As a part of Rs 25,000-crore deal: RIL synergising retail operations with Future Group

MUMBAI: Reliance Retail has started using Future Group’s supply chain unit for its logistics and warehousing needs in the food, groceries and fashion retail businesses, even as both firms await the final approvals for their deal for retail assets.
On Wednesday, the Securities and Exchange Board of India approved Reliance Retail’s acquisition of Future Group’s retail operations. As part of the Rs 25,000-crore deal, the retail and wholesale undertaking of the Future Group will be transferred to Reliance Retail & Fashion Lifestyle, a wholly owned subsidiary of Reliance Retail Ventures.

The deal still needs approval of the National Company Law Tribunal, in addition to noobjection certificates from Future Group’s creditors and minority shareholders. Meanwhile, Reliance Retail has started synergising its operations with those of Future Group companies.

“At present, our capacity is operating at around 30%. With Reliance as our principal client now, our space and capacity will get utilised to up to 85-90%, which increases topline significantly,” said Mayur Toshniwal, managing director at Future Supply Chain, which offers third-party services, including express cargo and temperature-controlled logistics, and gets nearly half the revenue outside its own group companies.

Reliance, as the main client, is expected to eventually contribute more than a quarter to Future Supply Chain’s total business. “We hope to get revenue of nearly Rs 150-200 crore in the next six months with the new partnership. This will also increase the contribution of external clients to over 75%,” said Toshniwal.



Reliance has also extended support to normalise Future Group’s other businesses — consumer goods firm Future Consumer and apparel manufacturing arm Future Enterprises have received large orders from Reliance Retail. Future Supply Chain, which manages nearly 70 warehouses covering 7.5 million square feet of space, posted Rs 1,140 crore revenue in the fiscal year ended March 2020. However, business declined significantly since the lockdown, to about Rs 200 crore in the six months through September.

The company said it is adding two new warehouses and 1.4 million sq ft of space as the opportunity from Reliance’s business, especially in fashion, is fairly significant.