Mukesh Ambani-controlled Reliance Industries (RIL) has raised ?5,500 crore through a private placement of non-convertible debentures (NCDs), said two officials aware of the development, requesting anonymity.
The company raised the capital in December across two tranches of 25,000 partly-paid redeemable non-convertible debentures aggregating to ?2,500 crore and 30,000 unsecured redeemable non-convertible debentures aggregating to ?3,000 crore worth of debentures at a coupon rate of 8.7% and 8.65%, respectively.
“ICICI Lombard, Future Generali India Life Insurance, Tata AIA Life Insurance and HDFC Standard Life are among the allottees which participated in the private placement. The funds will help RIL meet its operating expenditure,” said the first official mentioned above.
With the latest round, Reliance Industries has sold debentures amounting to a total outstanding of ?30,500 crore, as of December 2018.
“RIL’s leverage ratios are lower at around 3.5 times. Raising funds therefore is not a challenge, as the company is able to raise debt at competitive rates, thanks to the top-notch rating it enjoys from rating agencies,” said an analyst from an institutional brokerage, requesting anonymity.
In the last quarter, Reliance Industries had retained top rating from domestic agencies and investment grade rating for its international debt from Moody’s Investors Service and Standard & Poor’s.
Till November, Reliance Industries had raised nearly ?36,000 crore by selling bonds and equity to finance operations, refinance loans and expand its consumer businesses.
The money was raised by Reliance Industries and its two subsidiaries, Reliance Industrial Investments and Holdings Ltd and Reliance Jio Infocomm Ltd, its telecom arm.
At the end of the September quarter, RIL’s debt had expanded to ?2.59 trillion from ?2.19 trillion as on 31 March. Having a rating that is higher than India’s sovereign rating helps the company raise funds at a lower cost.
Its cash and cash equivalents of ?76,740 crore are in bank deposits, mutual funds, government bonds, and other marketable securities.
Analysts expect RIL’s capex to halve compared with FY14-16.
“Telecom capex will continue for sure and exploration and production spend will also pick up. However, if you look at how RIL’s earnings are shaping up, across hydrocarbons, Jio and retail, the company may have enough free cash flow, going forward. So retiring debt may not be a concern,” said an analyst with a domestic brokerage, requesting anonymity.
In its September quarter earnings announcement, Reliance Industries said that capacity additions across its businesses could see its consolidated operating profit rise 18% in the year ending 31 March.
The company has invested more than $30 billion over the last five years across its refining, chemicals, retail and telecom businesses to boost capacity.