Mumbai: Mukesh Ambani-led Reliance Industries Ltd (RIL) raised nearly ₹36,000 crore this fiscal year by selling bonds and equity, as the company finances operations, refinances loans and expands its consumer businesses. The funds were raised by RIL and its two subsidiaries Reliance Industrial Investments and Holdings Ltd (RIIHL) and Reliance Jio Infocomm Ltd. While RIL and Reliance Jio Infocomm together raised ₹27,500 crore by selling 281,000 shares through debentures, RIIHL raised ₹8,000 crore through 778 million optionally convertible preference shares.
Reliance raises ₹36,000 crore via bonds, equity in FY19
RIL did not reply to an email sent on Monday. The company already has shareholder approval to raise ₹20,000 crore through non-convertible debentures (NCDs).
“Once a net zero-debt company, RIL has been borrowing heavily to fund its telecom expansion and buy stakes in companies to build an attractive bouquet of applications through the Reliance Jio app. In addition to funding acquisitions, RIL also needs funds to refinance its existing long-term debt and replace short-term debt,” an analyst with a domestic brokerage said on condition of anonymity.
At the end of September quarter, RIL’s debt had expanded to ₹2.59 trillion from ₹2.19 trillion as on 31 March. The company’s rating that’s higher than India’s sovereign rating helps it raise cheaper debt. Its cash and cash equivalents of ₹76,740 crore are in bank deposits, mutual funds, government bonds and other marketable securities.
In the September quarter, RIL had incurred a capex of ₹39,000 crore, including about ₹5,000 crore of capitalization of foreign exchange losses.
Reliance Jio Infocomm Ltd incurred capex of ₹16,000 crore during the same period.
According to an October report of Bank of America Merrill Lynch, RIL had spent about ₹5,000 crore in the joint venture with music app Saavn, which showed up as capex for the quarter. The core businesses consumed ₹13,000 crore in capex, of which ₹1,000 crore each was in exploration and production (E&P)/real estate and ₹2000 crore was in the ongoing projects at Jamnagar.
Most of the ongoing expenditure at Reliance Jio Infocomm Ltd was for the mobility part of the business, which is likely to achieve its target of 99% population coverage by the end of the fiscal year, RIL said in October.
It has planned investments for its fibre-based broadband services, JioGigaFiber, that it will launch across 1,100 cities this fiscal. Analysts said although spends on mobility should reduce, RIL’s ambitious fiber-based broadband services and the purchase of telecom assets from Reliance Communications Ltd (RCom) will add to its expenses.
“Jio still has to pay ₹20,000 crore to Reliance Communication—as it awaits some approvals/clearances,” added the Bank of America Merrill Lynch report.