Reliance Retail posted a 14 per cent decline in operating profit while revenue remained flat as many shoppers stayed indoors or preferred local shops and online buying instead of crowding large retail stores.
Reliance’s retail division, which runs 12,000 stores selling products across groceries, consumer electronics and apparel, posted sales of Rs 41,100 crore with earnings before interest, taxes, depreciation and amortization (EBITDA) at Rs1,986 crore. The growth, however, was strong compared to sequential quarter revenues growing 30 per cent and EBITDA increase 8 per cent against the June quarter. During the second quarter, the company opened 232 new stores and said it will accelerate further as operating curbs are being lifted.
In August, Reliance Retail Ventures agreed to buy the retail assets of Future Group in a deal that will see five listed entities, including Future Retail, folded into Future Enterprises FEL), which currently houses the group’s retail back-end infrastructure. The retail business will then be transferred to Reliance in a slump sale for nearly 25,000 crore. However, Amazon which has an indirect stake in FRL has contested the deal and has even received a ruling in their favour from the Singapore International Arbitration Centre (SIAC) to halt the deal.
This deal requires approvals from Securities and Exchange Board of India (Sebi), Competition Commission of India (CCI) and National Company Law Tribunal (NCLT) in addition to no objection certificates from creditors and minority shareholders.
