Reliance Industries infused approximately Rs 14,839 crore into Reliance Retail as debt during the last fiscal year to support the retailer's long-term investment plans, as it continues to expand into smaller towns and experiment with new store formats.
This funding, the largest provided by the parent company in the past decade, was channeled as an inter-corporate deposit from its holding entity, Reliance Retail Ventures, according to the company's recent financial report. The parent company invested around Rs 19,170 crore in Reliance Retail last fiscal year, which includes Rs 4,330 crore in equity. Additionally, Reliance Retail accelerated the repayment of its bank loans, which analysts interpret as a step towards cleaning up its balance sheet in preparation for a potential initial public offering (IPO). However, Reliance has not officially announced any plans for an IPO in its retail business. In its FY24 earnings report, the company stated that it made significant investments in enhancing its supply-chain infrastructure and omni-channel capabilities and launched new formats such as the value retail chain Yousta and handicraft stores under the Swadesh brand.
"Although Reliance Retail currently benefits from financing provided by its parent company, it will be interesting to see how this financial strategy evolves over the next few years, particularly if the company considers going public. The retail giant’s ability to sustain growth while potentially shifting to more traditional financing methods will be crucial to monitor," commented Mohit Yadav, founder of the business intelligence firm AltInfo.
Reliance Retail did not respond to an email seeking comment by press time on Monday. Reliance Retail Ventures, the holding company for Reliance's retail and FMCG businesses and a subsidiary of Reliance Industries, raised Rs 17,814 crore in equity during FY24 from investors and its parent.
In the last fiscal year, Reliance Retail repaid long-term bank loans amounting to Rs 8,019 crore, a significant increase from the Rs 50 crore repaid in FY23. This repayment reduced its non-current bank loan borrowings by 30%, bringing them down to Rs 13,382 crore as of March 31, 2024. Meanwhile, its short-term unsecured borrowings from banks more than halved to Rs 5,267 crore. Despite this, Reliance Retail's overall debt increased from Rs 70,944 crore in FY23 to Rs 81,060 crore in FY24 due to the additional funding provided by the holding company through debt.
