Reliance Retail gets Rs 14,839 cr debt from parent for strategic growth

Reliance Retail Ventures, a subsidiary of Reliance Industries, raised Rs 17,814 crore in equity in FY24 from investors and its parent company

Reliance Industries infused approximately Rs 14,839 crore into Reliance Retail as debt in the last fiscal year to bolster its long-term investment initiatives, according to a report by The Economic Times. This move supports the conglomerate’s flagship retail business as it expands its footprint into smaller towns and experiments with new store formats.

According to the company’s recent financial statement, this funding – the largest from the parent company in the past decade – was provided as an inter-corporate deposit by Reliance Retail Ventures, the holding firm.

With this, the parent company has invested around Rs 19,170 crore in Reliance Retail over the last fiscal year, which includes Rs 4,330 crore in equity, the report added.

Reliance Retail also accelerated the repayment of its bank loans, which analysts interpret as a sign that the company is preparing to clean up its balance sheet in anticipation of a potential initial public offering (IPO), the business-daily claimed. However, Reliance has not yet officially announced any plans for an IPO in its retail division.

In its FY24 earnings report, the company stated that it invested in enhancing its supply chain infrastructure and omni-channel capabilities during the year. It also launched new formats such as the value retail chain Yousta and handicraft stores under the Swadesh brand.

Reliance Retail Ventures, a subsidiary of Reliance Industries, serves as the holding company for Reliance’s retail and FMCG businesses. The holding company raised Rs 17,814 crore in equity in FY24 from investors and its parent company.

During the last fiscal year, Reliance Retail repaid Rs 8,019 crore in long-term bank loans, a significant increase from the Rs 50 crore repaid in FY23. This reduced its non-current bank loan borrowings by 30 per cent to Rs 13,382 crore as of March 31, 2024. Meanwhile, its current or short-term unsecured borrowings from banks decreased by more than half to Rs 5,267 crore.

Despite these repayments, Reliance Retail’s overall debt increased from Rs 70,944 crore in FY23 to Rs 81,060 crore in FY24, driven by the funding provided by the holding company through the debt route.