The National Company Law Tribunal (NCLT) based in Mumbai has approved Reliance Retail’s plan to reorganise its consumer products business which is expected to result in shifting RIL’s fast-moving consumer goods (FMCG) and brands division into a new arm called Reliance Consumer Products Limited.
According to an NCLT ruling, the reorganisation plan is expected to cover four Reliance companies namely, Reliance Retail Limited (RRL), Reliance Retail Ventures Limited (RRVL), Reliance Consumer Products Limited (RCPL) as well as Tira Beauty Limited (New RCPL).
As per the plan, Reliance Retail’s FMCG brands business will move to Reliance Retail Ventures, while the existing Reliance Consumer Products will merge with Reliance Retail Ventures, so that Tira Beauty Limited will get to take over the consumer brands business and get renamed as Reliance Consumer Products Limited.
Earlier, Reliance had stated that the reorganisation will help the consumer brands business grow faster with a sharper focus and its own management. The Reliance group had explained that this segment requires large, ongoing investments and appeals to a different set of investors than the retail business.
“The consumer brands business is one of building brands, managing the entire product lifecycle from research, development, manufacturing, distribution and marketing. This is a large business by itself requiring specialised and focused attention, expertise and different skill sets as compared to retail business. This business also entails large capital investments on an on-going basis and can attract a different set of investors. 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,” according to the group’s presentation.
After the restructuring, three Reliance companies will continue to exist namely, Reliance Retail Ventures Limited as the main holding company, Reliance Retail Limited which will run retail stores, and the new Reliance Consumer Products Limited which will manage the consumer brands as well as the FMCG business.