Reliance Industries, owned by billionaire Mukesh Ambani, expects to achieve its target of growing into a zero net debt company by the end of FY21. The company is to pay off all its liabilities, according to a brokerage report filing by Edelweiss Securities.
Earlier, the company sold a minority of its Jio stakes to big companies and equity firms such as Facebook, Silver Lake, Vista Equity, KKR, and General Atlantic. Therefore, raising an aggregate amount of Rs. 78,562 crore. Further, through the rights issue, the multinational is raising ₹53,125 crore.
As per the report, the news comes in when the company is riding on the Rs 1.3 lakh crore in the aggregate raising of funds in the last few weeks. In addition, the multinational is ready to pay its net debt even if the Saudi Aramco deal gets deferred.
The company’s subsidiary, Jio’s capital expenditure (Capex) is largely complete. Thus, despite weaker oil and gas earnings, RIL should be able to generate FCF of more than ₹20,000 crore in FY21, similar to this fiscal year.
However, the adjusted net debt is higher at Rs. 2.57 lakh crore and will take longer to repay for the company. The Aramco deal was to settle by March 2020. Nevertheless, it expects to achieve this target this year.
Earlier on April 30, RIL stated its rights issue of Rs. 53,125 crore. Hence, it seemed part of RIL’s aim to attain the title of being a net debt-free company by March 2021. However, the shareholders requiring to pay only a 25% price of the rights issue application. Thus, making the proceeds at Rs, 13,281 crore which cannot be termed as a major source for debt reduction.
