Retail in Asia

In Markets

Capital structures of Indian retailers to remain stressed, says CARE

The capital structures of most of the retail companies in India are expected to remain stressed due to slower inventory and pressure on operating margins, said a new report.

"The working capital requirements of the retailers may increase due to slow moving inventory. Traditionally, retailers have relied on debt to fund their expansion plans, which has led to high interest out go and reduced free cash flow and moderate capital structures," said a report by CARE.

For instance, Future Retail, the flagship company of Kishore Biyani’s Future group, has paid 99.09 percent of its profit before interest and taxes (PBIT) as interest on its loans in quarter ending on 31 December 2013, meaning whatever it has earned during the quarter has gone towards interest payment.