In a move to insulate the company from further financial downturns, Reliance Industries (RIL) has mopped about Rs 37,300 crore through long-term loans and issuance of shares during the past financial year.
Besides the Rs 15,142 crore raised from Mukesh Ambani-led promoters through preferential allotment of shares in the last financial year, the company has borrowed $1.7 billion (about Rs 7,900 crore at the current exchange rate) as syndicated loans, $1.25 billion (Rs 5,800 crore) through export credit agencies-backed financing arrangements and $100 million (about Rs 460 crore) equivalent of Japanese yen via private placement, the company said in its annual report.
RIL, India’s largest private company, has also raised long-term resources through issue of Rs 8,000 crore worth of debentures in the domestic market.
The petroleum major undertook liability management to reduce overall cost of debt and diversify its liability mix, said the company. The consolidated debt has risen to Rs 73,904 crore after the merger of Reliance Petroleum (RPL) with the company. RPL, which was created to build the group’s second refinery at Jamnagar, had a debt of around Rs 23,000 crore.
The company has also invested Rs 10,270 crore in exploration and production, mainly at Asia’s largest natural gas find at the KG basin.
The company’s long-term debt as on March 2008 was Rs 27,957 crore. The long-term foreign currency-denominated debt constitutes 84 per cent of the total amount. The average maturity of the company’s long-term debt came down to 4.2 years from 5.2 years in March 2008. The proportion of short-term debt is 8.4 per cent.
“Considering the net worth of RIL at Rs 1,15,000 crore, the debt servicing is manageable. Since RIL has completed two of its capital-intensive projects, such as RPL refinery and KG gas exploration, the cash flow from the projects would be utilised for reducing debt and further investments,” said an analyst from a financial services company.
RIL’s liquidity position at Rs 25,050 crore and committed working capital facilities mitigate any refinancing risk, said the company. RIL’s gross debt to equity ratio, including long-term and short-term debt as on March 31, 2009, was 0.63, while the net debt to equity ratio was at 0.42. In the previous financial year, RIL’s gross debt-equity ratio was at 0.45.
The fixed assets of the company rose 62 per cent to Rs 100,343 crore, while Rs 69,043 crore has been invested as the capital for projects in progress, that shot up two times compared to the previous year.
The cash reserve of Rs 25,050 crore has bee placed in bank fixed deposits, corporate deposits, government securities and bonds.