Reliance Industries Doubles Exposure to Anil Ambani-led Groups Mutual Funds

Sitting on a huge cash pile, Mukesh Ambani-led Reliance Industries Ltd (RIL) has parked close to Rs 1,300 crore in mutual funds of Anil Ambani-led Reliance Group as part of its investment portfolio.

This marks a significant increase of investments worth Rs 691 crore as on March 31, 2013 in select schemes of Reliance Mutual Fund, which is run by the Anil Ambani-led business conglomerate's financial services arm - Reliance Capital - and is one of the top fund houses in the country.

RIL's total investments in select Reliance MF schemes, mostly fixed maturity plans (FMPs), rose to Rs 1,290 crore as on March 31, 2014, as per the company's latest annual report for financial year 2013-14.

While RIL has been known for years to park excess cash in various mutual funds, it began investing in funds operated by Reliance MF during fiscal year 2012-13 ever since a split took place between two Ambani brothers in 2005.

At the end of fiscal ended March 31, 2012, RIL had invested over Rs 8,700 crore in various mutual funds, but they did not include any scheme of Reliance MF.

As part of a truce, the two groups scrapped a non-compete agreement in 2010, while last year they also agreed for a comprehensive framework of business cooperation.

RIL has always figured prominently in stock portfolios of various schemes of Reliance Mutual Fund. As per latest estimates, Reliance MF has investments totalling close to Rs 400 crore in RIL shares across all its funds.

As per RIL's annual report, being sent to its shareholders ahead of the annual general meeting on June 18, the oil-to-retail conglomerate's overall investment portfolio totalled over Rs 61,000 crore as on March 31, 2014, up from nearly Rs 43,000 crore a year ago.

These include long-term investments totalling nearly Rs 27,000 crore in equity shares, bonds and funds, among others, while current investments amount to more than Rs 34,000 crore.

A major chunk of overall current investments have gone into mutual funds (over Rs 18,000 crore in FMPs and further Rs 10,000 crore in other schemes).

Within long-term investments, FMPs have got about Rs 5,600 crore which includes Rs 300 crore in a Reliance Fixed Horizon Fund. The current investment portfolio includes nearly Rs 1,000 crore in three FMPs of Reliance MF.

RIL holds one of the biggest cash balance among all Indian corporates. It had more than Rs 90,000 crore (over $15 billion) in cash and marketable securities at the end of 2013-14, up from about Rs 84,000 crore a year ago.

However, its 'cash and bank balances' fell from over Rs 50,000 crore to close to Rs 38,000 crore during the fiscal year, as more funds were parked in securities markets.

RIL moved from a net cash position at the beginning of the year 2013-14, to a marginal net debt level during the course of the year as it drew down on funding to part finance the expansion of its petrochemical capacities and setting up the new gasification plant and refinery off-gas cracker over the next two to three years.

"The company continued to efficiently manage its short-term resources by placing them in liquid instruments and highly rated securities, such as bank fixed deposits, CDs, Government securities and corporate bonds," it said.