Reliance Industries Q1 consolidated profit slips 7% YoY to Rs 12,273 crore

Reliance Retail on Friday reported an increase of 79.88 per cent in its pre-tax profit at Rs 1,941 crore for the first quarter ended June 2021.

The retail arm of Reliance Industries Ltd (RIL) had posted a pre-tax profit or EBITDA (earnings before interest, tax, depreciation and amortisation) of Rs 1,079 crore in the April-June quarter a year ago.

Revenue from operations of the organised retail segment of RIL during the quarter was at Rs 33,566 crore, up 19.04 per cent, against Rs 28,197 a year ago.

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While its gross revenue, which includes the value of sales and services, was up 21.90 per cent at Rs 38,547 crore in Q1/FY201-22 as against Rs 31,620 crore of the corresponding quarter of the last fiscal.

"Net profit for the quarter was Rs 962 crore, higher by 123.2 per cent Y-o-Y," it added.

However, sequentially, Reliance Retail gross revenue in April-June was down 18.09 per cent at Rs 38,547 crore, against Rs 47,064 crore of the January-March quarter on account of restrictions on store operations during the second wave of Covid-19.

RIL Chairman and Managing Director Mukesh Ambani said, "Covid-related restrictions on store operations during the quarter impacted our retail business operations and profitability. This is a temporary phenomenon."

"We remained focused on ensuring supplies of necessities, including food, grocery, health and hygiene products through a combination of online-offline channels. We stepped up our efforts in creating partnerships with small merchants and digital engagement with consumers. This is creating a newer and inclusive model of growth. I am confident that the retail business is poised to create exponential value and growth," he said.

During the quarter, store expansion was constrained as the business opened 123 stores taking the total count to 12,803, it said.

"Another 700+ stores in the pipeline will be commissioned as curbs are lifted," it added.

The area of retail operation operated by Reliance Retail was also up 18.96 per cent at 34.5 million sq ft as compared to 29 million sq ft in the corresponding quarter.

Besides, Reliance Retail also scaled up digital commerce venture and merchant partnerships, which helped it to get 20 per cent of the sales during the second wave impacted quarter.

"The focus on scaling up digital commerce and merchant partnerships helped partially alleviate the loss of business due to store closures. These streams contributed a sizable 20 per cent of retail sales in the quarter," it said.

Store operations were disrupted through the quarter starting from mid of April and after second week of June, there were sporadic signs of easing with continued restrictions varying across geographies.

"Operating efficiency was impacted due to the restrictions across the network as stores were operating for 70 per cent, 25 per cent, 38 per cent of normal working hours during April, May and June respectively," it said adding "retail stores and digital commerce could sell only essentials for the most part of the quarter".

Over the sales performance, the company said grocery was resilient, connectivity sustained its consistent performance but Consumer Electronics and Fashion & Lifestyle saw significant growth given a less constraining operating context relative to the corresponding quarter of the previous year.

The new businesses such as pharma, in which the company entered after acquiring Netmeds, Reliance Retail said it "continues to expand its portfolio and saw 60 per cent growth in orders over the previous quarter. The hyperlocal capabilities were extended to over 150 stores for same-day deliveries.

While Zivame delivered double-digit growth over the previous quarter despite supply-side challenges.

"Urban Ladder exit daily online orders grew 2.5x over last quarter. It developed an assisted sales channel through video calls and launched a multi-brand business in furnishing and décor across 40 sub-categories," it said.

Reliance Retail has invested in online pharmacy Netmeds, online furniture retailer Urban Ladder and online lingerie retailer Zivame, stepping up its play into the fast-growing ecommerce segment.

According to the company, the business remains "strongly focused" in augmenting its capabilities across channels, building its compelling proposition for customers and merchant partners and developing its product portfolio to stay on trend with emerging preferences.

"Whilst the current operating environment is uncertain, we remain cautiously optimistic and committed to restoring the strong growth momentum that was seen pre-pandemic, as operating curbs are lifted," it said.