Up to 15 per cent of Future Retail’s employees could be staring at job losses with the company acquired by Reliance Retail.
Sources close to Future Retail said that though an exact mapping of the staff is yet to be done, there are functions that clearly overlap between the two companies. One source said that Reliance Industries being a large conglomerate could possibly reskill and employ people in other businesses.
A research report by Credit Suisse said that substantial cost savings could accrue with rationalisation in rent and employee expenses.
“Reliance can extend the benefit of lower rent to Future store network. There exists the opportunity to rationalise the employee base as well. For instance, the absolute employee expenses of Future Retail are higher than that of Reliance Retail, even though the former clocks less than one-fourth the latter’s sales,” Credit Suisse said. The absolute employee expenses of Future Retail are higher than that of Reliance Retail.
Employee expense is about 5 per cent of sales for Future Retail and just 1 per cent of sales for Reliance Retail.
On Saturday, RIL announced that it was set to acquire Kishore Biyani-led Future Group’s retail businesses for nearly ₹25,000 crore. In addition, Reliance will pick stake in Future Enterprise.
“This transaction brings in formats like Big Bazaar, FBB, Brand Factory and Central to the already large network of Reliance Retail and further strengthens its position in the industry. The Future Group store network will deepen its geographical presence,” said Pankaj Jaju, CEO, Metta Capital Advisors.