Mukesh Ambani is going for the kill in eCommerce with a whopping Rs 4500 crore funding

Almost everything could be sold on Internet now. Keeping this development in mind, Reliance Retail is about to borrow Rs 4,500 crore to build its eCommerce business. It also plans to open new stores to counter rivals’ expansion in the rapidly growing eCommerce business in India.

The Mukesh Ambani-controlled retail company would borrow the amount through term loans and debentures.

"Reliance Retail is growing rapidly and these are enabling provisions to fund a growing and profitable business," a spokesperson told the Economic Times. "The funds will be utilised, as appropriate, for business operations."

Reliance Retail's revenue rose 21% to Rs 17,640 crore in FY15 with profit after tax of Rs 193 crore. The company became the country's largest retailer in FY14.

The company will avail term loans to the tune of Rs 2,500 crore from State Bank of India and raise another Rs 2,000 crore by issuing convertible debentures, it said in board resolutions filed with the Registrar of Companies last week.

The eCommerce business is expected to grow fourfold to almost $70 billion, or about Rs 4.34 lakh crore by 2019. Reliance Retail is piloting an online site for food and grocery products.

"The potential of ecommerce combined with the network of physical store locations will offer tremendous choice and convenience at a great value to the consumer," parent Reliance industries said in its latest annual report.

The move is part of Mukesh Ambani's wider strategy of placing its communications venture Reliance Jio Infocomm at the intersection of "telecom, web and digital commerce" as he said at the company's annual general meeting last year.

The ecommerce business is booming in India, with companies such as Flipkart, Amazon and Snapdeal winning Indian consumers by offering heavy discounts across products.

Experts said Reliance Retail's deep pockets and existing logistics infrastructure will help it in the ecommerce space.

Increase in Internet access through affordable smartphones and efforts by online retailers to develop payment channels such as cash on delivery, mobile wallets and streamlined logistics infrastructure are expected to boost ecommerce growth in the country.

(Image: Indiatimes)