Reliance Retail total debt up 73%; RRVL expected to continue pumping money

Reliance Retail Limited's debt-to-equity ratio increased from 1.35 in FY22 to 1.91 in FY23

Reliance Retail Limited (RRL) borrowed Rs 32,303 crore from banks in the financial year 2022-23 (FY23), which was a year characterised by the fast expansion of RRL's business, The Economic Times (ET) has reported. Industry executives say that the expansion has been primarily funded through debt.

Rs 19,243 crore of this debt was through loans, which were non-current, long-term, borrowings, according to ET, which cited details from RRL's latest annual report.

As of March 2022, RRL only had Rs 1.74 crore as bank loans in its accounts, hinting at the pace of the debt acquired. Besides loans, RRL also raised Rs 13,304 crore in long-term debt from the holding company Reliance Retail Ventures Limited (RRVL). This takes the company's total debt 73 per cent up to Rs 70,943 crore, according to the FY23 report.

RRVL is lending money to RRL primarily through the debt route, an industry executive was cited in the ET report.

Founder of a business intelligence firm, Mohit Yadav, was quoted in the report as saying, "The increase in Reliance Retail's long-term debt has largely funded investments to expand operational capacity enhance stores, and develop digital platforms like JioMart."

Debt from Reliance Retail Ventures Limited (RRVL)

An industry expert said that RRL's debt from the holding company will likely increase in the future, and RRVL is expected to pump more money into the venture.

Reliance Industries raised Rs 8,278 crore by diluting a 0.99 per cent stake in RRVL and is likely to dilute another 8-10 per cent over the next few months ahead of the proposed initial public offering of RRVL, the ET report said.

Of the total debt that RRL has acquired, Rs 11,459 crore has been taken as short-term borrowing and Rs 1,599 crore has been borrowed as working capital, the report added. RRL's debt-to-equity ratio increased from 1.35 in FY22 to 1.91 in FY23.