From being a zero-debt company in FY21, Reliance Industries (RIL) has added substantial debt in the past two financial years, mainly due to expansion plans of its two subsidiaries — Reliance Retail Ventures (RRVL) and Reliance Jio Infocomm (RJio).
The Mukesh Ambani-led firm’s net debt rose to Rs 34,815 crore in FY22 and in FY23, it rose significantly to Rs 1.26 trillion. In the June quarter, it rose marginally to Rs 1.27 trillion. At the same time, RIL’s cash and cash equivalents fell to Rs 2.31 trillion in FY22 from Rs 2.5 trillion in FY21, and to Rs 1.88 trillion as of FY23, according to data sourced from the Bombay Stock Exchange.
The net debt was pulled up by RIL’s subsidiaries, with them recording a total net debt of Rs 98,143 crore as of FY23, a 226% rise from Rs 30,113 crore. The highest of the impact was from RRVL with the company posing a net debt of Rs 46,644 crore in FY23, a 417% rise from Rs 9,030 crore posted in FY21.
RJio also posted a similar trend, with its net debt rising 228.70% to Rs 36,801 crore as of FY23 from Rs 11,196 crore in FY21.
“RIL’s subsidiaries were on an expansion spree, and a lot of capex was spent for these plans. For RJio, investments on 5G, expansion of telecom and digital services and subscriber additions would have been the reasons, while similar initiatives at retail have resulted in increasing net debt,” an analyst tracking the company said.
The debt level is not alarming as RIL has a healthy cash balance and profitability, while revenues continue to flow in from businesses, he added.
Since its commercial launch in September 2016, RJio’s expansion plans included 5G launch coming during this period. In RIL’s AGM last year (2022), CMD Mukesh Ambani had announced a ₹2 trillion investment for 5G services, that included rollout in metro cities by Diwali and to expand across the country by December 2023.
Ditto was the case of RRVL. The retail arm of RIL increased its total store count by 5,735 to 18,446 stores as of June 30, 2023, from FY21-end. In 2020, Reliance Retail raised a total of Rs 47,625 crore from various global investors, including the sovereign wealth funds of Saudi Arabia, Singapore and UAE, General Atlantic, KKR & Co. and Silver Lake Partners among others.
Other subsidiaries such as Independent Media Trust Group had also been posting a rise in net debt, while Reliance Sibur Elastomers had been beating the trend by reducing net loss. The media group’s net loss rose to Rs 5,815 crore as of FY23 from Rs 2,414 crore in FY21, while that of
Reliance Sibur Elastomers fell to Rs 2,144 crore from Rs 2,339 crore in the previous comparable period.
For RIL, its net debt has been rising since FY13, when it posted a dent of Rs 22,832 crore, to 1.6 trillion in FY20, before it became a net zero debt firm in FY21.
