Reliance Industries, led by India’s leading businessman Mukesh Ambani, has made a major increase in the authorized share capital of its fast-growing FMCG company Reliance Consumer Products Limited (RCPL).
Business News: Reliance Industries Limited (RIL) has taken a big step towards strengthening its rapidly expanding FMCG business. The company’s FMCG arm Reliance Consumer Products Limited (RCPL) has increased its authorized share capital four times to ₹40,000 crore. With this decision, the company may have more financial scope to raise capital in future and expand its business.
RCPL is continuously strengthening its presence in India’s fast growing consumer goods market. The company’s portfolio includes brands like Campa Cola and Independence. This increase in the authorized share capital has come at a time when Reliance is focusing on increasing its share in the country’s large consumer market by expanding its FMCG business.
Authorized share capital increased to ₹40,000 crore
According to the recent corporate filing related to the company, RCPL has decided to increase its authorized share capital from ₹10,000 crore to ₹40,000 crore. Authorized share capital is the maximum capital that a company can raise by issuing its shares. This change may give RCPL more capacity to raise capital through equity in the future.
The company can use this financing capacity for expansion of its FMCG business, new products, brand acquisition, distribution network and other business needs.
Borrowing limit also tripled
RCPL has not only changed the share capital but has also significantly increased its borrowing limit. The company has increased it from ₹9,000 crore to ₹27,000 crore. This means that now the limit for raising loans for the company to meet its business needs has tripled. This change is considered important in view of the increasing operational scope of the company.
FMCG business requires constant capital for large-scale production, supply chain, distribution, marketing and brand expansion. The increased borrowing limit may give the company additional financing options for these activities.
RCPL has also changed the limits for investing in or providing loans to other companies. This limit has been increased to ₹4,000 crore. This may give the company more financial flexibility than before for strategic investments and business opportunities.
Tenure of three executive directors till 2030
At the corporate level, RCPL has also decided to maintain continuity in its senior management. The company’s board has extended the tenure of three executive directors—T Krishnakumar, Ketan Modi and Aseem Parekh—by five years till 2030. Information about these proposals being approved in the company’s board meetings during July and August has come to light. The extension in the tenure of senior executives can ensure continuity at the management level to pursue the long-term strategy of the company’s FMCG business.
Big change in Reliance’s FMCG business
RCPL’s corporate structure has undergone significant changes in the recent past. In December the authorized share capital of the company was increased to ₹10,000 crore. Subsequently, as part of the restructuring of the FMCG business of the Reliance Group, RCPL was made a direct subsidiary of Reliance Industries instead of a subsidiary of Reliance Retail Ventures Limited (RRVL).
Following this, the group’s consumer brand business was also restructured. A new company was formed by demerging the consumer brands business of RRVL and later it was renamed as Reliance Consumer Products Limited.