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JioMart: Behemoth in Making?

Disclaimer: This is an informative post and not a recommendation to buy/sell/hold any security/instrument. The owner of this website has a long position in Reliance Industries (NSE-RELIANCE) in his personal portfolio and may add, trim, or exit without disclosing here.

The post is written by our EZPP partner Jayadiya Sirasani with relevant edits and changes by our editorial team. We routinely partner with high-quality industry professionals to develop content for our platform. If you're interested in joining the program, please apply here: EZPP

The story of Reliance starts in the 1950s when Dhirubhai Ambani was working as an assistant in petrol pumps and living in a one-bedroom chawl in 1960s Bombay. But this story has been repeated hundreds of times across articles, magazine covers, TV shows, and even movies hasn't it. It would help to sum up the entire back-story with just one of his quotes “I don't believe in not taking opportunities”.

The Reliance of today

Let's fast forward a few decades, and zoom in on where the group stands now. It helps to start with the Annual General Meeting in Aug-2019 where Mukesh Ambani emphasized that Reliance is driven by 3 growth engines- The PetChem business, Reliance Jio, and Reliance Retail. While the PetChem business is still the dominant part of the business, for the sake of this post we will focus on their two younger businesses - Jio and Reliance Retail which are the pillars on which JioMart is being built.

Jiomart or as referred to in the 42ndAGM as “New Commerce Venture” will be a cross-venture using the infrastructure of retail and user-base from telecom verticals. RIL announced that it plans to connect 3 crore offline retailers to more than 20 Cr households under Jiomart using an offline-to-online marketplace model.

In the past few years, Reliance has combined the nimbleness and drive of a young firm combined with the tremendous strength of its war chest to position itself well to win multiple high growth markets. We now try to see how the firm stands to leverage the combined strength of Reliance Retail and Reliance Telecom to win with JioMart.

Reliance Retail:

Reliance started out under Dhirubhai Ambani making polyester yarn for export and then went on the create the brand Vimal, starting on of the first franchising model with the only Vimal stores. This was almost 5 decades ago. In its current form Reliance Retail Ltd. stands tall as the largest retail chain in the country, valued at more than $34 billion.

Reliance Retail has more than 11,000 stores and 50 warehouses across the country. The firm has strategically developed a very strong presence across categories. It serves the household and grocery segment via Reliance Fresh, the Electronics segment via Reliance Digital, the cash and carry segment via Reliance Market, the Fashion segment via Reliance Trends and AJIO, the jewelry segment via Reliance Jewels and the online grocery segment via Reliance SMART. Other than these, they have tie-ups with brands across the spectrum ranging from Armani to Tiffany to MUJI. What this does is gives Reliance a very strong presence across categories creating a formidable retail franchise.

However, unlike the Telecom business where it is acting as a disruptor, if it relies solely on its brick and mortar presence it has the risk of falling into the disrupted camp. Online e-commerce is growing fast in the country niches are developing for almost every country we have described above. With Flipkart and Amazon now beginning to make inroads into Tier2 and Tier3 cities, the time to defend the turf is right now. And like always, Reliance has chosen to defend, by going on the offensive!

So with what do they go to war? Capital certainly helps, and the cash cow PetChem business provides a tonne of it. Presence on ground and brands are another key link. Here too, they are second to none. Touchpoints with retailers help in last mile as well as hyperlocal. The network established via Reliance Market (cash & carry) will play a pivotal role here. And last but not the least, the ~370mm mobile subscriber base which provides the last piece of the puzzle. Let's delve into that in greater detail with our analysis of Jio.


Today Jio will find mention in the pitchbooks of many a startup as a player that opened up the high-speed low-cost mobile internet market, and in a very short period of time radically increased the internet penetration in the country. As per their latest report, they have added 5.6 million mobile subscribers in November, taking its total user base to 369.93 million, which is about 32% of India’s population. While this number is expected to come down a bit on the back of folks with multiple sims abandoning them given the now increasing tariffs, the impact of Jio on India's telecom space is undeniable.

After strong upfront capex in the telecom business and sustaining steady cash burn for the first three years, the firm is now on a deleveraging mission. All of Jio’s fiber and tower arms are now transferred to two infrastructure investment trusts (InvITs)—Digital Fibre Infrastructure Trust and Tower Infrastructure Trust—which will be offered to external investors in the second half of 2020, paring down their debt significantly.