Rs. 620 crores. This marks a presence of Reliance Retail in the Pharma-Retail segment as well.
Reliance Retail acquired 100% stake in Shri Kannan Departmental Store Private Limited (SKDS)for a consideration of Rs 152.5 crores. SKDS is engaged in the business of retailing fruits & vegetables, dairy, staples, home & personal care and general merchandise to consumers. SKDS currently operates 29 stores across Coimbatore and nearby areas.
Reliance Brands Limited, another subsidiary of Reliance Retail acquired 100% equity shares of Hamleys Global Holdings Limited GBP 67.96 million. Reliance Lifestyle Holdings Limited, a subsidiary of the Company, runs and operates the Indian franchise of the Hamleys brand and has 88 stores in India. This acquisition will catapult RBL to be a major player in the global toy retail industry. (Source: Company Press Release)
Reliance Retail has also acquired men’s apparel company John Players in March,2019 for an undisclosed amount.
Investments flowing in
Silver Lake picked up a 1.75% stake in Reliance Retail Ventures for ₹7,500 crore. Earlier this year, Silver Lake invested Rs 10,202 crore in Jio Platforms, RIL’s digital services platform.
KKR & Co. is in advanced talks to invest at least $1 billion in Reliance Retail in what could be another U.S. investment following Silver Lake’s deal. Read More Here.
ADIA is in discussions to invest about $750 million at a valuation of roughly $57 billion, while PIF could funnel as much as $1.5 billion into Reliance Retail. (Source: Financial Times)
There have been reports of Reliance Retail offering 40% stake to Amazon for $20 Billion as well. This news report caused Reliance Industries Limited(RIL) shares to surge 7.2% in the markets.
What sets Reliance Retail apart?
Investment demands are pouring in so hard, that there have been reports of Mr. Mukesh Ambani, Chairman of Reliance Industries Ltd, has had to put investors like Soft Bank and Carlyle Group on a waiting list.
However, what remains common in all the investment rumours is the word “people familiar with the matter”. It is the people familiar with the matter and is anonymous to the public who are making disclosures about these deals. No confirmation has been obtained from the companies what so ever. One should keep their eyes and ears open before making any inferences.
With the Future Group in its pockets, Reliance’s Grocery segment can prove to be a tough competition for other retailers like D-Mart, Grofers, BigBasket and many more.
Additionally, Reliance Retail has its venture JioMart as its blue-eyed boy. JioMart is doing something which other retailers have failed to do so. It wants to include your next-door convenience store into its retail-ecosystem. Geographically too Reliance Retail intends expanding its trail. With the acquisition of Shri Kannan Departmental Stores, it’s set its foot in the state of Tamil Nadu’s niche retail market.
Reliance has managed to extend its wings in multiple retail segments like Toys, Pharma and Fashion & Lifestyle. Reliance has bagged investments and acquisitions for its Jio and Retail platforms, while Oil and Petroleum still continue to be a major source of income, it seems Reliance doesn’t want any sector to remain untouched by it.
