| Reliance Retail Ventures Limited | ||||
| Ratings Reaffirmed | ||||
| Rating Action | ||||
| ||||
| ||||
| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||
| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL AAA/Stable/CRISIL A1+’ ratings on the bank facilities and debt instruments of Reliance Retail Ventures Ltd (RRVL).
RRVL is the parent entity of Reliance Retail Ltd (RRL; rated ‘CRISIL AAA/Stable/CRISIL A1+’). Apart from RRL, it holds other retail ventures such as the Shri Kannan Departmental Stores, Genesis group and Reliance Brands, which operates retail formats under exclusive partnerships with some of the most revered global fashion and lifestyle brands. In its standalone capacity, RRVL provides supply chain management services for retail businesses. The commercial paper programme at RRVL is used mainly for meeting the working capital requirements of the company and its subsidiaries.
The ratings continue to reflect RRVL’s healthy as well as diversified business risk profile, supported by strong market position, and robust financial risk profile owing to strong accruals with a healthy and stable capital structure. RRVL also benefits from the parentage of Reliance Industries Ltd (RIL; rated ‘CRISIL AAA/Stable/CRISIL A1+’). These strengths are however partially offset by accruals being susceptible to competition in the retail sector and the exposure to risks related to sizeable expansions plans. |
Analytical Approach CRISIL Ratings has combined the business and financial risk profiles of RRVL and its subsidiaries including RRL. RRL and RRVL have a common management, fungible cash flows, and operational synergies.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths:
RRVL has successfully been able to expand and ramp up the JioMart catalogue by offering an assortment of consumer electronics and fashion and lifestyle products and integration with WhatsApp. Through its new commerce initiative, RRVL is linking producers with small merchants and consumers to create a win-win partnership model. The new commerce merchant partner base has been expanded to more than 3 million, which is expected to further increase following the integration with recent acquisition of Metro Cash and Carry India Pvt Ltd (rated ‘CRISIL A1+’).
The consolidated revenue from operations during the quarter ended June 30, 2023, stood at Rs 62,159 crore, a growth of 21% year-on-year driven by grocery, consumer electronics and fashion & lifestyle. For the same comparative period, earnings before interest, tax, depreciation and amortisation (Ebitda) from operations increased to Rs 4,896 crore from Rs 3,897 crore.
RRVL has successfully been able to progressively improve its operating profitability, benefited by its integrated value chain that ensures seamless sourcing and distribution across demand markets through supply chain efficiency. Moreover, the company’s integrated farm to fork model in grocery, fibre to wardrobe model for fashion and lifestyle, and design to install/after sales service model in consumer electronics are fully integrated value chains, ensuring direct control over product quality with sourcing benefits and stronger consumer value proposition.
Weaknesses:
|
Liquidity: Superior RRVL has exceptional financial flexibility given its demonstrated ability in accessing the capital market and raise equity especially from global investors. The company generates strong cash accrual, and has access to fund-based facilities of over Rs 10,000 crore, for which utilisation remains low. As on June 30, 2023, consolidated liquidity stood over Rs 9,400 crore.
RRVL's liquidity is further enhanced by the ample liquidity of its parent, its large cash and liquid investment of Rs. 192,064 crore as on June 30, 2023 and significant bank lines, which remain moderately utilised. |
Outlook: Stable CRISIL Ratings believes RRVL will continue to benefit from its healthy business risk profile, strong capital structure, and strategic importance to RIL. |
Rating Sensitivity factors Downward factors:
|
About the Company RRVL is a subsidiary of RIL; RIL holds 83.5% of the subscribed equity shares of RRVL, which in turn holds 99.93% of the subscribed equity shares of RRL. Since its inception in 2006, RRL (including RRVL) has grown into India’s largest retail conglomerate. It has also focused on backward integration and has built an advanced infrastructure supporting business systems, technology platforms and supply chain. As on June 30, 2023, RRVL operates 18,446 stores, spread across the grocery, consumer electronics, fashion and lifestyle, pharma and connectivity consumption baskets. RRVL is the master distributor for the telecom and FTTH services of RJIL. It is responsible for billing and collection and serves as a touch-point for subscribers at its various stores, including Reliance Digital and Jio Stores. |
About the Parent, RIL RIL is one of India's largest private sector companies, with diverse interests, including petrochemicals, oil refining, and upstream oil and gas exploration and production. RIL has strong competitiveness in the global oil refining and petrochemicals business, arising from its integrated business model with superior Complexity Index of 21.1 for its Jamnagar site, which makes it amongst the most complex sites in the world. RIL has also established its presence in the consumer facing business space by providing retail and digital services, which currently is RIL's principal growth driver. RRL is India's largest retail entity by revenue, while RJIL has also become India's largest telecom service provider by revenue market share. The group is also in the process of establishing itself in the green energy space. |
Key Financial Indicators (RRVL- Consolidated; CRISIL Ratings Adjusted)
|
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
#Yet to be placed |
Annexure - List of Entities Consolidated
* Represents entities where related party relationship existed for part of the current year | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||
|
Criteria Details
|