Cash buffer gives Reliance room to borrow another 200b rupees
MUMBAI: Reliance Industries Ltd is making room to add as much as 200 billion rupees (RM11.96 billion) to borrowings, using its cash buffer to manage rising funding costs and US$13 billion (RM51.85 billion) of maturities over the next three years.
The billionaire Mukesh Ambani-led company would seek approval to issue redeemable nonconvertible debentures at its July 5 shareholder meeting, here, it said in its latest annual report, without specifying how the money would be used.
Reliance had total debt of about US$33 billion, more than half of which was due for repayment by 2022, according to data compiled by Bloomberg.
The retail-to-refining conglomerate’s debt has tripled over five years as it invested US$37 billion in a telecom venture and to bolster its traditional petrochemicals business. Its latest plan extends a strategy of raising cheaper debt, riding on its better-thansovereign ratings, while also actively investing about US$12 billion in reserves to generate returns.
“Historically, the company has been able to keep its cash invested in financial assets that provided returns more than its cost of funding — thereby avoiding any negative costs of carry,” said Vishal Kulkarni, an analyst at S&P Global Ratings.
Reliance is rated “BBB+” by S&P Global Ratings, two levels higher than the Indian government.