It's Official: Reliance's Rs 1,645-Crore Stake In Dunzo Is Now Worth Nothing

Reliance Industries Ltd. has officially written down its investment in quick commerce player DunzoDigital Pvt. even as the conglomerate's retail segment struggles with newer avenues of growth.

The Mukesh Ambani-led group said that its investment in Dunzo, measured at cost, is now worth nothing and that the latter has ceased to be related party during the financial year. Last year, RIL's stake in Dunzo was worth Rs 1,625 crore, held through compulsorily and optionally convertible preference shares.

To put this into some context, Reliance Retail had purchased a 25.8% stake in Dunzo for $200 million, or about Rs 1,488 crore in late 2023, as it looked to expand its presence in the grocery delivery business.

"Through our partnership with Dunzo, we will be able to provide increased convenience to Reliance Retail's consumers and differentiated customer experience through rapid delivery of products from Reliance Retail stores. Our merchants will get access to the hyperlocal delivery network of Dunzo to support their growth as they move their business online through Jio Mart," Isha Ambani, director of Reliance Retail had said back then.

Reliance Retail Ventures Ltd.’s first-quarter net profit declined 7.7% to Rs 3,271 crore from Rs 3,545 crore in the preceding quarter, according to the consolidated financial results.

The retail arm of Reliance Industries Ltd. also logged a 5% fall in revenue to Rs 84,172 crore from Rs 88,637 crore in the March quarter. This was lower than the consensus estimate of Rs 85,111 crore of the analysts tracked by Bloomberg.

Reliance Retail's earnings before interest, tax, depreciation and amortisation fell 5% to Rs 6,381 crore from Rs 6,721 crore, thereby missing analysts' estimates of Rs 6,652 crore.

The Ebitda margin remained flat at 7.58%.

The company's revenue was impacted by weak performance in its biggest segment — the consumer electronics and devices segment, especially in the air-conditioner category — due to the early onset of monsoons. However, the company expects a recovery in the upcoming quarters.

Reliance Retail has opened 388 stores, taking the total store count to 19,592 with a total retail area of 77.6 million sq ft. at the end of June quarter.

“Reliance Retail delivered resilient performance during this quarter driven by our relentless focus on operational excellence, geographical expansion, and a sharper product portfolio," Isha Ambani, executive director, Reliance Retail Ventures Ltd, said. "Our continued investments in cutting-edge technologies and differentiated product offerings have enabled us to serve our customers better and scale with agility."

Reliance's consumer products business, which sells Campa and Independence, recorded sales of Rs 4,400 crore during the quarter.

JioMart has seen 68% growth in daily orders on quarter-on-quarter basis. It operates across 4,290 pin codes serviced by 2,200+ stores in 1,000+ cities.

The process of demerger of its fast-moving consumer goods business into a new entity called New Reliance Consumer Products Ltd. is underway, said its CFO Dinesh Taluja during a post-earnings call. "It is likely to be completed this year, once all regulatory approvals in place."

Reliance Retail has a presence across diverse categories including electronics, groceries, apparel, footwear, jewellery and pharmaceuticals. It operates stores under retail formats such as Reliance Fresh, Reliance Digital and Trends. "Business continued to focus on expanding non-apparel categories like footwear, beauty and personal care and accessories to offer wider choices to customers," RRVL said in a statement.

In February, Reliance Retail partnered with Shein to bring the brand back to India. "It's early days...we have not done a lot of marketing on this yet. Yet, we are seeing very strong traction having crossed two million app downloads," Taluja said.