MUMBAI: The country’s largest retailer Reliance Retail has set an ambitious target of clocking a Rs 1-trillion turnover over the next five years by its private label subsidiary Reliance Consumer Products (RCPL), from the present Rs 11,500 crore in FY25, which would also become a direct subsidiary of Reliance Industries soon.
Reliance Consumer Products will become a direct subsidiary of Reliance Industries, consolidating all consumer brands under one focused entity, group chairman Mukesh Ambani had told shareholders at the 48th AGM last Friday.
Setting an ambitious growth target for RCPL, Isha Ambani, a director of Reliance Retail, addressing the shareholders said, “the near-term goal is becoming the fastest consumer brands company with Rs 1-trillion in revenue within the next five years.
“Our long-term ambition is to become the country’s largest FMCG company with a global presence and entering 25 global markets in the next 12 months. This will make RCPL a big new value-creating engine for Reliance, comparable to our retail business in size and profitability”.
Highlighting the country’s expanding consumer market, driven by the middle class and rural adoption of branded products, she said “as a separate company, RCPL will give this business the independence to focus exclusively on its market, products, and customers without competing for management bandwidth.”
“Our FMCG business will also be the blueprint for expansion into apparel, electronics, and other large and high-value consumer categories–built on deep consumer insight, design excellence, Deep-Tech manufacturing scale, and unmatched distribution. We are planning to enter as many as 25 overseas markets in the next 12 months,” she said further.
Brokerage Motilal Oswal in a report said, the proposed carving out of RCPL from Reliance Retail and making it direct subsidiary of RIL is a huge value accretive move.
Noting the 20% growth in annual revenue growth for retail, Emka Global said all this make Reliance a buy target with Rs 1,600.
“Reliance Retail has provided a strong outlook of delivering over 20% retail annual revenue growth over FY25-28 (vs our estimate of 15% currently). The outlook bakes in high single-digit growth on a like-for-like basis and annual expansion of 2,000–3,000 new stores (10-15%). In addition, the online channel should add to growth, as its mix would improve from a high single-digit to over 20% by FY28,” Emkay analysts said.
Describing the $2-trillion domestic consumer market that’s expanding at over 8% annually and representing a high-growth opportunity, she said "our 350 million middle-class households, with a combined purchasing power exceeding Rs 100 trillion ($1.2 trillion), are driving demand for premium yet affordable branded products."
“For the first time in our history, rural markets, consisting of 900 million consumers, are driving 65% of the fast moving consumer goods market growth. They are adopting global-quality branded products faster than urban markets, with penetration growing at 35% annually. This combination of a rising middle class and accelerating rural adoption marks an unmissable consumption opportunity,” she said.
She also claimed that RCPL is not only observing this shift but also shaping it by becoming a manufacturing-led company to deliver global-quality products at Indian prices.
Chairman Ambani said the creation of RCPL as a subsidiary of RIL, is a "strategic move to create the country’s largest FMCG company. RCPL's phenomenal growth is guaranteed by the consumption boom, our world-class supply chain, and advanced manufacturing capabilities,” he said.
Reliance Retail had reported 28.3% on-year increase in profit to Rs 3,271 crore from an 11.3% rise in revenue at Rs 84,171 crore. The company added 388 new stores, expanding its customer base to 358 million, while the early monsoon season temporarily impacted the consumer electronics segment, although recovery is underway.
The company was among the top-5 global retailers in terms of number of stores in FY24 and among the top-20 retailers in terms of number of employees, and among the top-30 retailers in terms of revenue.
Isha also announced plans to enter luxury jewellery with design-led collections and expand into fashion jewellery and accessories, new retail formats focused on mobiles and laptops by expanding of Reliance Digital big-box stores; getting into fashion and lifestyle brands, groceries which is being expanded at 2.5x the pace of modern trade, especially in small towns; beauty and personal care and pharma. Reliance is also building its own cosmetics brand.