Reliance Industries Goes Slow On Non-Core Investments As Net Debt Hits $9 Billion

It has been a quiet year for Mukesh Ambani-owned Reliance Industries Ltd. for acquisitions and investments.

The oil-to-retail company invested close to Rs 78,033 crore across all businesses in the year ended March, according to the 2023 annual report. That includes Rs 5,029 crore on account of entities acquired or additional investments.

By comparison, Reliance Industries Ltd. had invested $9.3 billion or Rs 73,764 crore just outside its core businesses in FY22.

Ambani deleveraged during the Covid-19 pandemic by selling stakes in telecom and retail businesses to become net debt free, only to add net debt as the conglomerate embarked on setting up gigafactories under its new energy business.

Reliance's standalone gross debt rose Rs 21,260 crore in FY23 to Rs 2.15 lakh crore. Net debt rose to Rs 72,897 crore (about $ 9 billion) as of March 2023 from Rs 12,328 crore a year earlier.

Consolidated net debt stood at Rs 1,10,218 crore as of March compared with Rs 35,815 crore a year earlier. What that means is that net debt for other segments including consumer businesses, stood at Rs 37,318 crore in FY23.

• The company's net-debt-to-Ebitda was less than 1 time on a consolidated basis.

• Cash profit stood at Rs 1.26 lakh crore, and the company funded 98% of the capex in the last two years from cash profits, it said.

• Net block or the net value of assets rose by Rs 85,000 crore during the year to Rs 7.09 lakh crore.

• In addition, the company has deployed Rs 1.17 lakh crore of capital which is work in progress, and Rs 1.2 lakh crore of spectrum which is under development as part of the Rs 2-lakh-core investment planned in the 5G space.

• After demerger of the financial services business, the non-current investments held for more than a year in associates declined to Rs 7,435 crore from Rs 1.05 lakh crore.

Top Investments In FY23

Among Reliance's key investments in FY23 are Rs 9,145 crore in Reliance Storage Ltd.; Rs 1,838 crore in the joint venture Sanmina- SCI India; and Rs 1,499 crore in equity and convertible debenture of Sintex Industries. It also invested Rs 193 crore in Life Insurance Corp.

Reliance made additional investments to the tune of Rs 9,145 crore during the year.

Private Equity Exposure

RIL has increased its exposure to private equity and alternate investment funds which invests in real estate, infrastructure and startups. It invested in Multiples PE Fund II LLP, Kalaari Capital Partners, Nepean Focused Investment Fund etc. Total investments into this segment stood at Rs 4,570 crore as on March 31.

Other Investments

Reliance also has among the highest current investments in government securities at Rs 21,848 crore as of March against nil a year earlier. It also increased its exposure to Treasury bills to Rs 13,157 crore. Its mark-to-market exposure to mutual funds fell to Rs 6,315 crore from Rs 20,944 crore.

Reliance's other income decline during the year, mainly as gains from debt instruments fell to Rs 9,174 crore from Rs 12,247 crore a year earlier. It gained interest income worth Rs 1,709 crore from the bank deposits against Rs 54 crore in the previous year, suggesting the company took advantage of rising deposit rates.