Reliance Industries Ltd (RIL) is embarking on a restructuring exercise that aims to group all its fast-moving consumer goods (FMCG) brands, currently part of its retail ventures, into a new company so they get “specialised and focused attention”, besides drawing investors focused on this segment.
The products are currently with Reliance Retail Ventures Ltd (RRVL), Reliance Retail Ltd (RRL) and Reliance Consumer Products Ltd (RCPL). The unit that’s going to house the FMCG brands is to be called New Reliance Consumer Products Ltd (New RCPL) and will be a direct subsidiary of RIL, much like Jio Platforms Ltd.
Biz Entails Large Capital Investments
The move will help attract a “different set of investors”, according to a June 25 National Company Law Tribunal (NCLT) order, which stems from RIL’s filing for the restructuring.
“The consumer brands business is one of building brands, managing the entire product lifecycle from research, development, manufacturing, distribution and marketing,” according to the order. “This is a large business by itself requiring specialised and focused attention, expertise and different skill sets as compared to retail business.”
RIL chairman Mukesh Ambani has already indicated IPO plans for the retail and telecom businesses. The restructuring exercise will help ready the retail business for a share sale by spinning off the FMCG business, which could have inflated valuations, said a person aware of the company’s plans. As per RIL’s latest figures, RRVL has a valuation of over $100 billion. That’s likely to make the public offer, if it materialises, one of the largest in recent times.
The FMCG business was worth Rs 11,500 crore in FY25 and features over 15 homegrown and acquired brands such as Campa (soft drinks), Independence (packaged grocery) and Ravalgaon (confectionery). Other acquisitions include jam and sauce brand SIL, regional beverage brand Sosyo and shampoo brand Velvette.
“This business also entails large capital investments on an ongoing basis and can attract a different set of investors,” according to the NCLT document. “The consumer brands business is not part of the retail business and it is proposed that this business is housed in a direct subsidiary of RIL.”
RCPL—which is responsible for manufacturing, distribution and marketing—sells the products at prices that are 20-40% lower than rivals Coca-Cola, Mondelez and Hindustan Unilever besides offering higher trade margins.
RIL didn’t respond to queries
T Krishnakumar, director of RCPL and the group’s FMCG chief, had recently told ET that the strategy was to focus on 600 million consumers at the mass end and work closely with neighbourhood stores by giving them healthy margins. He had said the group intends to scale up the FMCG business nationally by March 2027.
RRL and RCPL are subsidiaries of RRVL, the holding company for all the retail businesses and a direct subsidiary of RIL.
The restructuring will be a four-step process. First, the FMCG brands of RRL will be transferred to parent RRVL on a slump-sale basis. Second, RCPL will be amalgamated with RRVL. Third, the consolidated “consumer brands business undertaking” will be demerged from RRVL and vested in Tira Beauty Ltd, a shell company which currently has no business operations. Tira Beauty will be renamed New Reliance Consumer Products (New RCPL) on a going concern basis.
The order by the Mumbai bench of the NCLT directed RRVL to convene meetings of its 14 equity shareholders as well as its creditors to approve the proposed “composite scheme of arrangement”. Meetings of the shareholders of RRL, RCPL and Tira Beauty won’t be required with the companies submitting affidavits expressing consent.
“New RCPL will carry on the business of manufacturing, distribution, selling and marketing of multiple products under FMCG category and making investments in subsidiaries and joint ventures engaged in FMCG category retail business,” as per the order. “On consummation of this scheme, New RCPL will become a direct subsidiary of RIL.”
More than 60% of the Rs 11,500 crore sales in FY25 came from general trade or kiranas, the company said in its last earnings call. Campa has gained double-digit market share in some regions and the products are available in one million-plus retail outlets through a network of more than 3,200 distributors, the company had said.
The NCLT division bench of justice VG Bisht and technical member Prabhat Kumar had in its order also directed the companies to submit corporate and performance guarantee details as well those of as any other contingent liabilities, if any.
Source: Economic Times