DEBT COST

FINALLY, THE financing costs of Reliance Industries (RIL) skyrockets. In the first quarter, RIL’s financing cost has risen by 217 per cent year- on-year to ` 3,550 crore. The petroleum giant has invested ` 33,267 crore in three months until June in digital and petrochemical businesses and that drove the gross debt to

` 2.42 lakh crore. The company has invested over ` 2 lakh crore in building the Jio network and around ` 1.5 crore in expanding its petrochemicals’ capacities. Thanks to the investment, the revenue of petrochem increased by 58 per cent to

` 40,287 crore and profit before interest and tax (PBIT) almost doubled to ` 7,857 crore. The Jio return, however, is not that lucrative. Its operating revenue was

` 8,109 crore, and its EBIT was ` 1,708 crore – a substantially lower return on investment. Jio posted a net profit of ` 612 crore. Now investors have to determine whether Jio can service its own debt with its cash flow.