Billionaire Mukesh Ambani has accelerated the timeframe for wiping out Rs 1.61 trillion of net debt at his Reliance Industries by bringing in strategic investors in key businesses as well as committing more equity.
Ambani, chairman and managing director of Reliance Industries Ltd (RIL), had in August last year set a target of March 2021 to make the oil-to-telecom conglomerate net debt-free. But thanks to a £5.7 billion (Rs 43,547 crore) deal with Facebook, a Rs 53,125 crore rights issue and more stake sale to companies such as Saudi Aramco, the target is likely to be achieved by December.
In an investor and media call post announcement of the company’s fourth-quarter earnings, RIL’s Joint Chief Financial Officer Srikanth Venkatachari said, “The zero net debt target will be achieved within the 2020 calendar year.”
Since the August announcement, Ambani has sold a 9.99 per cent stake in the digital platform that houses India’s youngest but biggest mobile operator to Facebook, decided to hive out Reliance’s oil and petrochemicals business into a separate entity to help a proposed stake sale to Saudi Arabian Oil Co (Saudi Aramco), and pledged to make up for any shortfall in the rights issue.
The company expects to complete a capital raising programme totalling Rs 1.04 trillion by June, Venkatachari said.
This includes the rights offering of one share for every 15 shares held at Rs 1,257, a 14 per cent discount to the closing price for April 30. Also included is the Rs 43,574 crore coming from the Facebook buying stake in Jio Platforms and Rs 7,000 crore from sale of 49 per cent stake in fuel retailing venture to UK’s BP plc.
“In addition, Saudi Aramco due diligence is progressing well,” he said without saying when the deal was expected to be closed.
Reliance values its oil-to-chemical business, which includes its twin refineries at Jamnagar in Gujarat, petrochemical assets, and 51 per cent stake in auto fuel and aviation fuel retailing venture, at $75 billion. Saudi Aramco is in talks to buy a 20 per cent stake in this venture.
Alongside announcing the zero net debt target, Ambani, 63, had in August also announced the potential sale of 20 per cent interest in the oil-to-chemical business to Aramco by March 2020. That deadline has been missed partly because of differences over the deal structure and partly due to talks stalling following the outbreak of coronavirus and the subsequent nationwide lockdown.
