RIL plans to borrow Rs 40,000 crore in consumer push

Mumbai: Reliance Industries Ltd, India’s second-largest company by market value, plans to raise about Rs 40,000 crore in fresh debt this financial year as it expands its consumer businesses, according to people familiar with the matter.

The billionaire Mukesh Ambani-led company will raise funds through loans and bonds, mostly in the Indian currency, the people said asking not to be named as they are not authorized to speak to the media. Of this, the refining-to-retail conglomerate already has shareholder approval to raise as much as Rs20,000 crore through non-convertible debentures.

Reliance’s total debt has tripled in the past five years as it borrowed to fuel more than Rs 3.3 trillion of spending on a new telecom venture and its traditional petrochemicals business. Ambani will invest this year to roll out fiber-based broadband services and on acquisitions, including the purchase of telecom assets from brother Anil’s Reliance Communications Ltd (RCom). The company has total borrowings of about Rs 2.2 trillion, more than half of which is due to be repaid by 2022, according to data compiled by Bloomberg.

Net liabilities will probably increase this year, mostly due to the RCom transaction, before falling in the financial year ending March 2021 as cash flows improve, said Somshankar Sinha, a Mumbai-based analyst at Jefferies India. “Reliance needs funds to refinance existing long-term debt or replace short-term debt with longer tenors, and to fund its announced acquisitions.”

Reliance has agreed to pay about Rs17,300 crore to purchase spectrum, mobile-phone towers and fiber assets from RCom and another Rs5000 crore for textile-maker Alok Industries, which it won in an auction under India’s bankruptcy rules.

There are investments planned for the fiber-based broadband services, JioGigaFiber, that will launch across 1,100 cities in August under the umbrella of telecom unit Reliance Jio Infocomm Ltd., the people said. In addition, the conglomerate will spend on acquiring apparel brands and opening new retail outlets, one of the people said.

Reliance Industries Limited (RIL)