Even as Reliance Industries (RIL) plans to invest more than Rs 1,00,000 crore in various businesses over the next few years, concerns over the use of cash by the Mukesh Ambani-led conglomerate continue to persist, a report has said. The mega investment plan has been outlined in an equity research report by global investment banking major, Morgan Stanley, which, incidentally, happens to be the financial advisor to international energy giant BP’s proposed partnership with RIL.
The investments would mostly be in exploration and production (E&P), petrochemicals and shale gas. According to
Morgan Stanley, RIL has announced investments worth $7.2 billion since January 2010. The large investment pipeline notwithstanding, Morgan Stanley said it was concerned over the limited clarity on the use of cash flow. Noting that the cash flow being larger than the capex size was leading to uncertainty, Morgan Stanley said its concerns mainly stemmed from three issues — lack of clarity on deploying cash flows, E&P remaining a dampener and lower petrochemical netbacks. The netback is calculated by deducting the entire cost incurred in taking the product to the market from the total revenue.
