- Reliance Retail grew its consumer base in electronics retailing business sales by 14% to Rs 44,625 crore
- Tata owned Infinity Retail Ltd which owns and runs the Croma chain reported sales of Rs. 5173 crore which rose by 11%
According to a report by the Economic Times, consumers have been purchasing smartphones, televisions, laptops, refrigerators, and air-conditioners of almost Rs 50,000 crore from electronics retail chains which are primarily owned by Reliance and Tatas in 2019-2020.
Presently, these two large corporations control over 20% of the Indian market.
As mentioned in the latest regulatory disclosures, Reliance Retail’s electronics venture Reliance Digital and Jio Points have the greater share at over 17% of the total market. This is followed by Tata-owned Croma. Both the chains have undertaken rapid expansion last year which could lead to this growth despite the lockdown which had impacted their performance in the January-March quarter.
Sales Comparison
While Reliance Retail grew its consumer base in electronics retailing business sales by 14% to Rs 44,625 crore in FY20 as per an investor presentation, Tata owned Infinity Retail Ltd which owns and runs the Croma chain reported sales of Rs. 5173 crore which rose by 11% as reported in Registrar of Companies filings.
Kamal Nandi, President of Consumer Electronics and Appliances Manufacturers and Godrej Appliances Business Head commented, “Reliance and Croma are size-able retailers and are distinct channels by themselves in the industry.”
Tata’s efforts for a sustainable digital market play
Meanwhile, Corporate intelligence firm Altinfo founder Mohit Yadav shared that Tata’s efforts at having a sustainable play in the digital retail segment are bearing fruits now. He also added that Reliance is operating at a very advanced scale altogether.
To meet up to the level of Croma needs to make a call, will it be balanced growth and risk of losing market share or will they eventually give in and we will see a high burn play.
Reliance’s earnings
It has also been reported that Reliance’s earnings before interest, tax, depreciation and ammortisation (EBITDA) from electronics retailing rose up by 47% at Rs 2785 crore, while it went up by 123% for Croma at Rs 208 crore. However, Croma reported like-for-like operating loss for the last financially year at Rs 53 crore against the previous year’s operating profit of Rs 63 crore.
On the other hand, Ritesh Ghosal attributed the loss to Covid impacted of around Rs 200 core of sales in March. This resulted in a loss of Rs 29 crore. This also led to the company’s decision to invest ahead of the curve in additional personnel in corporate roles.
Impact of Covid19
Along with this, IT infrastructure in enablement of future customer propositions and new distribution centres for expansion into new cities were also taken care of.
The report has also claimed that the Tata-owned venture expects severe disruptions of its planned revenues in FY21 due to the lockdown imposed by the government but is confident that its mitigation plans will recover the gap in long term targets.
The April-June quarter was almost washed out due to restrictions whereby the impact continues with 24% decline in sales till August. Ghosal said, “What makes us optimistic is the 12% growth in the second quarter till date on the back of 21% growth in August.”
