Mukesh Ambani, chairman of Reliance Industries, is restructuring Reliance Retail Ventures to boost its valuation to $125 billion, according to a report by Bloomberg. The move includes job and cost cuts, limiting store expansion, merging business units, and streamlining operations. Ambani, along with his daughter Isha Ambani, is directly overseeing these changes.
Reliance Retail’s Overhaul: Key Changes
The restructuring aims to improve efficiency and profitability as Reliance Retail prepares for an initial public offering (IPO). Some of the key changes include:
- Limiting physical store expansion to control operational costs.
- Reducing marketing budgets to optimize spending.
- Merging Reliance Brands with Reliance Retail for better synergy.
- Reviewing global brand partnerships to focus on high-value collaborations.
- Hiring approvals from the chairman’s office for employees above a certain pay scale.
These efforts come after brokerages valued Reliance Retail at $50 billion, significantly lower than the $100 billion valuation from its last funding round two years ago.
Why is Reliance Retail Being Restructured?
Reliance Retail has grown rapidly, expanding into multiple formats, brands, and geographies. However, Mukesh Ambani recently acknowledged to investors that the company expanded too quickly, leading to operational inefficiencies.
The restructuring will help Reliance Retail:
Compete more effectively with Tata Group, Amazon, and quick commerce platforms.
Improve profitability through cost-cutting measures.
Prepare for a successful IPO with a stronger valuation.
Navigate India’s broader consumption slowdown by maintaining lean operations.
Reliance Retail’s IPO Plans
Reliance Retail aims to raise $125 billion through an IPO. The fresh issue will likely involve a 5% stake dilution, giving early investors limited exit opportunities.
Between 2020 and 2023, global investors including Qatar Investment Authority and General Atlantic invested $8.24 billion for an 11.9% stake in Reliance Retail. The upcoming IPO is expected to further attract institutional investors.
Reliance Retail’s Financial Performance
Reliance Retail reported ₹2.73 lakh crore in revenue and a ₹11,100 crore profit for the 2023-24 financial year. The company currently serves:
- 34 crore registered customers
- Over 19,100 stores across India
- Four digital applications
With its dominant market presence, Reliance Retail remains India’s largest retailer, but its next phase of growth will focus on efficiency and profitability rather than aggressive expansion.
Mukesh Ambani’s revamp of Reliance Retail is a strategic move to boost valuation, improve profitability, and prepare for an IPO. By controlling costs, optimizing operations, and focusing on high-value partnerships, the company aims to outperform competitors and attract top investors.
As Reliance Retail undergoes these changes, it will be interesting to see how it balances growth with sustainability in India’s evolving retail landscape.
